When it comes to the best Vanguard mutual funds, you might think the universe of offerings is so large that it's impossible to pick the right options.
We wouldn't blame you: Vanguard is one of the world's leading asset managers, with a staggering $7 trillion under management.
That's in part because of the firm's commitment to providing simple, low-cost mutual fund offerings to the general public instead of complicated and costly offerings that don't deliver.
Ample research underscores the perils of so-called "active" management. The latest proof comes from Refinitiv Lipper, whose data shows that about 66% of active managers of equities funds did not beat their respective benchmarks in 2023.
With numbers like that, boring old index funds tied to a fixed list of stocks seems to be the way to go.
How to choose the best Vanguard mutual funds
The following nine Vanguard mutual funds are representative of the value in this strategy, spanning all the major asset classes to provide something for everyone.
This breadth was a major consideration as we compiled this list of the best Vanguard mutual funds, making sure to find useful, low-cost options that align with a variety of investing goals.
And lest you think mutual funds are more expensive than their exchange-traded sisters, all the options here charge less than 0.30% for annual expenses – or $30 or less on every $10,000 you invest.
They are all multibillion-dollar offerings. And, with the exception of one active fund, they're all passive index funds. But that one oddball has been around for almost 100 years, so it is at least worth mentioning.
Without further ado, here are the nine best Vanguard mutual funds to buy now. Data is as of October 17. Fund yields represent the trailing 12-month yield, which is a standard measure for equity funds, unless otherwise noted. Minimum initial investment for all funds listed here is $3,000.
Vanguard 500 Index Fund Admiral Shares
- Fund category: Large blend
- Assets under management: $552.8 billion
- Yield: 1.3%
- Expense ratio: 0.04%, or $4 annually for every $10,000 invested
The Vanguard 500 Index Fund Admiral Shares (VFIAX, $539.32) is the second-largest Vanguard fund strategy, with "only" about $1.3 trillion in total net assets.
As the name implies, this is a low-cost index fund benchmarked to the flagship S&P 500 Index of the top 500 publicly traded U.S. corporations. Holdings should be familiar to you – blue chip stocks Microsoft (MSFT), Nvidia (NVDA) and Apple (AAPL) are just a few of the leaders here.
There are tons of other S&P 500 index funds out there, so this offering isn't particularly unique. But, like many of the other best Vanguard mutual funds, VFIAX offers massive scale and a very low cost structure that is hard to match, even when you take into account the generally cheaper cost structure of exchange-traded funds out there.
That includes a Vanguard ETF, too, by the way. The Vanguard S&P 500 ETF (VOO) follows the same strategy but shaves a hundredth of a percentage point off the already low fee structure for an annual expense ratio of 0.03%.
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Vanguard Total Stock Market Index Fund Admiral Shares
- Fund category: Large blend
- Assets under management: $401.7 billion
- Yield: 1.3%
- Expense ratio: 0.04%
The Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX, $140.09) is Vanguard's simple solution for investors who want exposure to the totality of the U.S. stock market in a single mutual fund investment.
All told, there are nearly 3,700 different stocks that make up this portfolio, representing all sectors of the domestic marketplace and all sizes of companies.
This total stock market mutual fund is not, however, equally weighted across these thousands of individual stocks. In reality, it's biased toward the biggest names, with trillion-dollar tech giants Apple and Microsoft representing about 12% of the entire fund.
While this worked out well for VTSAX amid tech sector's recent outperformance, it could swing the other way if a rotation into other sectors accelerates.
Although VTSAX is a bit top heavy, it's hard to argue with the simplicity of this fund or its scale, which is why it's one of the best Vanguard mutual funds to buy. There is currently nearly $2 trillion – yes, trillion with a "T" – invested across the various versions of the Vanguard Total Stock Market funds out there.
It's not particularly sophisticated, but you'll be in good company with other investors who think long-term, buy-and-hold index funds are the way to go.
The Vanguard Total Stock Market Index Fund Admiral Shares is also offered as an ETF, the Vanguard Total Stock Market ETF (VTI).
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Vanguard Dividend Appreciation Index Fund Admiral Shares
- Fund category: Large blend
- Assets under management: $16.0 billion
- Yield: 1.7%
- Expense ratio: 0.08%
Investors seeking stability among broad market uncertainty should consider dividend-paying stocks. The best dividend stocks have significant and regular profits, and they are committed to consistently delivering some of that cash to their shareholders.
