One of the largest investment businesses globally, Vanguard oversees assets worth over $7 trillion.
Its name is also almost synonymous with passive investing, which aims to replicate the performance of larger market sectors and asset classes rather than outperforming them.
The foundation of Vanguard’s passive strategy is a group of index funds with extremely low cost ratios that guarantee investors will get the majority of their profits. Vanguard’s own statistics indicates that the average expense ratio of a Vanguard fund is 83% less than the industry average.
Vanguard funds are so inexpensive that many investors who want to create diversified, passively managed portfolios choose them. Use this list of the top Vanguard index funds as your cheat sheet if you want to become one of them.
Top Vanguard Index Funds
These Vanguard mutual funds are index funds that consistently produce annual returns that match the market, along with incredibly low fees and expense ratios.
They consist of stock and bond funds. While some replicate whole asset classes and market indices, others concentrate on certain sectors or businesses.
These Vanguard index funds are not as liquid as individual equities or exchange-traded funds (ETFs) because they are mutual funds.
The trading day after the placement of the order is when orders usually fill, and the minimum amount required is usually $3,000. If this becomes too costly, keep in mind that almost all of these index funds have comparable exchange-traded funds (ETFs) that may be bought in shares as little as one and that trade in real-time during regular market hours.
The five-year return through Q3 2023, the expense ratio as of Q3 2023, and the relative risk potential on a scale of 1 to 5, with 5 being the riskiest, are all included in each listing below.
Pro tip: Vanguard Digital Advisor is one of the most accessible and reasonably priced robo-advisors available, so take it into consideration if you’re not comfortable doing your own investing. With as little as $3,000, you can start a Vanguard Digital Advisor account. An annual advising fee of up to 0.20% will be charged. That is a lot less than the typical fee for a human investment advisor.
1. Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX):
.0.04% expense ratio;
.11.34% five-year return
• Possible Risk: Four
The goal of the Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) is to replicate the performance of the US stock market as a whole.
2. Admiral Shares of the Vanguard Total Bond Market Index Fund (VBTLX)
• Ratio of Expenses: 0.05%
• Return Over Five Years: 0.75%
• Potential Risk: Two
Vanguard Index Fund for the Whole Bond Market Bond index fund Admiral Shares (VBTLX) follows the results of a wide benchmark index of investment-grade, taxable bonds:
• U.S. Treasuries, including short- and long-term;
•Mortgage-backed securities; corporate bonds,
•Mostly in the industrial sector
Two bond classes are excluded by VBTLX because they conflict with its investment goals:
• Tax-exempt bonds issued by state and local governments, which are not part of the federal government
• Treasury inflation-protected securities, or TIPS, are federal government bonds that are protected against inflation.
A well-diversified portfolio, even one with a majority of equities invested in it, should include VBTLX.
Particularly for investors with shorter investment horizons and lower overall volatility tolerance, VBTLX can serve as a buffer against the inevitable market risk associated with stock investments because bonds are often less volatile than stocks.
An ETF that tracks VBTLX is the Vanguard Total Bond Market ETF (BND).
3. Admiral Shares of the Vanguard Total International Stock Index Fund (VTIAX)
• Five-Year Return: 3.96%
• Expense Ratio: 0.11%
• Possible Risk: Five
Admiral Shares of the Vanguard Total International Stock Index Fund (VTIAX) provide investors inexpensive exposure to a wide range of publicly traded firms with headquarters outside of the US.
It’s a useful addition to the Vanguard Total Stock Market Index Fund (VTSAX), which solely consists of equities of American corporations, as it excludes those stocks.
The purpose of VTIAX is to replicate the performance of the FTSE Global All Cap ex U.S. Index.
Small-, mid-, and large-cap businesses with headquarters in low-, middle-, and high-income economies (established and emerging markets) make up the index’s constituents, with the exception of the US.
Its performance is not directly associated with VTSAX’s; over the last five years, VTIAX has severely underperformed VTSAX. Nonetheless, for investors who would want not to be totally dependent on the vagaries of the US equity markets, VTIAX offers significant diversification.
Vanguard Total International Stock ETF (VXUS) is an ETF that tracks VTIAX.
4. Admiral Shares (VFIAX) of the Vanguard 500 Index Fund
Cost-to-Rate Ratio: 0.04%
• Gains Over Five Years: 12.62%
• Potential for Risk: 4
Possibly the best S&P 500 index fund is the Vanguard 500 Index Fund Admiral Shares (VFIAX).
It is intended to replicate the performance of the S&P 500 stock index, which comprises 500 large-cap U.S. stocks and is frequently used as a gauge of the state of the American economy.
It is not shocking that VFIAX is rather volatile given the volatility of the S&P 500 stock index.
Even so, investors who want more exposure to large-cap stocks—which are often less volatile than small- and mid-cap stocks—find VFIAX to be a particularly helpful addition to diversified stock portfolios.
Nevertheless, investors with limited time horizons, poor risk tolerance, or both should avoid VFIAX.
Vanguard S&P 500 ETF (VOO) is an ETF that tracks VFIAX.
5. Admiral Shares of the Vanguard Balanced Index Fund (VBIAX)
• Five-Year Return: 7.36%;
• Expense Ratio: 0.07%
• Potential for Risk: 3
Admiral Shares of the Vanguard Balanced Index Fund (VBIAX) is a hybrid index fund that keeps about 60% of its assets in equities and 40% in bonds. It specifically follows two indexes: one for taxable U.S. bonds and one for U.S. stocks.
For investors with a moderate risk tolerance, VBIAX is a valuable tool since it offers more exposure to the upside of the stock market than bonds-only funds and is less volatile than stocks-only index funds.
