3 No-Load Vanguard Mutual Funds to Buy for 2022 & Beyond
John C. Bogle founded the Vanguard group way back in 1974. The largest mutual fund house in the United States, unlike other fund houses, is known for hiring managers primarily from outside. It helps control the cost of actively-managed funds and makes it easier for the fund house to replace the fund if the manager fails to deliver.
Vanguard is also known for a high degree of diversification, which did help them earn higher ratings. Most importantly, Vanguard mutual funds predominantly consist of low-cost mutual funds and are known to have expense ratios that are mostly below industry averages. As mentioned in a nerdwallet article, per Vanguard, the average expense ratio for its mutual funds is 0.07%, which is undoubtedly below the industry standard.
The expense ratio is the fee that investors pay to the fund house for the fund's management. A low expense ratio, thus, means that more money remains invested in the market making Vanguard mutual funds an attractive choice for investors. Let’s assume that you have invested $5000 in a fund with an expense ratio of 1.5%. Therefore, you have paid $75 to manage your money. And if the fund earns 10%, the investor would get a return of 8.5%. So, no doubt, an expense ratio cut means significant savings for an investor.
At the same time, almost all Vanguard mutual funds have no load. That means the fund doesn’t charge investors when fund shares are being bought or when fund shares are being sold. Again, this helps more capital to remain invested in the market, which undeniably is a major boon for investors. Banking on such positives, investing in Vanguard mutual funds always seems to be judicious. Also, mutual funds, in general, diversify portfolios without the several commission charges that are mainly associated with stock purchases and trim transaction costs (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
We have, thus, chosen three no-load Vanguard mutual funds that investors should buy now for the long term. These funds possess a Zacks Mutual Fund Rank #1 (Strong Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000 and expense ratios considerably lower than the category average. So, these funds have provided comparatively strong performance along with lower fees.
Vanguard U.S. Growth Fund Investor Shares VWUSX mostly invests in large-cap U.S. companies and seeks long-term capital appreciation. The fund invests in companies that have above-average earnings growth potential and are more or less reasonably priced in the market.
James Stetler is the Lead Manager of VWUSX since Apr 7, 2019, and most of the fund’s exposure is in sectors such as technology, retail trade and non-durable as of 3/31/2022.
VWUSX’s three-year and five-year annualized returns are 20.2% and 19.7%, respectively. Last year, VWUSX gave a commendable return of 12.3%. VWUSX has an annual expense ratio of 0.38%, below the category average of 0.99%. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Vanguard Mid-Cap Growth Fund Investor Shares VMGRX invests the majority of its assets in mid-cap companies that are believed to have solid growth prospects shortly. VMGRX aims to achieve long-term capital appreciation.
Stephen Bishop is the Lead Manager of VMGRX since Dec 4, 2016, and most of the fund’s exposure is in sectors such as technology, retail trade and services as of 3/31/2022.
VMGRX’s three-year and five-year annualized returns are 12% and 13.5%, respectively. In 2021, VMGRX gave a creditable return of 9.8%. VMGRX has an annual expense ratio of 0.33%, below the category average of 1.09%. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Invesco Small Cap Value Fund Class Y VSMIX invests a major portion of its assets in small-cap companies that are believed to be undervalued. VSMIX seeks long-term growth of capital.
Jonathan Edwards is the Lead Manager of VSMIX since June 24, 2010, and most of the fund’s exposure is in sectors such as finance, industrial cyclical and technology as of 3/31/2022.
VSMIX’s three-year and five-year annualized returns are 22.4% and 13.2%, respectively. Last year, VSMIX gave a superb return of 36.8%. VSMIX has an annual expense ratio of 0.83%, below the category average of 1.16%. To see how this fund performed compared in its category, and other 1 and 2
Ranked Mutual Funds, please click here.
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