Top 10 Popular Best Vanguard Mutual Funds

Vanguard Investment logo
Vanguard Investment logo

Intro

The following article will provide top 10 popular Vanguard Mutual Funds list. Everyone who has started investing whether in brokerage account or retirement account (401k & IRA) should know Vanguard. Many pundits even mentioned if you have 401k account in Vanguard Group, you are in very good hands. As one of the biggest providers in the pension business as well as mutual funds, Vanguard provides many superiors investment options such as Mutual Funds and ETFs. If you are interested in Vanguard Brokerage Services account to buy ETF, please check my previous article.

There are several reasons why you should consider a Vanguard:

  1. Vanguard is owned by its shareholders (i.e. not for profit company)
  2. Most of the products whether ETFs or Mutual Funds have the lowest expenses in industry
  3. As an investor, you can have many products to choose from whether they are stocks funds or bond funds.
  4. Most of the fund follows index and passively managed which can provide a way to follow the market closely. There is less second guessing by its fund manager.

A bit for refreshing, mutual fund in general can be classified into 2 categories such as bond mutual funds and stock mutual funds. Bond mutual funds, also known as Fixed Income mutual fund, can be divided into two main categories as well such as taxable bonds and non taxable bonds. Taxable bond can consist of short term bond, intermediate term bond, long term bond, investment grade corporate bond, high yield corporate bond, and Treasury Inflation Protected (TIP) Bond. These taxable bonds can be either domestic bonds or global bonds. The non taxable bond consist mainly the municipal bonds either investment grade municipal bond or non investment grade municipal bond.

Vanguard Funds

For stock fund (equity fund), there are 3 main categories such as domestic equity, International equity, and emerging market mutual funds. Compare to fixed income funds, usually equity funds are more volatile and can swing more up or down during any day especially during this recent economic crisis period.

The list that I provided will consist of 3 or more star of Morningstar rating and big asset underlying the mutual funds. Usually, big asset means lot of confident by investor or institutional or pension fund to invest in these funds. With 3 or more star rating, this means the fund has consistently perform under any market condition and should perform better or at least average compare to many of its index benchmark.

Top 10 Vanguard Funds

 

The list is as follows:

  1. Vanguard Total Stock Market - VTSMX
  2. Vanguard 500 Index Fund - VFINX
  3. Vanguard Total Bond Market Index - VBMFX
  4. Vanguard Emerging Markets Stock Index
  5. Vanguard Wellington
  6. Vanguard Short Term Investment Grade
  7. Vanguard GNMA
  8. Vanguard Windsor II
  9. Vanguard Inflation-Protected Secs
  10. Vanguard Intermediate Term Tax Exempt Fund - VWITX

If you are interested in table comparison, please check below.

 

Vanguard Total Stock Market Portfolio
Vanguard Total Stock Market Portfolio

1. Vanguard Total Stock Market, VTSMX

Vanguard total stock market is an equity fund and passively managed. The Vanguard Total Stock Market fund seeks to track and have investment return similar to the performance of a benchmark index, MSCI US Broad Market Index. The fund Invests in more than 3,000 stocks representative of the whole U.S. market. The fund is being managed passively by Gerard C. O’Reilly. As typical vanguard fund, this is a no load mutual fund as well. There are no sales load, max front end sales load, and 12b1 fee. The expense ratio is only 0.19% per year which is very little compare to other funds average of 1.42%.

This fund is also offered in most IRA, 401K fund, and 529 account selection. Some asset classes of fund have lower expense ratio fee, and no front end sales charge fee. Other tickers of Vanguard Total Stock Marketare: VITSX, VTSAX, and VTSSX. For instance, VITSX has only 0.06% expense ratio. The expense ratio of different classes of fund can range from 0.06% to 0.18%.

The primary portfolio consists of large cap blend stocks. The top 3 sectors of fund as August 2010 are Technology, Financial and Healthcare sector. Top 10 largest equity holdings for this fund include Exxon Mobil, Apple, Microsoft, Procter & Gamble, General Electric, International Business Machines (IBM), Johnson & Johnson, JP Morgan Chase, AT&T and Chevron.

