|Expense Ratio (net)||0.04%|
|Last Cap Gain||0.00|
|Morningstar Risk Rating||Average|
|Beta (3Y Monthly)||1.00|
|5y Average Return||N/A|
|Average for Category||N/A|
|Inception Date||Nov 13, 2000|
[Editor's note: This story was previously published in October 2018. It has since been updated and republished. Symbols of most of the Vanguard mutual funds were updated from the original column to reflect Vanguard's change to the Admiral series of mutual funds which have lower fees. ]Vanguard index funds have long been at the forefront of passive investing and are favorites among the buy-and-hold community for building long-term portfolios.In terms of assets, two of Vanguard's funds, Vanguard Total Stock Market Index (MUTF:VTSMX) and Vanguard Total Bond Market Index (MUTF:VBTLX), are respectively among the largest stock funds and bond funds in the investment universe.InvestorPlace - Stock Market News, Stock Advice & Trading TipsWhen investors say they want to build a "set-it-and-forget-it" portfolio or a "lazy" portfolio, they look to Vanguard's broad selection of dirt-cheap mutual funds to do the building.There are many ways to construct a portfolio, but a timeless approach is to use a core and satellite structure, which consists of one or two core holdings that receive the highest allocations and usually three to five satellite holdings that receive smaller allocations. * 7 Healthy Dividend Stocks to Buy for Extra Stability With that backdrop in mind, here are seven Vanguard index funds to build a complete portfolio: Vanguard 500 Index (VFIAX)Expenses: 0.04% Minimum Investment: $3,000To get your portfolio started with Vanguard index funds, there's arguably no better choice than Vanguard's flagship index fund, Vanguard 500 Index (MUTF:VFIAX).Although many investors and advisors might argue that the Total Stock Market fund is a better choice for a core holding because of its broader diversity, VFIAX is a smart choice for investors building a portfolio to include several funds.Since VFIAX only includes roughly the top U.S. stocks by market cap, such as top holdings Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), and Amazon (NASDAQ:AMZN), investors can build around this fund with another fund that holds small- and mid-cap stocks. Vanguard Extended Market Index (VEXAX)Expenses: 0.08% Minimum Investment: $3,000A perfect compliment to VFIAX is Vanguard Extended Market Index (MUTF:VEXAX), which will complete your exposure to the U.S. stock market.VEXAX tracks the S&P Completion Index, which includes small- and mid-cap U.S. stocks. Together with Vanguard's S&P 500 Index fund, an investor will capture the entire U.S. stock market. Since VEXAX provides more exposure to small- and mid-cap stocks than a total stock fund would provide, it introduces a combination of higher potential long-term returns and greater diversity to a portfolio. * 7 Healthy Dividend Stocks to Buy for Extra Stability Top holdings for VEXAX include Tesla (NASDAQ:TSLA), ServiceNow (NYSE:NOW), and Worldpay (NYSE:WP). Vanguard Total Bond Market Index (VBTLX)Expenses: 0.05% Minimum Investment: $3,000Arguably the best mutual fund to buy for a fixed-income core holding, Vanguard Total Bond Market Index (MUTF:VBTLX) is an outstanding way to get cheap exposure to the entire U.S. bond market.VBTLX tracks the Bloomberg Barclays U.S. Aggregate Float Adjusted Index, which includes over 8,500 U.S. bonds across the spectrum of short-, intermediate-, and long-term in duration, and multiple categories of bonds, including corporate, municipal and U.S. Treasury issues.With such broad exposure to the bond market, combined with the low expenses of just 0.05%, it's no wonder that VBTLX is the largest bond fund in the world, as measured by assets under management. Vanguard Total International Stock Index Fund (VTIAX)Expenses: 0.11% Minimum Investment: $3,000To cover the stock market outside of the U.S., you can get the job done with just one Vanguard index fund -- Vanguard Total International Stock Index (MUTF:VTIAX).This international stock index fund does cover the full range of market capitalization; however, it is cap-weighted, which means the top holdings are large-cap stocks, such as Royal Dutch Shell (NYSE:RDS.A), Nestle (OTCMKTS:NSRGY) and Tencent Holdings (OTCMKTS:TCEHY). Vanguard FTSE Social Index (VFTSX)Expenses: 0.18% Minimum Investment: $3,000If you're looking for alternative equity core holding or a compliment to your existing stock funds, Vanguard FTSE Social Index (MUTF:VFTSX) is a good choice, especially for the socially conscious investor.On the market since 2000, VFTSX tracks the FTSE4Good US Select Index, which includes over 400 mid- and large-cap U.S. stocks like AAPL, MSFT and AMZN. * 7 Healthy Dividend Stocks to Buy for Extra Stability Investors who may be attracted to VFTSX are those that want to buy stocks of companies that have been screened for certain social, human