Vanguard Investments offers investors a large variety of high-quality no-load mutual funds and exchange-traded funds (ETFs). Finding the best Vanguard funds can be challenging because there are so many to choose from. There are low-cost index funds, actively managed mutual funds, sector funds, and more at Vanguard.
To choose the best Vanguard funds, we looked in five diverse categories. Then, we looked at a combination of low expenses and long-term performance.
- Vanguard offers many types of mutual funds that cover a wide range of needs for investors of every level.
- The VTSAX and VTIAX mutual funds both cover large portions of the stock market and demonstrate above-average long-term returns.
- Not all Vanguard funds focus on broad stock indexes, such as the VBTLX, which covers bonds, and the VGHCX, which focuses on the healthcare sector.
- For more conservative investors, a balanced fund like the VWINX is a good option with historically solid returns and low expenses.
5 of the Best Vanguard Funds From 5 Different Categories
In no particular order, here are the five top funds to buy at Vanguard—all of which represent different mutual fund categories.
This is the biggest mutual fund in the world for a good reason. VTSAX passively covers the entire U.S. stock market in one fund. That means you can get exposure to thousands of stocks in one cheap fund. And like many of the cheapest stock funds, long-term performance tends to beat the majority of actively managed funds. This is especially true for 10-year periods and longer. As of September 29, 2021, the expense ratio for VTSAX was a low 0.04%.
Like VTSAX, this fund invests in the entire U.S. market. But in the case of VBTLX, it's the entire bond market. The combination of low expenses and broad diversification makes VBTLX hard to beat. Expenses for VBTLX were just 0.05% as of September 29, 2021.
You can expect funds that require very little management to cost less than actively managed funds, which have higher expense ratios.
This fund continues the theme of capturing large portions of the stock market with one low-cost mutual fund. VTIAX offers exposure to more than 7,400 stocks outside of the U.S. As a passively managed index fund that tracks an index, don't expect VTIAX to be a top performer in the short run. But the long-term returns, such as those of 10 years or longer, can be expected to be above average. They also may be ahead of the majority of actively managed funds. Expenses for VTIAX are extremely low for an international stock fund; they're just 0.11% as of September 29, 2021.
Other than index funds, Vanguard offers many outstanding actively managed funds. This includes those such as VWINX, which is a balanced fund. Also called asset allocation funds, balanced funds hold a mix of stocks, bonds, and cash that reflects the fund's primary objective. It's often categorized as conservative, moderate, or aggressive.
VWINX is one of the best conservative funds you can buy. Its allocation normally fluctuates around 40% stocks and 60% bonds. But the long-term returns have historically looked as good as moderate allocation funds. As of September 29, 2021, expenses are extremely low for an actively managed fund at 0.23%.
The allocation of assets in a balanced fund can be adjusted to suit your risk tolerance, time horizon, or other investing goals by scaling between higher risk, higher return assets like stocks, and lower risk, lower return assets like bonds.
Vanguard also offers sector funds. And VGHCX is one of the best and oldest on the market. Focusing on healthcare stocks, such as Bristol-Myers Squibb (BMY) and UnitedHealth Group (UNH), VGHCX is one of the best-performing funds over the past 20 years. Benefiting from an aging population and advances in biotechnology and medical devices, VGHCX could be a top performer over the next decade or more. Expenses were just 0.32% as of September 29, 2021.
Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell securities.