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By Jeff Reeves
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When it comes to the best Vanguard mutual funds, you might think the universe of offerings is so large that it's impossible to pick the right options. We wouldn't blame you: Vanguard is one of the world's leading asset managers, with a staggering $8 trillion under management. That's in part because of the firm's commitment to providing simple, low-cost mutual fund offerings to the general public instead of complicated and costly offerings that don't deliver.
There's countless research that shows the perils of so-called "active" management. The latest proof comes from Refinitiv Lipper, whose data shows that about 63% of active managers of equities funds did not beat their respective benchmarks in 2022. With numbers like that, boring old index funds tied to a fixed list of stocks seems to be the way to go.
How to choose the best Vanguard mutual funds
The following nine Vanguard mutual funds are representative of the value in this strategy, and span all the major asset classes to provide something for everyone.
"Given that most markets – and funds – have declined over the past year, smart investors will carve out time now to review their portfolio and make any necessary adjustments," writes Nellie Huang, senior associate editor for the investing team at Kiplinger's Personal Finance. "A good mix of holdings will include both stocks and bonds, pay adequate attention to small and large companies – foreign and domestic – and be balanced between value-priced shares andgrowth stocks."
This was taken into consideration as we compiled this list of the best Vanguard mutual funds, making sure to find useful, low-cost options that align with a variety of investing goals.
And lest you think mutual funds are more expensive than their exchange-traded sisters, all the options here charge less than 0.3% annually in expenses – or $30 or less on every $10,000 you invest.
They are all multi-billion offerings – and, with the exception of one active fund, are all passive index funds. But that one oddball has been around for almost 100 years, so it is at least worth mentioning.
Without further ado, here are the nine best Vanguard mutual funds to buy now.
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Disclaimer
Data is as of April 19. Fund yields represent the trailing 12-month yield, which is a standard measure for equity funds, unless otherwise noted. Minimum initial investment for all funds listed here is $3,000.
Topics
ListsThe Vanguard Group
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Vanguard 500 Index Fund Admiral Shares
- Fund category: Large blend
- Assets under management: $290.6 billion
- Yield: 1.6%
- Expense ratio: 0.04%, or $4 annually for every $10,000 invested
The second-largest Vanguard fund strategy with "only" about $793 billion in total net assets is the Vanguard 500 Index Fund Admiral Shares (VFIAX, $383.51). As the name implies, this is a low-cost index fund benchmarked to the flagship S&P 500 Index of the largest 500 U.S. corporations.
The names should be familiar to you – blue chip stocks Apple (AAPL), Johnson & Johnson (JNJ) and JPMorgan Chase (JPM) are just a few of the leaders here.
There are tons of other S&P 500 index funds out there, so this offering isn't particularly unique. But, similar to many of the other best Vanguard mutual funds, VFIAX offers a massive scale and a very low cost structure that is hard to match, even when you take into account the generally cheaper cost structure of exchange-traded funds out there.
That includes a Vanguard exchange-traded fund, too, by the way. The Vanguard S&P 500 ETF (VOO) follows the same strategy, but shaves a hundredth of a percentage point off the already low fee structure for an annual expense ratio of 0.03% in the exchange-traded version.
Learn more about VFIAX at the Vanguard provider site.
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Vanguard Total Stock Market Index Fund Admiral Shares
- Fund category: Large blend
- Assets under management: $285.0 billion
- Yield: 1.6%
- Expense ratio: 0.04%, or $4 annually for every $10,000 invested
The Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX, $100.31) is Vanguard's simple solution for investors who want exposure to the totality of the U.S. stock market in a single mutual fund investment. All told, there are nearly 4,000 different stocks that make up this product, representing all sectors of the domestic marketplace and all sizes of companies.
One important factor to point out, however, is that this total stock market mutual fund isn't equally weighted across these thousands of individual investments. In reality, it's biased toward the biggest stocks, with trillion-dollar tech giants Apple and Microsoft (MSFT) representing about 12% of the entire fund by itself.
While this has worked out well for VTSAX so far in 2023 amid the tech sector's outperformance, it could swing the other way if these stocks start to lag. "Given the huge run-up in the past three months among many tech stocks – it might not take much bad news for [tech's] performance gap to narrow significantly," says Mike Dickson, head of research at Charlotte-based asset management firm Horizon Investments.
But while the VTSAX is a bit top heavy, it's hard to argue with the simplicity of this fund or its scale, which is why it's one of the best Vanguard mutual funds to buy. There is currently more than $1 trillion – yes, trillion with a "T" – invested across the various versions of the Vanguard Total Stock Market funds out there. So while it's not particularly sophisticated, you'll be in good company with other investors who think long-term, buy-and-hold index funds are the way to go.
The Vanguard Total Stock Market Index Fund Admiral Shares is also offered as an ETF, the Vanguard Total Stock Market ETF (VTI).
Learn more about VTSAX at the Vanguard provider site.
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Vanguard Dividend Appreciation Index Fund Admiral Shares
- Fund category: Large blend
- Assets under management: $66.6 billion
- Yield: 2.0%
- Expense ratio: 0.08%
Following a rocky 2022 for markets, many investors are looking to reduce their risk profile and build a portfolio that exhibits less volatility. That's where dividend-paying stocks come in. The best dividend stocks have significant and regular profits, and they are committed to consistently delivering a share of that cash back to their shareholders.