rights and environmental criteria. However, VFTSX can be attractive to all investors for its low expenses and long-term returns that have historically outpaced the broader stock market indices. Vanguard Real Estate Index (VGSLX)Expenses: 0.12% Minimum Investment: $3,000To add diversity to a portfolio, a quality sector fund like Vanguard Real Estate Index (MUTF:VGSLX) is a smart choice.Stocks in the real-estate sector as a whole do not have a high correlation, in terms of price movement, to the major market indices, such as the S&P 500 Index. This makes VGSLX a good satellite holding in a diversified portfolio.VGSIX tracks the MSCI US Investable Market Real Estate 25/50 Index, which includes 184 holdings, most of which are REITs like American Tower Corp (NYSE:AMT), Simon Property Group (NYSE:SPG) and Crown Castle International (NYSE:CCI).As of this writing, Kent Thune did not personally hold a position in any of the aforementioned securities, although he held VBTLX in some client accounts. Under no circumstances does this information represent a recommendation to buy or sell securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Smart Money Stocks to Buy Now * The 10 Best Cheap Stocks to Buy Right Now * 7 Restaurant Stocks to Watch in 2019 Compare Brokers The post 6 Vanguard Index Funds for a Complete Portfolio appeared first on InvestorPlace.
The investment community lost a giant Wednesday when John Bogle, the founder of Vanguard, passed away at 89. Bogle kick-started the index fund revolution, introducing the first such fund, which created an industry that now has $1.5 trillion in assets under management. "Mr. Bogle had legendary status in the American investment community, largely because of two towering achievements: He introduced the first index mutual fund for investors and, in the face of skeptics, stood behind the concept until it gained widespread acceptance; and he drove down costs across the mutual fund industry by ceaselessly campaigning in the interests of investors. Vanguard, the company he founded to embody his philosophy, is now one of the largest investment management firms in the world," according to Vanguard. Bogle, a native Pennsylvanian and Princeton alumnus, did more for everyday investors than any fund manager, investor or Wall Street maven before or after him. Whether or not index fund investors own Vanguard funds, they are benefiting from Bogle's efforts to lower costs. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Known as the "Vanguard effect" in index fund circles, the firm's emphasis on keeping costs low so investors can keep more of their returns is a main reason why so many rival fund issuers offer low fees on index funds and exchange traded funds (ETFs). Today, Vanguard manages over $5 trillion in assets and the average annual fee of 0.11% on its funds is a big reason why the non-profit company is one of the world's largest asset managers. * 7 Retail Stocks to Buy for the Rise of Menswear Here are seven Vanguard index funds that Bogle himself probably would have liked. ### Vanguard 500 Index Fund -- Admiral Shares (VFIAX) Expense Ratio: 0.04% per year, or $4 on a $10,000 investment The Vanguard 500 Index Fund -- Admiral Shares (MUTF:VFIAX), an S&P 500 tracking fund, is the index fund that started it all. Today, Vanguard's S&P 500 index funds and ETFs have over $400 billion in combined assets under management, according to issuer data. To get the benefit of this index fund's low fee, investors are required to make a minimum investment of $3,000. Minimum investments are required on many Vanguard index funds, but that can be avoided by embracing the comparable ETFs, of which Vanguard has many to go along with its index funds. The Vanguard S&P 500 ETF (NYSEARCA:VOO), one of the world's largest ETFs, has no minimum investment requirement and shares that 0.04% expense ratio. VFIAX holds 509 stocks with a median market value of $99.1 billion. ### Vanguard Total Stock Market Index -- Admiral Shares (VTSAX) Expense Ratio: 0.04% While the aforementioned VFIAX started the index fund revolution, the Vanguard Total Stock Market Index - Admiral Shares (MUTF:VTSAX) is a juggernaut in its own right. With its low fee and massive roster of holdings, this index fund and its ETF equivalent are perfect ideas for novice investors. * 7 Stocks to Buy as the Dollar Weakens VTSAX's low annual fee makes it 96% cheaper than the average fees of competing strategies, a trait that likely explains the whopping $672.2 billion in assets across those index fund's various share classes. Speaking of big, VTSAX holds over 3,500 domestic stock, putting the "broad" in broad market fund. ### Vanguard Total Bond Market -- Admiral Shares (VBTLX) Expense Ratio: 0.05% Index funds helped democratize fixed-income investing and the Vanguard Total Bond Market -- Admiral Shares (MUTF:VBTLX) is one of the leaders of that charge. Thanks