Vanguard Funds: Best Investment Options For Your Portfolio

Vanguard is one of the world's leading asset managers, with a staggering $7 trillion under management. The company's commitment to providing simple, low-cost mutual fund offerings to the general public makes it a popular choice for investors. Vanguard funds are known for their simplicity, low fees, and strong performance. Here are some of the best Vanguard funds to consider for your investment portfolio:

- Vanguard 500 Index Fund Admiral Shares (VFIAX): This fund offers exposure to 500 of the largest U.S. companies, which make up 75% of the U.S. stock market's total value. It has a low expense ratio of 0.04%.

- Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX): This fund covers the entire U.S. equity market, including small-, mid-, and large-cap growth and value stocks. It has a low turnover rate of 2.2% and an expense ratio of 0.04%.

- Vanguard Dividend Appreciation Index Fund Admiral Shares (VDADX): This fund focuses on high-quality companies with growing dividends, including Apple, Broadcom, and Microsoft. It has a 0.08% expense ratio.

- Vanguard Total International Stock Index Fund Admiral Shares (VTIAX): This fund offers exposure to international stocks, tracking over 8,600 stocks from both developed and emerging markets. It has a low turnover rate of 3.9% and an expense ratio of 0.12%.

- Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX): This fund provides wide exposure to U.S. investment-grade bonds, investing about 30% in corporate bonds and 70% in U.S. government bonds. It has an expense ratio of 0.05%.

- Vanguard Wellington Fund Investor Shares (VWELX): This fund has a long track record, having been launched in 1929. It allocates two-thirds of its portfolio to large- and mid-cap stocks with high dividends and low valuations, and one-third to investment-grade corporate bonds. It has an expense ratio of 0.26% and pays an above-average 2.3% 30-day SEC yield.

Vanguard Total Stock Market Index Fund Admiral Shares

VTSAX is also offered as an ETF, the Vanguard Total Stock Market ETF (VTI). With an expense ratio of 0.04%, it is a low-cost option for investors.

The fund has delivered strong returns over the years. As of August 2024, the five-year average annual return was 11%, the 10-year return was 12%, and the 15-year return was 11%.

One important factor to consider is that the fund is biased towards the biggest stocks. While this bias has worked well during the tech sector's recent outperformance, it could become a liability if these large stocks start to underperform.

Vanguard Dividend Appreciation Index Fund Admiral Shares

The fund's strategy focuses on high-quality companies with growing dividends, including big names like Apple Inc., Broadcom Inc., and Microsoft Corp. These established companies insulate the portfolio from volatility and should lead to a long-term risk-adjusted advantage. The expense ratio is a low 0.08%, and the minimum initial investment is $3,000.

The fund has a Morningstar Medalist Rating and has received positive ratings for its management team and investment process. Morningstar's analysis describes it as "a steady approach to higher yield", and it is offered as an ETF, the Vanguard Dividend Appreciation ETF (VIG).

With a large blend of assets under management, currently $14.8 billion, and a low expense ratio, this fund offers a stable and cost-effective investment strategy.

Vanguard Health Care Fund Investor Shares

One key feature of the American healthcare sector is its for-profit nature, which has led to ever-increasing costs of medicine. By investing in Vanguard Health Care Fund Investor Shares, investors can hedge against these rising healthcare expenses. Additionally, in the event of a recession, healthcare stocks could serve as a ballast for portfolios due to their defensive characteristics.

The fund has a relatively high expense ratio of 0.35%, but it is still considered a low-cost option compared to other investment alternatives. As of September 27, 2024, the Net Asset Value (NAV) was 227.71, with a one-day return of -0.42%. The total assets under management for this fund are 51.1 billion dollars, and the minimum initial investment requirement is 3,000 dollars.

Jean Hynes, the lead manager of the Vanguard Health Care Fund, will be stepping down from her role at the beginning of 2025 to focus on her position as CEO of Wellington, the strategy's subadvisor. Rebecca Sykes, a Wellington veteran with deep expertise in healthcare, has been promoted to comanager and is expected to succeed Hynes.

Vanguard Real Estate Index Fund Admiral Shares

Vanguard is a great choice for investors due to its low-cost structure and high quality. Vanguard's Real Estate Index Fund Admiral Shares (VGSLX) is a sector fund with a real-estate-specific focus. With around 150 different REITs (real estate investment trusts) in this top Vanguard mutual fund, it offers a yield of 3.9%, which is three times the current yield of the S&P 500.

The VGSLX fund includes residential and office plays, as well as industrial warehouse giant Prologis (PLD) and telecom tower operator American Tower (AMT). Vanguard's Real Estate Index Fund Admiral Shares is also offered as an ETF, the Vanguard Real Estate ETF (VNQ).

The fund has a Morningstar Medalist Rating and is considered one of the best U.S. real estate funds available due to its diversification, market-cap weighting, and very low fee. The expense ratio is 0.13%, with a minimum initial investment of $3,000.

Vanguard is a leading asset manager, with a staggering $7 trillion under management. The firm is committed to providing simple, low-cost mutual fund offerings to the general public. Vanguard's Real Estate Index Fund Admiral Shares is a great option for investors seeking exposure to the U.S. real estate market with a focus on REITs and a high yield.

Vanguard Total International Stock Index Fund Admiral Shares

The fund offers a truly global perspective, with almost 8,600 total companies from various countries and sectors. While there are familiar names like Swiss consumer giant Nestle and Taiwanese chipmaker Taiwan Semiconductor Manufacturing, the fund also includes many unsung international stocks that are not easily accessible on U.S. exchanges. The regional breakdown of the fund is diverse, with investments in Japan (16% of assets), the United Kingdom (10%), Canada (7%), and China (7%).

Vanguard's Total International Stock Index Fund Admiral Shares is a great option for investors seeking international diversification. The fund provides access to a wide range of companies and sectors from different countries, reducing the risk associated with investing in a single market. With an expense ratio of 0.12%, it is a cost-effective way to gain exposure to international stocks.

The fund is also available as an ETF, the Vanguard Total International Stock ETF (VXUS), providing even more flexibility for investors who prefer the ETF structure.

When considering investing in Vanguard's Total International Stock Index Fund Admiral Shares, it is essential to assess your investment goals, risk tolerance, and time horizon. While the fund offers international diversification and a low expense ratio, it is important to remember that investing in international stocks comes with its own set of risks, including currency fluctuations and geopolitical uncertainties. Conduct thorough research, consider seeking advice from a financial advisor, and remember that diversification does not guarantee profit or protect against losses.

Frequently asked questions