2. Vanguard 500 Index Fund, VFINX

Vanguard 500 index fund is another popular Vanguard stock fund. Vanguard 500 Index fund investment objective is to track the performance of a benchmark index, S&P 500 index. The fund mainly consists of large capitalization stocks (i.e. large company). As typical vanguard fund, this mutual fund is also a passive management or indexing investment approach designed to track the performance of the Standard & Poor’s 500 Index, which is a widely recognized benchmark of U.S. stock market performance that is dominated by the stocks of large U.S. companies. The fund is being managed passively by Michael H. Buek. There are no sales load, max front end sales load, and 12b1 fee. This fund is also offered in most IRA, 401K fund, and 529 account selection. Some asset classes of fund have lower expense ratio fee, and no front end sales charge fee. Other tickers of Vanguard 500 Index fundare: VFIAX and VIFSX. For instance, VFIAX and VIFSX have only 0.07% expense ratio and no front end sales load. The expense ratio of different classes of fund can range from 0.07% to 0.18%.

The primary portfolio is very similar to vanguard total stock market. It consists of large cap blend stocks. The top 3 sectors of fund as August 2010 are Technology, Financial and Healthcare sector. Top 10 largest equity holdings for this fund include Exxon Mobil, Apple, Microsoft, General Electric (GE), Johnson & Johnson (JNJ), Procter & Gamble, International Business Machines (IBM), AT&T, Chevron and JP Morgan Chase.

vanguard bond list
vanguard bond list

3. Vanguard Total Bond Market Index - VBMFX

As its name sound, Vanguard Total Bond Market Index fund is a fixed income fund or bond fund. This fund is another way to invest in total bond sector. This bond fund is less volatile than its counterpart stock fund. The fund seeks to track the performance of a broad, market-weighted bond index. The fund employs a “passive management” by lead manager Kenneth Volpert, or indexing investment approach designed to track the performance of the Barclays Capital U.S. Aggregate Float Adjusted Index. The fund has returned 7.96% over the past year and 7.36% over the past three years. There is no front end sales load and max 12b1 fees. The total expense ratio is only 0.22% and is very low compare to other bond funds. Other tickers may have lower expense ratio such as VBTIX, VBMPX, VBTSX and VBTLX.

4. Vanguard Emerging Markets Stock Index - VEIEX

Ever since Vanguard becomes the largest asset manager by leaping Fidelity, I believe most investor has moved their asset to Vanguard. Compare to other competitor funds, the Vanguard Emerging Markets Stock Index fund is a passive type mutual fund (i.e. tracking index) and has low expense ratio of 0.40% for this fund. This can be advantageous for investor. That means fewer fees for asset management and more return. There is also a small purchase fee of 0.50% and redemption fee of 0.25% for this fund.

The Vanguard Emerging Market Stock Index portfolio tracks the MSCI Emerging Markets Index, which is weighted toward the largest companies in the largest emerging markets. Because of this, China, South Korea, India, Russia and Brazil make up 65 percent of the portfolio. Currently the fund consists of 748 stocks common stocks of companies located in emerging markets around the world. The lead manager is Duane F. Kelly since 1994.

This fund is also offered in most 401K fund selection. Some asset classes of fund have lower expense ratio fee, small purchase fee, and redemption fee. Other tickers of Vanguard Emerging Market Stock Index fund are: VEMIX, VERSX, and VEMAX.

The primary portfolio consists of blend stocks (i.e. growth & value stock). Top 10 largest equity holdings for this fund include China Mobile, Vale SA, Petroleo Brasileiro, Gazprom, America Movil, Industrial & Commercial Bank of China, Samsung Electronics GDR, China Construction Bank, Samsung Electronics, and Itau Unibanco Holding.

5. Vanguard Wellington - VWELX

Vanguard Wellington was the first balanced fund in the industry which consists of bonds and stocks. It was intended to be the only an investor needed mutual fund and therefore covered the staple asset classes, stocks and bonds. Today it has 65% of assets in big-company stocks (including the 13% in foreign stocks), 32% in high-quality intermediate-term bonds and the balance in cash. Turnover is very low, the expense ratio is only 0.34%, and performance is exceptional. The fund seeks to provide long-term capital appreciation and reasonable current income. The majority of the asset is invested in dividend paying stocks. The current lead manager is Edward Bousa (since 2002). There is no front end sales load and max 12b1 fees.

Top 6 to 10

6. Vanguard Short-Term Investment-Grade - VFSTX

The Vanguard Short-Term Investment-Grade fund seeks to give investors a fairly safe place to store their money. Short-term bond funds generally have less volatility than their longer-term counterparts. The main strategy of the fund is to invest in a variety of high-quality fixed income securities, mostly in short-term investment-grade securities. The fund is managed by lead manager, Robert F. Auwaerter. The fund has returned 5.08% over the past five years and 4.89% over the past decade. There is no front end sales load and max 12b1 fees. The total expense ratio is only 0.24% and is very low compare to other bond funds. Other tickers may have lower expense ratio such as VFSIX and VFSUX.

