Top 7 Vanguard index funds to consider buying

Top 7 Vanguard index funds to consider buying

Many people prefer tried-and-tested, low-risk investment options because these offer protection in the face of economic uncertainties. Index funds are among such investment options, and quite a few of them end up performing better than other types of mutual funds. Vanguard, a giant in the investment management industry, offers a host of index funds that strike the right balance between risks and returns. Here are some of its best index funds to consider buying today:

1. Vanguard S&P 500
This popular index fund is also called the Vanguard 500 Index Fund (VFIAX), and it tracks and invests in stocks that are a part of the S&P 500 index. Basically, the S&P 500 index tracks the stocks of the top 500 companies that are listed on stock exchanges in the country, so there is a good chance of high returns. Also, investing in this fund diversifies the investor portfolio to a great extent, reducing overall risk. The risk further diminishes with this type of investment because it tracks a highly reputed index in the financial market. The Vanguard S&P 500 lends itself well to long-term investment goals, wherein the plan is to let the corpus grow on its own time before reaping its benefits.

2. Vanguard Total Bond Market Index Fund
This index fund tracks the performance of the Bloomberg U.S. Aggregate Float Adjusted Index and exposes one to a broad and market-weighted bond index. The fund involves investment in securities backed by mortgage and U.S. treasury bonds. It tracks short-term, intermediate, and long-term bonds, so investors with different investment objectives can consider this index fund. One of the possible drawbacks of this option is that when interest rates increase, the bond’s price in the portfolio may drop, so its net asset value also decreases. However, this is also true for other bond investments. So, if one is sure about investing in bonds, the Vanguard Total Bond Market Index Fund is worth considering.

3. Vanguard Balanced Index Fund
This type of index fund is suitable for those who are willing to undertake risk to a certain extent but also need some security. The fund essentially tracks a popular stock index with 60% of the investor’s corpus and uses the remaining 40% to track the performance of a broad, market-weighted bond index. The stock index ensures high yields, whereas the bond index increases the investment’s security. So, it may be well-suited to those who have moderate risk tolerance.

4. Vanguard Total Stock Market Index Fund
This fund tracks the performance of indexes investing purely in the stock market, including small-cap, mid-cap, and large-cap growth as well as value stocks. In essence, the investment covers the entire equity market and can yield very high returns. Vanguard’s total stock index fund aims at diversifying the investor’s portfolio and increasing tax efficiency. It is also an affordable investment option for those who want to explore the country’s stock market. Although Vanguard invests only in promising equity avenues, those investing in the Vanguard Total Stock Market Index Fund must be prepared for the risks associated with a pure-equity portfolio.

5. Vanguard Growth Index Fund
This low-cost investment option follows a sector-based approach to investment; it invests in stocks of companies belonging to highly promising sectors and industries, such as technology, FinTech, cybersecurity, and ecommerce. This way, if the industry performs as expected, investors are guaranteed very lucrative returns and interest rates. Vanguard carries out extensive research on the most upcoming industries in the country and around the world, so it minimizes any risks of the industry underperforming unless there is a sudden economic crisis. This type of investment is suitable for those with a moderate risk appetite. But, it holds the potential for huge profits.

6. Vanguard Small-Cap Index Fund
Today, with the avenues and reach available, several small-scale companies and startups are making their mark in their respective sectors. Vanguard’s Small-Cap Index Fund capitalizes on this trend and invests in small companies that have recently gone public. If a company grows exponentially and becomes highly profitable, investors benefit by a considerable margin. As Vanguard researches well on companies that have the potential to excel, there are fewer chances of incurring losses in this type of investment.

7. Vanguard Total International Stock Index Fund
For those who would like to explore the international market, this index fund tracks stock indexes in developing and developed countries across the globe. This is a good option for those with a high risk tolerance looking to diversify their portfolio with an international equity position.

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