"Companies with long histories of annual dividend growth also offer some peace of mind," writes Dan Burrows, senior investing writer at Kiplinger.com. "When a firm manages to raise its dividend year after year, throughrecession, war, market crashes and more, it's making a powerful statement about both its financial resilience and its commitment to shareholders."
The Vanguard Dividend Appreciation Index Fund Admiral Shares (VDADX, $42.52) is one of the best Vanguard mutual funds to invest with this strategy in mind. As the name implies, the mutual fund is composed of stocks with track records of not just paying dividends over time, but also growing them for steady appreciation.
The focused list of around 300 total stocks includes oil major Exxon Mobil (XOM), Big Tech leader Microsoft and consumer staples stock Procter & Gamble (PG), to name a few. These are all rock-solid companies with staying power, in addition to paying a steady dividend to their investors.
The current yield of the Vanguard Dividend Appreciation Index Fund Admiral Shares is 2.0%.
The Vanguard Dividend Appreciation Index Fund Admiral Shares is also offered as an ETF, the Vanguard Dividend Appreciation ETF (VIG).
Learn more about VDADX at the Vanguard provider site.
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Vanguard Health Care Fund Investor Shares
- Fund category: Health
- Assets under management: $46.7 billion
- Yield: 0.8%
- Expense ratio: 0.30%*
You might think that Vanguard mutual funds are just general index funds across broad swaths of the market. However,the Vanguard Health Care Fund Investor Shares (VGHCX, $213.49) shows that these products come with a sector focus, too.
There are only about 100 holdings in this growth-oriented fund, but it's a who's who of the best healthcare stocks, led by insurance giant UnitedHealth Group (UNH) and Big Pharma mainstays like Eli Lilly (LLY), Pfizer (PFE) and AstraZeneca (AZN).
One of the sad realities of American healthcare is the for-profit nature of the sector and the ever-increasing costs of medicine. By some estimates, the price of medical care in the U.S. has more than tripled since 2000. For investors, VGHCX can be used as a hedge against these increasing expenses.
And should a recession occur – Kiplinger has the odds of one hitting later this year at 50-50 – healthcare stocks could create a ballast for portfolios given their defensive characteristics.
VGHCX is not to be mistaken with its sister "Admiral Shares" fund that has a slightly lower expense ratio, but a fairly prohibitive investment minimum of $50,000.
* Includes 0.29% management fees and 0.01% in other expenses.
Learn more about VGHCX at the Vanguard provider site.
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Vanguard Real Estate Index Fund Admiral Shares
- Fund category: Real estate
- Assets under management: $32.5 billion
- Yield: 4.1%
- Expense ratio: 0.12%
The Vanguard Real Estate Index Fund Admiral Shares (VGSLX, $117.19) is another sector fund, with a real-estate specific focus.
VGSLX is music to the ears of many investors who aren't particularly impressed with the yield on other offerings on this list of the best Vanguard mutual funds. Some of the biggest paydays on Wall Street come from the best REITs, or real estate investment trusts. That's because this special class of company is granted operational tax breaks to accommodate the capital-intensive nature of real estate and property management. But in exchange, REITs must deliver 90% of taxable income back to their shareholders via dividends.
There are about 170 different REITs in this top Vanguard mutual fund. These include residential and office plays, along with industrial warehouse giant Prologis (PLD) and telecom tower operator American Tower (AMT) to add some variety. And best of all, the 4.1% yield offered by VGSLX is more than three times that of the broader S&P 500.
The Vanguard Real Estate Index Fund Admiral Shares is also offered as an ETF, the Vanguard Real Estate ETF (VNQ).
Learn more about VGSLX at the Vanguard provider site.
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Vanguard Total International Stock Index Fund Admiral Shares
- Fund category: Foreign large blend
- Assets under management: $56.1 billion
- Yield: 2.9%
- Expense ratio: 0.11%
Most investors who want a fully diversified portfolio should know that in addition to covering stocks of different sizes and in different sectors, they should consider stocks in different geographies, too.
That's where the Vanguard Total International Stock Index Fund Admiral Shares (VTIAX, $30.34) mutual fund comes in.
This Vanguard investment is an "ex-U.S." mutual fund, designed to specifically exclude any companies headquartered in the United States. Not only does that provide exposure to international stocks that many investors are looking for, it also allows for an easy overlay that ensures you don't have redundant domestic equity holdings across your mutual funds. This makes it one of the best Vanguard mutual funds to buy.
Though global in nature, there are plenty of familiar names on the list of nearly 8,000 total companies. Swiss consumer products giant Nestle (NSRGY) and China tech giant Tencent Holdings (TCEHY) are near the top of the list. Of course, you'll also get plenty of unsung international stocks that aren't easy to buy on U.S. exchanges as you move further down the list.
As for the regional breakdown, about 15% of assets are in Japan, followed by 10% in the U.K. and just under 9% in China.