7. Vanguard GNMA - VFIIX

The Vanguard GNMA fund investment seeks to provide a moderate level of current income. The fund major investment is in government National Mortgage Association certificates and some other U.S. government obligations securities. The Vanguard GNMA fund is managed by Thomas Pappas and Michael Garrett. It has avoided exotic mortgage-backed fare and they don't make big interest-rate bets. This strategy has proven golden during the latest economic crisis. The fund has returned 6.30% over the past five years and 6.14% over the past decade. There is no front end sales load and max 12b1 fees. The total expense ratio is only 0.23% and is very low compare to other bond funds. Other tickers may have lower expense ratio such as VFIJX.

8. Vanguard Windsor II - VWNFX

Vanguard Windsor II is part of stock fund and seeks long-term capital appreciation and income. The Vanguard Windsor II fund is managed by James Barrow since 1985. The fund has multiple advisors overseen by Vanguard; each manager manages a portion of the fund’s assets. These advisors mainly invest in undervalued stocks, which are stocks that have generally fallen out of favor with investors. The fund has returned -0.40% over the past five years and 3.26% over the past decade. There is no front end sales load and max 12b1 fees. The total expense ratio is only 0.38% and is very low compare to other bond funds. Other tickers may have lower expense ratio such as VWNAX.

9. Vanguard Inflation-Protected Securities - VIPSX

TheVanguard Inflation-Protected Sec fund invests exclusively in investment-grade bonds, the vast majority of which are TIPS. It looks to protect investors against inflation and realize long-term profits. The fund has returned 5.23 percent over the past five years. TIPS are commonly viewed as a safe haven and TIPS have been a popular destination for nervous investors. In near term or long term, the fund's success will depend on the rate of inflation. TIPS pay fixed interest rates, but the bond's principal is tied to inflation as measured by the consumer price index (CPI). The Vanguard Inflation Protected Securities fund is managed by John Hollyer since 2000.There is no front end sales load and max 12b1 fees. The total expense ratio is only 0.25% and is very low compare to other bond funds. Other tickers for institutional or 401k account may have lower expense ratio such as VIPIX, VAIPX.

10. Vanguard Intermediate Term Tax Exempt

The Vanguard Intermediate Term Tax Exempt Fund objective is to provide moderate and sustainable current income that is exempt from federal personal income taxes and actively managed by Michael G. Kobs since 2008. The majority of the investment about 75% is investment grade rated municipal bonds and small investment about 25% is in high yield municipal bonds (junk rated - Baa or BBB). This fund is one of the biggest municipal bond funds in its category with more than 30 billion asset and has the highest Morningstar rating with 5 Stars rating.This gigantic fund has put up respectable numbers recently and has done well despite some changes in its management. Christopher Ryon left the fund in 2007 after a 16-year as the fund manager, and current manager Michael Kobs has been in charge only since 2008. The fund has returned 4.86% over the past five years and 4.99% over the past decade. At the same time, the fund's ultra low annual expense ratio of 0.20% gives investors the best bet to invest in this municipal bond fund. There is no front end sales load and 12b1 fee for this fund. Another class of ticker, VWIUX, has a lower expense ratio of 0.12% only.

Other Vanguard Mutual Funds worth a look

Vanguard has so many great funds I could go on forever. Here are a few more top 11 to 15 for investor’s consideration:

  • Vanguard PRIMECAP (VPMCX), it seeks long-term capital appreciation by investing in stocks with above-average earnings growth potential. This is a stock fund.
  • Vanguard Total International Stock Index (VGTSX), this fund invests in Europe and Pasic basin companies. It track index and passively managed. This is a stock fund.
  • Vanguard Mid Capitalization Index (VIMSX), it invests in mid capitalization company in US domestic companies and tracks MSCI US Mid Cap 450 Index. This is a stock fund.
  • Vanguard Short-Term Bond Index (VBISX), it invests in short term bond and tracks the performance of the Barclays Capital U.S. 1â5 Year Government/ Credit Float Adjusted Index. This is a bond fund.
  • Vanguard Small Cap Index (NAESX), it invests in small capitalization company in US domestic companies and tracks MSCI US small Cap 1750 Index. This is a stock fund.