But when stock prices rise steadily, VBIAX can’t keep up with the gains of funds like VFIAX and VTSAX since stock and bond prices typically move in opposition to one another.
There isn’t an ETF for VBIAX.
6. Admiral Shares, a Vanguard Large-Cap Index Fund (VLCAX)
• Ratio of Expenses: 0.05%
• Return Over Five Years: 12.03%
• Potential Risk: Four
Vanguard Large-Cap Index Fund Admiral Shares (VLCAX) is designed to mirror the performance of an index of large U.S. companies (the CRSP U.S. Large Cap Index).
This index includes some of the biggest names in business today, including Amazon (AMZN) and Apple (AAPL), as well as large U.S.-based health care companies, industrial firms, insurers, and consumer staples companies.
VLCAX’s performance correlates closely with but is not identical to that of the S&P 500 index and VFIAX, the Vanguard fund designed to mirror it.
Accordingly, it’s not an essential portfolio component for investors with adequate exposure to VFIAX. And, like other stocks-only funds, VLCAX is relatively volatile.
VLCAX is also available as an ETF: the Vanguard Large-Cap ETF (VV).
7. Admiral Shares, a Vanguard Mid-Cap Index Fund (VIMAX)
• Five-year return of 8.79%;
• Expense ratio of 0.05%;
• Possible Risk: Five
Admiral Shares (VIMAX), the Vanguard Mid-Cap Index Fund, tracks the performance of the CRSP U.S. Mid Cap Index. A wide variety of sectors and industries are included in this index, which represents a representative basket of midsize American businesses.
Vanguard gives VIMAX a risk potential score of five out of five because it only trades mid-cap companies, which are often more volatile than large-cap stocks but less volatile than small-cap stocks.
Nevertheless, risk-averse investors with extended time horizons who want to broaden their exposure to the center of the US stock market can consider investing in VIMAX.
Vanguard Mid-Cap ETF (VO) is an ETF that offers VIMAX as well.
8. Admiral Shares of the Vanguard Real Estate Index Fund (VGSLX)
• Ratio of Expenses: 0.12%
• Return Over Five Years: 4.66%
• Potential Risk: Four
The Admiral Shares Vanguard Real Estate Index Fund (VGSLX) aims to replicate the performance of the larger U.S. real estate market.
In addition to a somewhat smaller selection of real estate service companies, it invests in a wide range of real estate investment trusts (REITs). The majority of its holdings are made up of REITs, which trade and own commercial real estate facilities in the United States, such as shopping centers, hotels, office buildings, and multifamily residential complexes.
VGSLX has a significant disadvantage over more diversified Vanguard index funds in that it is intimately correlated with the performance of the U.S. commercial real estate market due to its exclusive investment in such assets.
Additionally, this fund is strongly associated with the general situation of the U.S. economy because the real estate market in the country underperforms during recessions and difficult economic times.
However, VGSLX is a good hedge against volatility in stocks-only funds like VTSAX and VTIAX because it has little correlation with other U.S. and foreign equity sectors.
Vanguard Real Estate ETF (VNQ) is an ETF that tracks VGSLX.
9. Admiral Shares, a Vanguard Growth Index Fund (VIGAX)
• Ratio of Expenses: 0.05%
• Return Over Five Years: 14.67%
• Potential Risk: Four
The Vanguard Growth Index Fund Admiral Shares (VIGAX) replicates the performance of a particular segment of the US large-cap market: large-cap growth stocks. These stocks reflect businesses in industries like technology that have historically developed more quickly than the US market as a whole.
It accomplishes this by monitoring the performance of the CRSP US Large Cap Growth Index, which is comprised of instantly identifiable companies like Tesla (TSLA), Microsoft (MSFT), and Meta (FB).
Because VIGAX is volatile, much like other stocks-only funds, it is not suitable for investors who are extremely risk averse.
Its risk potential score isn’t quite as high as that of Vanguard’s international or mid-cap stock funds, though, so investors with limited risk tolerance may find some relief.
Vanguard Growth ETF (VUG) is another exchange-traded fund that offers VIGAX.
10. Admiral Shares of the Vanguard FTSE Social Index Fund (VFTAX)
• 0.14% expense ratio
• Available for no more than 12.09% of the total since launch on February 19, 2019
• Potential Risk: Four
A socially conscious (ESG) mutual fund, Vanguard FTSE Social Index Fund Admiral Shares (VFTAX), is made to mimic the performance of the FTSE4Good US Select Index.
It mostly consists of mid- and large-cap equities and specifically leaves out stocks in particular sectors of the economy, such as nuclear power, weaponry, fossil fuels, adult entertainment, alcohol, tobacco, and gambling.
Additionally, stocks of businesses that do not adhere to specific diversity standards, like having at least one woman on the board and having established corporate diversity policy, as well as U.N. global compact values, like human rights and anti-corruption, are excluded from VFTAX.
There isn’t an ETF for VFTAX.
Last Remark
This is an exhaustive list of the top Vanguard index funds that are currently accessible to investors in the United States. However, this is by no means a definitive list of the top Vanguard funds.
Exchange-traded funds are another asset class that Vanguard supports; our ranking of the top Vanguard ETFs includes the best of them. Examine their past results and overall returns in comparison to the items on this list.
Vanguard offers a few actively managed mutual funds that employ the promise of market-beating returns—though not the guarantee—to lessen the financial pain of higher-than-usual fees and expenditures, despite being best known for its low-cost, passively managed offerings.
As usual, research these Vanguard goods and any others that pique your interest on your own. Compare similar competitor funds offered by other low-cost providers like Fidelity and Charles Schwab before making your purchase.
Do your homework now rather than when you have more stakes in the outcome.