"Companies with long histories of annual dividend growth also offer some peace of mind," writes Dan Burrows, senior investing writer at Kiplinger.com, in his feature "Best Dividend Stocks to Buy for Dependable Dividend Growth."
Burrows adds that "when a firm manages to raise its dividend year after year, through recession, war, market crashes and more, it's making a powerful statement about both its financial resilience and its commitment to shareholders."
The Vanguard Dividend Appreciation Index Fund Admiral Shares (VDADX, $54.56) is one of the best Vanguard mutual funds to invest with this strategy in mind. As the name implies, the mutual fund is composed of stocks with track records of not just paying dividends over time, but also growing them for steady appreciation.
The focused list of about 340 total stocks includes oil major Exxon Mobil (XOM), semiconductor stock Broadcom (AVGO) and consumer staples giant Procter & Gamble (PG) to name a few. These are all rock-solid companies with staying power and shareholder-friendly initiatives.
The Vanguard Dividend Appreciation Index Fund Admiral Shares is also offered as an ETF, the Vanguard Dividend Appreciation ETF (VIG).
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Vanguard Health Care Fund Investor Shares
- Fund category: Health
- Assets under management: $7.4 billion
- Yield: 0.7%
- Expense ratio: 0.35%
You might think that Vanguard mutual funds are just general index funds across broad swaths of the market. However, the Vanguard Health Care Fund Investor Shares (VGHCX, $225.72) shows that these products come with a sector focus, too.
There are only about 100 holdings in this growth-oriented fund, but it's a who's who of the best healthcare stocks, led by weight-loss drug manufacturer Eli Lilly (LLY), insurance giant UnitedHealth Group (UNH) and Big Pharma mainstay AstraZeneca (AZN).
One of the sad realities of American healthcare is the for-profit nature of the sector and the ever-increasing costs of medicine. By some estimates, total healthcare spending has more than doubled since 2000. For investors, VGHCX can be used as a hedge against these increasing expenses.
And, should a recession occur, healthcare stocks could create a ballast for portfolios given their defensive characteristics.
VGHCX is not to be mistaken with its sister "Admiral Shares" fund that has a slightly lower expense ratio but a fairly prohibitive investment minimum of $50,000.
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Vanguard Real Estate Index Fund Admiral Shares
- Fund category: Real estate
- Assets under management: $22.5 billion
- Yield: 3.7%
- Expense ratio: 0.13%
The Vanguard Real Estate Index Fund Admiral Shares (VGSLX, $137.22) is another sector fund, with a real estate focus.
VGSLX is music to the ears of many investors who aren't particularly impressed with the yield on other offerings on this list of the best Vanguard mutual funds. Some of the biggest paydays on Wall Street come from the best REITs, or real estate investment trusts.
That's because this special class of company is granted operational tax breaks to accommodate the capital-intensive nature of real estate and property management. But, in exchange, REITs must deliver 90% of taxable income back to their shareholders via dividends.
There are around 150 different REITs in this top Vanguard mutual fund. These include residential and office plays along with industrial warehouse giant Prologis (PLD) and telecom tower operator American Tower (AMT) to add some variety. And, best of all, the 3.7% yield offered by VGSLX is three times the current yield of the S&P 500.
The Vanguard Real Estate Index Fund Admiral Shares is also offered as an ETF, the Vanguard Real Estate ETF (VNQ).
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Vanguard Total International Stock Index Fund Admiral Shares
- Fund category: Foreign large blend
- Assets under management: $79.7 billion
- Yield: 2.8%
- Expense ratio: 0.12%
Most investors who want a fully diversified portfolio should know that in addition to covering stocks of different sizes and in different sectors, they should consider stocks in different geographies, too.
That's where the Vanguard Total International Stock Index Fund Admiral Shares (VTIAX, $34.04) mutual fund comes in.
This Vanguard investment is an "ex-U.S." mutual fund, designed specifically to exclude any companies headquartered in the United States.
Not only does that provide exposure to international stocks that many investors are looking for. It also allows for an easy overlay that ensures you don't have redundant domestic equity holdings across your mutual funds. This makes it one of the best Vanguard mutual funds to buy.
Though global in nature, there are plenty of familiar names on the list of more than 8,600 total companies. Taiwanese chipmaker Taiwan Semiconductor Manufacturing Co. (TSM) and Danish pharmaceutical giant Novo Nordisk (NVO) are at the top of the list.
Of course, you'll also get plenty of unsung international stocks that aren't easy to buy on U.S. exchanges as you move further down the list.
