5 Actively Managed Vanguard Funds to Own for the Long Haul

Passive investing isn't the only card up Vanguard's sleeve. These actively managed funds cover a variety of investment strategies and have low fees to boot.

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Vanguard funds are top of mind when it comes to index investing. After all, founder John Bogle basically created the idea of passive investing and brought index funds to masses back in the 1970s.

But Vanguard's actively managed funds should be on equal footing with their passive brethren.

One of the biggest hurdles to actively managed mutual funds and exchange-traded funds (ETFs) is something called a "fee hurdle." Historically, active funds cost more to run than a passive index-tracking fund. Because of this, an actively managed fund must earn more than its fees in order to bring investors a return. So even if a fund does beat the underlying index or benchmark, the higher fees will often produce lower returns.

But for Vanguard, low-cost investment management is in its blood. As a result, Vanguard's actively managed funds feature rock-bottom fees just like its passive investment options. This allows many of its active funds to offset the fee hurdles that other firms encounter and gives investors the opportunity to benefit from active management outperformance at lower costs.

With that in mind, here are five of Vanguard's active funds to own for the long term. The funds featured here cover a variety of strategies, so there's likely a low-cost option that aligns with your goals, no matter what type of investor you are.


Data is as of March 10. Dividend yields represent the trailing 12-month yield, which is a standard measure for equity funds.

Contributing Writer, Kiplinger.com