to index funds and passive ETFs, investors can access broad baskets of bonds at reasonable costs. VBTLX is a domestically focused fund, and its asset mix usually somewhere around 70% U.S. government debt and 30% investment-grade, domestic corporate bonds. Home to nearly 8,600 bonds, one of the largest rosters in the fixed income index fund space, VBTLX features little in the way of credit risk as essentially all of its holdings carry investment-grade ratings. This index fund's holdings have an average maturity of 8.3 years and an average duration of 5.9 years. VBTLX has a 12-month yield of 2.8%. ### Vanguard Value Index Fund -- Admiral Shares (VVIAX) Expense Ratio: 0.05% Among index funds focusing on a particular investment factor, value funds are among the most popular. The Vanguard Value Index Fund -- Admiral Shares (MUTF:VVIAX) offers cost-efficient exposure to a broad basket of U.S. large caps with the value designation. Factor funds usually carry higher fees than cap-weighted counterparts, but VVIAX is one of the cheaper value funds on the market. This index fund holds 344 stocks with a median market capitalization of $89.3 billion. Its price-to-earnings ratio of 14.3x reflects a modest discount to the S&P 500 and other broad domestic equity benchmarks. * 10 Growth Stocks With the Future Written All Over Them As is the case with many value index funds, this Vanguard fund is heavily allocated to the financial services sector. That sector accounts for 23.5% of VVIAX's weight. The healthcare and technology sectors combine for over 28% of the fund's weight. ### Vanguard Mid-Cap Index Fund -- Admiral Shares (VIMAX) Expense Ratio: 0.05% Index funds have their roots in domestic large caps, but the industry evolved to bring cost-effective exposure to smaller stocks to investors. That includes mid caps and the Vanguard Mid-Cap Index Fund -- Admiral Shares (MUTF:VIMAX), which is cheaper than 95% of competing funds, according to Vanguard data. Long-term investors should consider mid caps. "The S&P Mid-Cap Index is the winner for 25-year total return, by a mile. The mid-caps haven't taken home the prize for any of the other periods. However, they have beaten the S&P 500 for all the listed periods of 10 years or more," according to MarketWatch. VIMAX holds 366 stocks with a median market value of $12.5 billion, which is above the $10 billion mark that signals the official definition of mid-cap territory. This index fund devotes 20.5% of its weight to financial stocks while industrial and technology names combine for over 34%. ### Vanguard Short-Term Corporate Bond Index Fund -- Admiral Shares (VSCSX) Expense Ratio: 0.07% When the Federal Reserve raise interest rates, as it did four times last year, investors often move to shorter duration bonds and the related index funds. The issue with trimming interest rate risk is that investors' income streams can be hit by that move. One way of ameliorating that scenario is with short-term corporate bond index funds, such as the Vanguard Short-Term Corporate Bond Index Fund -- Admiral Shares (MUTF:VSCSX). VSCSX yields 2.7% and 90% cheaper than competing short-term corporate bonds funds. * 8 Dividend Stocks With Growth on the Horizon Credit risk is minimal with this index fund as almost 87% of VSCSX's 2,200-plus holdings are rated A or BBB. The index has an average duration of 2.7 years. ### Vanguard Total World Stock Index Fund -- Investor Shares (VTWSX) Expense Ratio: 0.19% Prior to the advent of index funds, investors looking for international equity exposure were forced to stock pick or embrace high-fee, actively managed mutual funds. Today, the universe of international equity index funds is chock full of funds appropriate for rookie and cost-conscious investors alike. The Vanguard Total World Stock Index Fund -- Investor Shares (MUTF:VTWSX) is one of the leading index funds in that group. As its name implies, VTWSX is a total market fund, meaning it offers exposure to a broad swath of regions and stocks. VTWSX, which holds over 8,100 stocks, has some emerging markets exposure to the tune of 9.9%, but the fund is dominated by developed markets. While VTWSX uses different terminology, it is essentially a global index fund, meaning its largest geographic exposure is the U.S. Japan, the U.K. and China combine for almost 17% of the fund's weight. Global and international index funds usually feature higher fees than counterparts focusing on domestic stocks, but VTWSX is still less expensive than 83% of rival funds. As of this writing, Todd Shriber did not own any of the aforementioned securities. ### More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Companies Apple Should Consider Buying * 7 Beaten-Up Housing Stocks Due for a Bounce Back * Take Buffett's Advice: 5 Vanguard Funds to Buy Compare Brokers The post The Bogle Way: 7 Index Funds for Passive Investors appeared first on InvestorPlace.