As for the regional breakdown, 15.5% of assets are in Japan, followed by 9.5% in the U.K., 7.9% in China and 7.2% in Canada.
The Vanguard Total International Stock Index Fund Admiral Shares is offered as an ETF, the Vanguard Total International Stock ETF (VXUS).
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Vanguard Emerging Markets Stock Index Fund Admiral Shares
- Fund category: Diversified emerging markets
- Assets under management: $17.7 billion
- Yield: 2.5%
- Expense ratio: 0.14%
Investing in so-called "developed" markets like Japan and the U.K. is all well and good, but many investors are looking for the growth potential of emerging market stocks when they look overseas.
If you're interested in these high-growth, but higher-risk international stocks, consider the Vanguard Emerging Markets Stock Index Fund Admiral Shares (VEMAX, $39.23) mutual fund.
As is typical of the names featured on this list of the best Vanguard mutual funds to buy, this index fund is a cheap and simple option that takes the guesswork out of what some might think to be a complicated strategy.
VEMAX offers a single, simple holding, diversified across some 5,900 stocks. Top stocks include the obvious leaders like China-based tech giants Alibaba Group Holdings (BABA) and Tencent Holdings (TCEHY) but also many emerging market growth opportunities you may never have heard of, like Beijing-based shopping platform Meituan.
Top countries represented are China (29.2% of assets), India (24%), Taiwan (19.5%) and Brazil (4.8%).
The Vanguard Emerging Markets Stock Index Fund Admiral Shares is also offered as an ETF, the Vanguard FTSE Emerging Markets ETF (VWO).
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Vanguard Total Bond Market Index Fund Admiral Shares
- Fund category: Immediate core bond
- Assets under management: $102.4 billion
- SEC yield: 4.1%*
- Expense ratio: 0.05%
Looking beyond stocks, the once-sleepy bond market is seeing renewed interest thanks to the fact that yields in many investment-grade bonds are higher than what's being offered by many top dividend stocks.
The Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX, $9.72) is not just the best Vanguard mutual fund to offer diversified exposure to the bond market. It's also one of the biggest and most established offerings across any asset manager.
VBTLX boasts an enormous portfolio of more than 11,000 "investment-grade" bonds, meaning debt securities of high-credit quality from corporations or government entities that are at lower risk of default. That means you get a lot of individual bonds to provide diversification, but also high standards to offer peace of mind.
To be clear, the bond market is more stable than the stock market, but this can cut both ways. It's almost impossible to imagine bonds delivering a quick 10% or 20% in principal gains, while the stock market has had many windows of time where it's been able to pull that off.
Still, if you prefer reliable income instead of higher risk investments, this is one of the best Vanguard mutual funds to layer into your portfolio.
The Vanguard Total Bond Market Index Fund Admiral Shares is also offered as an ETF, the Vanguard Total Bond Market ETF (BND).
* SEC yield reflects the interest earned after deducting fund expenses for the most recent 30-day period and is a standard measure for bond and preferred-stock funds.
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Vanguard Wellington Fund Investor Shares
- Fund category: Allocation (50% to 70% equity)
- Assets under management: $13.7 billion
- Yield: 2.1%
- Expense ratio: 0.26%
Founded in 1929, the Vanguard Wellington Fund Investor Shares (VWELX, $46.55) is Vanguard's oldest mutual fund and Wall Street's oldest "balanced" fund.
That means it doesn't go all in on either stocks or bonds but instead offers a blended exposure with about two-thirds of the portfolio in publicly traded stocks and the other third or so in fixed-income markets.
Top equity positions are large corporations like Dow Jones stocks Microsoft and Apple. On the bond side, the portfolio includes "agency" mortgage bonds from government backed entity Fannie Mae as well as investment-grade corporates from big banks JPMorgan Chase (JPM) and Wells Fargo (WFC), among others.
All told there are around 70 total stocks and about 1,400 individual bonds in this portfolio. And they're hand-picked, making this the only "active" fund on the list of the best Vanguard mutual funds to buy.
Just keep in mind, however, that a balanced portfolio across asset classes is no guarantee of profitability. Wellington is up about 14% year to date to underperform the vanilla S&P 500 stock market index. Still, if you want a one-stop holding for both stocks and bonds, this Vanguard mutual fund is a very popular and respected option.
There's also a Vanguard Wellington Fund Admiral Shares (VWENX) version, with a more prohibitive $50,000 minimum investment but a lower cost structure.
Learn more about VWELX at the Vanguard provider site.
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