The Vanguard Total International Stock Index Fund Admiral Shares is offered as an ETF, the Vanguard Total International Stock ETF (VXUS).
Learn more about VTIAX at the Vanguard provider site.
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Vanguard Emerging Markets Stock Index Fund Admiral Shares
- Fund category: Diversified emerging markets
- Assets under management: $72.4 billion
- Yield: 3.7%
- Expense ratio: 0.14%
Investing in so-called "developed" markets like Japan and the U.K. is all well and good, but many investors are looking for the growth potential of emerging market stocks when they look overseas. If you're interested in these high-growth, but higher-risk international stocks, then consider the Vanguard Emerging Markets Stock Index Fund Admiral Shares (VEMAX, $33.88) mutual fund.
As is typical of all the names featured on this list of the best Vanguard mutual funds to buy, this index fund is a cheap and simple option that takes the guesswork out of what some might think to be a complicated strategy. The VEMAX offers a single, simple holding, diversified across some 5,700 stocks. Top stocks include the obvious leaders like China tech giants Alibaba Group Holdings (BABA) and Tencent Holdings, but also many other emerging market growth opportunities you may never have heard of like Beijing-based shopping platform Meituan.
Top countries represented are China (35% of assets), Taiwan (18%), India (16%) and Brazil (6%).
The Vanguard Emerging Markets Stock Index Fund Admiral Shares is also offered as an ETF, the Vanguard FTSE Emerging Markets ETF (VWO).
Learn more about VEMAX at the Vanguard provider site.
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Vanguard Total Bond Market Index Fund Admiral Shares
- Fund category: Immediate core bond
- Assets under management: $91.2 billion
- SEC yield: 2.6%**
- Expense ratio: 0.05%
Looking beyond stocks, bond market investing is back in fashion in 2023 after big changes to the interest rate environment over the last year or so. The Federal Reserve has steadily ratcheted up interest rates to fight inflation.
And the once-sleepy bond market has seen renewed interest thanks to the fact that yields in many investment-grade bonds are moving higher than the yield offered by popular dividend stocks. "Fixed-income yields are higher than they were a year ago and may offer investors potential income sources beyond stock dividends and real estate holdings," says Michelle Wan, investment strategy analyst at Wells Fargo Investment Institute.
The Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX, $9.65) is not just the best Vanguard mutual fund to offer diversified exposure to the bond market, but one of the biggest and most established offerings across any asset manager. It boasts an enormous portfolio of more than 10,000 "investment grade" bonds, meaning debt securities of high-credit quality from corporations or government entities that are at lower risk of default. That means you get a lot of individual bonds to provide diversification, but also high standards to offer peace of mind.
To be clear, the bond market is more stable than the stock market, but this can cut both ways. It's almost impossible to imagine bonds delivering a quick 10% or 20% in principal gains, while the stock market has had many windows of time where it's been able to pull that off. Still, if you prefer reliable income instead of higher risk investments, this is one of the best Vanguard mutual funds to layer into your portfolio.
The Vanguard Total Bond Market Index Fund Admiral Shares is also offered as an ETF, the Vanguard Total Bond Market ETF (BND).
** SEC yield reflects the interest earned after deducting fund expenses for the most recent 30-day period and is a standard measure for bond and preferred-stock funds.
Learn more about VBTLX at the Vanguard provider site.
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Vanguard Wellington Fund Investor Shares
- Fund category: Allocation (50% to 70% equity)
- Assets under management: $103.8 billion
- Yield: 2.1%
- Expense ratio: 0.25%
Founded in 1929, the Vanguard Wellington Fund Investor Shares (VWELX, $39.91) is Vanguard's oldest mutual fund and Wall Street's oldest "balanced" fund. That means it doesn't go all in on either stocks or bonds, but instead offers a blended exposure with about two-thirds of the portfolio in publicly traded stocks and the other third or so in fixed-income markets.
Top equity positions are large corporations like Dow stocks Microsoft and Coca-Cola (KO). On the bond side, the portfolio includes "agency" mortgage bonds from government backed entity Fannie Mae, as well as investment grade corporates from telecom Comcast (CMCSA) and financial giant Bank of America (BAC), among others.
All told there's around 85 total stocks and about 1,200 individual bonds in this portfolio. And they're hand-picked, making this the only "active" fund on the list of the best Vanguard mutual funds to buy.
Just keep in mind, however, that a balanced portfolio across asset classes is no guarantee of profitability. Wellington is up about 4% for the year-to-date to underperform the vanilla S&P 500 stock market index. Still, if you want a one-stop holding for both stocks and bonds, this Vanguard mutual fund is a very popular and respected option.
There's also a Vanguard Admiral Shares version, with a more prohibitive $50,000 minimum investment but lower cost structure.
Learn more about VWELX at the Vanguard provider site.
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Jeff Reeves
Contributing Writer, Kiplinger.com
Jeff Reeves writes about equity markets and exchange-traded funds for Kiplinger. A veteran journalist with extensive capital markets experience, Jeff has written about Wall Street and investing since 2008. His work has appeared in numerous respected finance outlets, including CNBC, the Fox Business Network, theWall Street Journaldigital network,USA Todayand CNN Money.
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