(click column header to sort results)
No  
Mutual Funds Description  
Ticker  
Category  
Expense ratio  
Morningstar Rating  
Yield  
Total Asset  
Min Invest  
1 yr  
3 yr  
5 yr  
10 yr  
1
Vanguard Total Stock Market
VTSMX
Stock
0.18%
3
1.88%
138 Bil
$3,000
11.01%
-6.34%
1.13%
0.25%
2
Vanguard 500 Index Fund
VFINX
Stock
0.18%
3
2.03%
94 Bil
$3,000
10.05%
-7.20%
0.56%
-0.53%
3
Vanguard Total Bond Mkt Idx
VBMFX
Bond
0.22%
3
3.44%
88 Bil
$3,000
7.96%
7.36%
6.14%
6.13%
4
Vanguard Emerg. Mkt Stock Idx
VEIEX
Stock
0.40%
3
1.10%
52 Bil
$3,000
19.36%
-1.94%
12.01%
13.12%
5
Vanguard Wellington
VWELX
Balance
0.34%
5
2.96%
50 Bil
$10,000
9.57%
-0.42%
4.68%
6.30%
6
Vanguard Short-Tr Invest. Grade
VFSTX
Bond
0.24%
4
3.40%
38 Bil
$3,000
6.65%
5.20%
5.08%
4.89%
7
Vanguard GNMA
VFIIX
Bond
0.23%
4
3.11%
37 Bil
$3,000
6.97%
7.50%
6.30%
6.14%
8
Vanguard Windsor II
vwnfx
Stock
0.38%
3
2.10%
33 Bil
$10,000
7.35%
-8.70%
-0.40%
3.26%
9
Vanguard Inflation-Prot Secs
VIPSX
Bond
0.25%
4
2.68%
32 Bil
$3,000
9.00%
6.54%
5.23%
7.26%
10
Vanguard Int Term Tax Exempt
VWITX
Bond
0.20%
4
3.57%
30 Bil
$3,000
5.00%
5.78%
4.86%
4.99%
Table Comparison of Best Vanguard Mutual Funds

Disclosure: I have no affiliation with any of these mutual funds. I also have no positions in any of above funds. Please do your own research for additional details. Please trade and invest responsibly. Past Performance is No Guarantee of Future Results

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Comments 11 comments

LillyGrillzit profile image

LillyGrillzit 6 years ago from The River Valley, Arkansas

I love this Hub. I think why I like the Financial Data you give is that you aren't pushing people down one road or another. You have provided stats, and facts of the financial structure, how investing works, and safe investing. I always appreciate you show the do-ability while cautioning individuals not to invest crazily. The Best!


chan0512 profile image

chan0512 6 years ago from Camarillo, CA Author

Thanks Lilly! As Engineer, I like to use stat/table.


Peter Owen profile image

Peter Owen 5 years ago from West Hempstead, NY

Very good article on Vanguard.


chan0512 profile image

chan0512 5 years ago from Camarillo, CA Author

Thanks Peter! Vanguard has amazing products. I like Vanguard's ETFs and Index Mutual Fund. Thanks for stopping by.


quemacoco profile image

quemacoco 5 years ago

great advice. very well researched and explained concisely. thanks


chan0512 profile image

chan0512 5 years ago from Camarillo, CA Author

Quemacoco,

Thanks for your kind words. I always like Vanguard funds or ETF. I believe Vanguard is one of the best investing choice. Thanks for stopping by.


Ralph Deeds profile image

Ralph Deeds 5 years ago

Excellent information and advice! Vanguard is the best--no load, low cost, tax efficient index funds.

Investing in individual stocks is a loser's game for most people who are the bottom of the food chain, last to get the good news and bad news. See "Winning the Loser's Game," by Charles Ellis who is a believer in low cost index mutual funds.


monicamelendez profile image

monicamelendez 4 years ago from Salt Lake City

Vanguard is a really solid choice for investments. Nice write-up. Thanks!


the cheap guy profile image

the cheap guy 4 years ago from Makati

I would like to mention for any Canadians out there, Vanguard has recently opened in Canada and you can buy a handful of ETFs, these have the lowest MERs that I have seen for any Canadian ETFs.


Financial Advisor 3 years ago

Vanguard is not a "not for profit" company.


chan0512 profile image

chan0512 3 years ago from Camarillo, CA Author

Financial Advisor,

At least they have the lowest fee among other mutual funds family.

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