Investing icon Warren Buffett advises investors to stash 90% of their money in a Standard & Poor's 500-stock index fund and keep the rest in short-term government bonds. That's a good start for investors who want to keep things simple, but it limits your investments to large U.S. companies. So today, we'll show you how the best Vanguard index funds can add more portfolio diversification while still keeping your strategy simple. Rather than help to pay the huge salaries of high-powered fund managers, investors can buy index funds, which simply aim to mirror the returns of their benchmark indexes. Why? Because roughly two-thirds of actively managed funds fail to match or beat their indexes. It's not that fund managers are stupid or incompetent. It's because picking mispriced stocks is incredibly difficult. It's not surprising that the average fund lags its benchmark index by just about what it charges investors in annual expenses (a little more than 1%). Vanguard - whose founder, John Bogle, just passed away - invented the index fund and still does the best job operating them. Vanguard index fund fees are always, if not the lowest, within a few basis points (a basis point is one one-hundredth of a percent) of the lowest. What's more, its managers are skilled at running index funds, so they don't stray far from the performance of the index they track - a job that actually sounds a lot easier than it is. Here are six of the best Vanguard index funds you can use to build a solid portfolio. This includes a general suggestion for a percentage of your assets to allocate to each one. And if you prefer exchange-traded funds to mutual funds, that's OK too - I'll offer up the ETF version of each fund. ### SEE ALSO: The 27 Best Mutual Funds in 401(k) Retirement Plans
Vanguard founder John C. Bogle died Jan. 16 at age 89. But "Saint Jack," who built the index fund from virtually nothing into a $5 trillion empire and was a boon to individual investors, had already cheated death several times before.
[Editor's note: This story was last updated in February 2016. It has since been updated and republished.] Vanguard should probably be thanking Warren Buffett. In Berkshire Hathaway's (NYSE:BRK.B) 2014 shareholders letter, Buffett mentioned Vanguard funds in a big way. Specifically, he recommended that the cash left to his wife be invested 10% in short-term government bonds and 90% in a very low-cost S&P 500 index fund. Not just any index fund mind you, but a Vanguard fund in particular. InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 A-Rated Stocks the Smart Money Is Piling Into Whether it be exchange-traded funds (ETFs) or mutual funds, the Oracle of Omaha believes Vanguard funds are the way to go. With that in mind, I've put together a portfolio of two ETFs, two mutual funds and a fifth wildcard. The resulting portfolio should be appropriate for Buffett's wife -- or anyone else, for that matter. ### Vanguard Funds Mutual Fund #1 -- Vanguard 500 Index Fund Admiral Shares (VFIAX) Allocation: 50% of Portfolio 10-year performance: 7.88% The goal here is to keep costs to a minimum while generally sticking to Buffett's hypothesis when it comes to his wife's investments. In that case, it makes more sense for the S&P 500 investment to be a mutual fund rather than an ETF (although Vanguard Funds do offer commission-free ETFs) to avoid paying commissions on the largest segment of the portfolio. The Vanguard 500 Index Fund Admiral Shares (VFIAX) charge an annual expense ratio of just 0.05%. Your fees would amount to a mere $25 on a $50,000 portfolio. That's hard to beat, and Buffett knows it. The largest holdings in this fund include Apple (NASDAQ:AAPL), Exxon Mobil (NYSE:XOM) and Google (NASDAQ:GOOGL, NASDAQ:GOOG). The minimum investment is $10,000. EDITOR'S NOTE: Corrects to $25 in annual expenses. ### Vanguard Funds Mutual Fund #2 -- Vanguard Mid-Cap Index Fund Admiral Shares (VIMAX) Allocation: 20% of Portfolio 10-year performance: 14.9% The VFIAX covers off the large-cap portion of the portfolio quite nicely. While Buffett might not be fond of mid-cap stocks being added to the mix, evidence suggests mid-caps outperformed large-cap stocks over a four-year period between 2009 and 2013. In fact, John Hancock published a report in 2012 that cautions investors about underweighting mid-caps because of an assumption that a large-cap fund combined with a small-cap fund will do the job. That's simply not the case. Mid-cap stocks tend to provide an attractive combination of risk and reward. For this reason, I recommend the Vanguard Mid-Cap Index Fund Admiral Shares (VIMAX), which tracks the CRSP Mid Cap Index, an index composed of stocks that fall between the top 70%-85% of investable market capitalization. The average company in the index has a market cap of $8.2 billion. * 10 Companies That Could Post Decelerating Profits They're big enough to survive an economic hit but small enough to still be growing. With an expense ratio of 0.1%, this entry on our list of Vanguard funds