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4 Best Vanguard Mutual Funds From Q1

Nitish Marwah

Founded by John C. Bogle in 1975, Vanguard is one of the world's largest investment management companies. The company offers about 190 domestic funds and 220 funds for foreign markets. It also offers asset management and financial planning services to clients throughout the globe. As of Dec 31, 2018, the company had more than 20 million investors in 170 countries.

Vanguard stands out from other mutual fund companies because it is owned by the funds themselves. The company believes that this structure helps management to focus more on shareholder interests. Among the notable advantages Vanguard claims to offer include low-cost and no-load funds.

Vanguard Receives Highest Inflows in Q1

Per Morningstar, Vanguard topped mutual fund inflows in the first quarter of 2019 and also individually in March. The fund family witnessed inflows worth $62 billion in the period between January and March, comfortably surpassing the combined inflows of its next three competitors. Further, Vanguard’s March inflows totaled $22 billion.

Morningstar Senior Analyst Kevin McDevitt reported that Vanguard “benefited from strong interest in its core strategies with its intermediate-term bond, large-blend and foreign large-blend offerings alone, collecting in $15.9 billion in March and $37.1 billion for the quarter.”

The fund family’s U.S. assets breached past $5 trillion for the first time, more than doubling from $2.4 trillion in January 2014.

Which Fund Turned Out to be the Best?

By the end of the first quarter, Vanguard had around $4.3 trillion of assets under management. The initial investment of the majority of mutual funds from the family ranges from $0 to $3,000. As of Mar 31, 2019, none of the Vanguard mutual funds carried any load.

Further, Vanguard Long-Term Investment-Grade Fund Investor Shares VWESX turned up as one of the best performing mutual fund from the Vanguard family. The fund posted solid gains in the period between January and March. VWESX, which invests a bulk of its intermediate- and long-term investment-grade securities, returned 12.9% in the first quarter and has added 7.1% so far this year.

What Contributed to Overall Vanguard’s Growth?

Vanguard invests in a variety of sectors that are sensitive, cyclical and defensive. From the sensitive sectors, most investments were made in the technology sector. In the cyclical sectors, the fund family invested the maximum in the financial services sector, while in defensive sectors it invested heavily in healthcare.

Technology Select Sector SPDR (XLK) climbed 20.9% in the first quarter and was the best performing sector in the first quarter among the 11 S&P 500 sectors. Also, as of Apr 5, 2019, technology mutual funds collectively delivered impressive returns of 21.6% in the past three months, according to Morningstar. The financial and healthcare mutual funds also registered three-month returns of 10.6% and 11.7%, respectively.

4 Best Funds to Buy Now

Given such bullish circumstances, we have highlighted four Vanguard mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) and are poised to gain from such factors. Moreover, these funds have encouraging first quarter and year-to-date (YTD) returns. Additionally, the minimum initial investment is within $5000.

We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.

The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Vanguard International Growth Investor VWIGX fund seeks capital growth by investing in stocks of companies located outside the United States. These companies are expected to diversify their assets in countries across developed and emerging markets.

This Sector – Non Us-Equity product has a history of positive total returns for over 10 years. Specifically, the fund's returns over the first quarter and YTD benchmarks are 17.2% and 14.9%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

VWIGXhas an annual expense ratio of 0.45%, which is below the category average of 1.13%.

Vanguard Emerging Markets Select Stock Investor Fund Investor VMMSX invests mainly in equity securities of companies located in emerging markets. It invests in small-, mid-, and large-capitalization companies and is expected to diversify its assets among companies in emerging markets.

This Sector – Non Us-Equity product has a history of positive total returns for over 10 years. Specifically, the fund's returns over the first quarter and YTD benchmarks are 12.9% and 11.8%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

VMMSX has an annual expense ratio of 0.94%, which is below the category average of 1.36%.

Vanguard LifeStrategy Growth Investor VASGX fund invests in other Vanguard mutual funds with asset allocation of nearly 80% in equity securities and about 20% in debt securities and bonds. VASGX seeks appreciation of income and capital for the long run.

This Sector – Allocation Balanced product has a history of positive total returns for over 10 years. Specifically, the fund's returns over the first quarter and YTD benchmarks are 11.5% and 10.6%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

VASGXhas an annual expense ratio of 0.14%, which is below the category average of 0.77%.

Vanguard Short-Term Investment-Grade Investor VFSTX fund seeks income while maintaining a high degree of stability of principal. VFSTX invests in a variety of high-quality and, to a lesser extent, medium-quality fixed income securities. The fund also invests to a limited extent in non-investment-grade and fixed income securities, mainly short-term and intermediate-term corporate bonds.

This Sector – Inv Grade Bond-Short product has a history of positive total returns for over 10 years. Specifically, the fund's returns over the first quarter and YTD benchmarks are 11.1% and 2.2%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

VFSTXhas an annual expense ratio of 0.20%, which is below the category average of 0.75%.

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