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5 Top-Performing Vanguard Funds of 2019

Zacks Equity Research

Founded on May 1, 1975, Vanguard is one of the largest investment companies worldwide. The company, headquartered in Valley Forge, Pennsylvania, offers a wide range of low-cost mutual funds, exchange-traded funds, advice and related services to investors. The company has 15 offices globally where about 17,600 employees (as of Aug 31, 2019) help investors in making the right investment choices.

Vanguard’s Journey in 2019

Vanguard’s assets under management as of Aug 31, 2019 were about $5.6 trillion. A major reason for this striking figure is the superior performance of Vanguard’s investments.

In fact, the company’s proven investment approach and client-first culture has been instrumental in boosting its growth. This client-first culture has allowed the company to offer funds at prices that are constantly among the lowest in the industry. In 2018, the asset-weighted average expense ratio of Vanguard’s funds was 0.10% against the industry's corresponding average (minus Vanguard) of 0.58%.

As of the same date, the fund house had about 190 U.S. funds (including variable annuity portfolios) and about 220 additional funds in non-U.S. markets.  

An advantage of investing in Vanguard’s mutual funds is that they are not only focused on U.S. markets, but also diversify well across various sectors.

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

Technology Select Sector SPDR (XLK) has gained 47.8% in the past year, turning up as the best performer among the 11 S&P 500 sectors. The financial and healthcare sectors have also registered one-year annualized returns of 29.4% and 19.9%, respectively.

In fact, speaking of the top-performing mutual funds from the fund house in the last one year, Vanguard U.S. Growth Fund Investor Shares (VWUSX) gained the most with 33.4% returns, followed by Vanguard Capital Value Fund Investor Shares (VCVLX) and Vanguard Mid-Cap Growth Fund Investor Shares VMGRX with returns of 32.9% and 32.1%, respectively.

5 Best Vanguard Funds

We have, therefore, selected five Vanguard mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy). In addition, the minimum initial investment for these funds is within $5,000.

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 Mid-Cap Growth Fund Investor Shares aims for long-term capital appreciation. The fund invests the majority of its assets in securities of medium-capitalization companies. VMGRX invests only in those companies that the fund advisor believes has the best potential for growth in the future.

This Zacks sector – Mid Cap Growth has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

VMGRX has an annual expense ratio of 0.36%, which is below the category average of 1.17%. It has returned 32.1% over a year. VMGRX has a minimum initial investment of $3000.

Vanguard Diversified Equity Fund Investor Shares VDEQX aims for long-term capital growth and dividend income. The fund invests across all market capitalizations and mostly in securities of U.S.-based companies.VDEQX is a “fund of funds,” which means that the fund invests in a diversified group of other Vanguard equity mutual funds, instead of investing in individual securities.

This Zacks sector – Large Cap Blend has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

VDEQX has an annual expense ratio of 0.36%, which is below the category average of 1.06%. It has returned 31.5% over a year. VDEQX has a minimum initial investment of $3000.

Vanguard Explorer Fund Investor Class VEXPX seeks long-term capital growth. The fund mostly invests in stocks of small- and medium-capitalization companies. It uses multiple investment advisors.

This Zacks sector – Small Cap Growth has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

VEXPX has an annual expense ratio of 0.46%, which is below the category average of 1.23%. It has returned 31.3% over a year. VEXPX has a minimum initial investment of $3000.

Vanguard Dividend Growth Fund Investor Shares VDIGX aims for increasing income over time and capital appreciation. The fund mostly invests in stocks that offer current dividends. It invests across several sectors for a diversified portfolio.

This Zacks sector – Large Cap Blend has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

VDIGX has an annual expense ratio of 0.22%, which is below the category average of 0.94%. It has returned 30.9% over a year. VDIGX has a minimum initial investment of $3000.

Vanguard Selected Value Fund Investor Shares VASVX aims for long-term capital growth and income. The fund mostly invests in stocks of medium-capitalization companies. It invests in stocks that are considered undervalued by the advisor. These stocks usually have above-average dividend yields.

This Zacks sector – Mid Cap Value has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

VASVX has an annual expense ratio of 0.33%, which is below the category average of 1.09%. It has returned 29.5% over a year. VASVX has a minimum initial investment of $3000.

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