If you’re looking to invest in the stock market cost-effectively, Vanguard mutual funds could be the perfect solution for you. Known for its low fees, Vanguard offers investment products that enable you to build a diversified portfolio at a minimal cost.
In this guide, we are going to cover everything you need to know about Vanguard mutual funds, from how they work to their risks and fees. We’ll also look at how to invest in them and discuss how to choose the right fund for your portfolio.
What is Vanguard?
Founded in 1975, Vanguard is one of the world’s largest providers of investment funds. Today, the firm boasts over 50 million clients worldwide and more than $8 trillion in assets under management.
Vanguard is famous for pioneering the concept of index or ‘passive’ investing. This is an approach to investing that involves passively tracking the performance of a stock market index such as the S&P 500 or the Nasdaq 100, instead of trying to actively beat the market by picking individual stocks.
One thing that’s unique about Vanguard is that it is owned by its mutual fund shareholders. This structure helps the investment firm keep fees low and prioritize strong long-term returns for investors.
How do Vanguard mutual funds work?
Vanguard offers many different types of mutual funds today.
Its funds include:
- Index funds – these simply aim to track an index such as the S&P 500.
- Actively-managed funds – these are mutual funds that are actively managed by professional fund managers.
- Exchange-traded funds (ETFs) – these are like mutual funds but they trade on the stock market.
- Target-date retirement funds – these funds are designed to automatically adjust the investment mix over time as you get closer to retirement.
- LifeStrategy funds – these offer a mix of equities and bonds.
- ESG funds – these invest in companies that have a focus on environmental, social, and governance (ESG) factors.
Through these products, investors can get exposure to a broad range of markets, indexes, sectors, and asset classes.
Best Vanguard mutual funds list
Vanguard has a lot of different mutual funds on its platform. Which fund is best for you will depend on your investment goals and risk tolerance.
However, some of the most popular Vanguard funds include:
- The Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) – one of the largest mutual funds globally, this offers exposure to US large-cap, mid-cap, and small-cap stocks.
- The Vanguard 500 Index Fund Admiral Shares (VFIAX) – this tracks the S&P 500 index, providing investors with exposure to the 500 largest publicly-traded companies in the US.
- The Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) – this fund offers investors access to stock markets outside the US.
Cost & fees of Vanguard mutual funds
Vanguard is known for providing low-cost mutual funds. However, costs vary across its product range.
For example, the expense ratio on the Vanguard 500 Index Fund Admiral Shares is just 0.04% per year. By contrast, the expense ratio on the Vanguard Total International Stock Index Fund Admiral Shares is 0.12% per year.
Overall, its fees are very attractive. They are a lot lower than the fees some other investment managers charge.
How to buy Vanguard mutual funds
There are several ways you can buy Vanguard mutual funds today. One way is to invest directly through Vanguard. Another is to go through a broker or investment platform. You can find more information on the best US mutual fund brokers right here at Good Money Guide.
Do Vanguard mutual funds make good investments?
Vanguard mutual funds are generally considered to be good long-term investments. That’s because they offer diversified exposure to the stock market at a low cost.
However, before investing in a Vanguard mutual fund, it’s important to ensure that it’s suitable for your investment goals and risk tolerance. Understanding your own financial situation and investment horizon is crucial for choosing the right fund for your portfolio.
Are Vanguard mutual funds risky?
Like any investment product, Vanguard mutual funds carry risk. With these products, there is a chance that the value of your investment could fall.
However, risk levels vary across the company’s range of funds. If you are a risk-averse investor, it’s possible to find Vanguard products that have a lower level of risk.
FAQs
Is Vanguard considered good for mutual funds? Vanguard is one of the most reputable providers of mutual funds in the world. Over the last few decades, it has built a reputation for offering high-quality products that have very low fees.
Which Vanguard mutual funds are the best performing? The best performing Vanguard mutual funds are always changing, depending on market movements. However, over the long term, the Vanguard 500 Index Fund Admiral Shares, which tracks the S&P 500 index, has performed very well.
Do I need a broker to buy Vanguard mutual funds? No. If you want to buy Vanguard mutual funds, you can go directly through Vanguard.
Based in London, Edward is a distinguished investment writer with an extensive client portfolio comprising a diverse array of prominent financial services firms across the globe. With over 15 years of hands-on experience in private wealth management and institutional asset management, both in the UK and Australia, he possesses a profound understanding of the finance industry.
Before establishing himself as a writer, Edward earned a Commerce degree from the prestigious University of Melbourne. Complementing his academic background, he holds the esteemed Investment Management Certificate (IMC) and is a proud holder of the Chartered Financial Analyst (CFA) qualification.
Widely recognized as a sought-after investment expert, Edward’s insightful perspectives and analyses have been featured on sites such as BlackRock, Credit Suisse, WisdomTree, Motley Fool, eToro, and CMC Markets, among others.