is giving you safety and performance in one. Top holdings include Forest Laboratories (FRX) and Illumina (ILMN). ### Vanguard Funds ETF #1 -- Vanguard FTSE All-World ex-US Small-Cap ETF (VSS) Allocation: 10% of Portfolio 5-year performance: 1.8% Although I just said mid-caps are a key part of any portfolio and tend to outperform small caps while utilizing less risk, there is always a place for small caps in your portfolio. That's especially true when the two previous picks from Vanguard Funds are almost 100% invested in the U.S. with virtually no international exposure. That's just not smart when you consider how strong European stocks have been since last August. For this reason, a little bit of love outside America makes total sense. My recommendation is to go with the Vanguard FTSE All-World ex-US Small-Cap ETF (VSS), a fund that tracks the performance of the FTSE Global Small Cap ex US Index, which consists of approximately 3,050 stocks in 46 countries including the United Kingdom, Canada, Japan and Taiwan. Investing in both developed and emerging markets, the fund gives you good exposure to some of the world's future stars at an annual expense ratio of just 0.2%. With such low fees, it's no wonder Vanguard Funds has $2.2 billion invested in this ETF. ### Vanguard Funds ETF #2 -- Vanguard Short-Term Government Bond ETF (VGSH) Allocation: 10% of Portfolio 5-year performance: 0.73% Buffett recommends that 10% of his wife's portfolio go to short-term government bonds. Vanguard Funds has an ETF that does exactly that. The Vanguard Short-Term Government Bond ETF (VGSH) invests in investment-grade U.S. government bonds with average maturities between one and three years. The risk, on a scale of one to five, is one -- meaning this Vanguard ETF is for conservative investors looking for stable share prices. * 7 Beaten-Up Housing Stocks Due for a Bounce Back And with an expense ratio of 0.12%, this ETF should give you peace of mind for your short-term needs. ### Vanguard Funds Wildcard -- Vanguard Consumer Staples ETF (VDC) Allocation: 10% of Portfolio 10-year performance: 11.9% On this final piece of the puzzle, I'm going defensive. The mutual fund version of the S&P 500 has less than 10% invested in consumer staples' stocks. I mean to remedy that by putting the final 10% in the Vanguard Consumer Staples ETF (VDC), a collection of 109 household names including Procter & Gamble (NYSE:PG) and Coca-Cola (NYSE:KO). Since its inception in 2004, VDC has had but one year of negative annual total returns, and that was in 2008 when it experienced a 17% decline -- 20 percentage points better than the S&P 500. When the you-know-what hits the fan, you'll be glad you own this particular low-cost ETF (with a 0.10% expense ratio) from Vanguard Funds. It seems the "keep it simple" rule holds true, and Warren Buffett is the No. 1 follower. As of this writing, Will Ashworth did not own a position in any of the aforementioned securities. ### More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Growth Stocks With the Future Written All Over Them * 7 Reasons Why Buffett's Bet on Apple Stock Is a Good One * 10 Companies That Could Post Decelerating Profits Compare Brokers The post Take Buffett's Advice: 5 Vanguard Funds to Buy appeared first on InvestorPlace.
HOWARD GOLD'S NO-NONSENSE INVESTING When I look back over the past 100 years in investing, five giants stand out: Warren Buffett, whose genius at individual stock picking made him the Mozart of investing; George Soros, who showed how individual money managers with nerves of steel could move global markets; John Templeton, who taught Americans there was a whole world to invest in beyond the U.
We discussed how to choose between ETFs and mutual funds, zero fee funds, staying focused during market volatility and strategies for rising rates.
A version of this article was published in the June 2018 issue of Morningstar FundInvestor. There's some evidence that U.S. companies are deleveraging, but overall corporate debt remains on par with levels during the 2007-09 financial crisis. According to the Federal Reserve, total U.S. corporate debt was equal to 45.2% of U.S. gross domestic product in 2018's first quarter, down a tenth of a percentage point from six months prior.
With many foreign stock index funds turning in mediocre performance over the past decade, investors may be wondering: Is the case for indexing foreign stocks dead? The primary thesis for investing with index funds is well-known and accepted. Investors get a diversified portfolio of stocks at a low expense ratio, and low fees should translate into superior performance relative to the more expensive, actively managed alternatives in a given asset class.
The number of complex investment strategies available to investors has never been greater. This all-knowing market mechanism makes it difficult to identify stocks that are mispriced, so the logical conclusion is that you should simply own the index and take advantage of the market's long-term aggregate growth.