11 best Vanguard index funds to buy in 2024

By:

Prash Raval

Prash is a financial writer for Invezz covering FX, the stock market and investing. For over a decade he has traded spot FX full time while... read more.

Updated: Oct 24, 2023

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Vanguard is one of the world’s largest and best index fund providers. Our investment experts have compared its most popular funds and in this guide, you can find the best Vanguard index funds to buy in 2024. 

What are the 11 top Vanguard index funds to buy?

1. Vanguard Total Stock Market Index Fund (VTSAX)
2. Vanguard S&P 500 ETF (VOO)
3. Vanguard Total International Stock ETF (VXUS)
4. Vanguard Total Bond Market Index Fund (VBTLX)
5. Vanguard Real Estate ETF (VNQ)
6. Vanguard Information Technology ETF (VGT)
7. Vanguard Growth Index Fund (VIGAX)
8. Vanguard Dividend Appreciation (VIG)
9. Vanguard Value ETF (VTV)
10. Vanguard Small Cap Index Fund (VB)
11. Vanguard Mid Cap Index Fund (VIMAX)

The best Vanguard index funds, compared

1. Vanguard Total Stock Market Index Fund (VTSAX)

Key details

• Date created: 1992
• Expense ratio: 0.04%
• 5-year return: 146.8%
• Minimum investment: $3,000
• Dividend yield: 1.55%
• Risk level: High

The Vanguard Total Stock Market Index Fund (VTSAX) is a mutual fund that aims to track the performance of the CRSP US Total Market Index. This means it invests in a wide range of U.S.-traded stocks, regardless of size or market cap. VTSAX holds over 3,592 stocks, with the top 10 holdings accounting for 10.1% of the fund’s assets. 

VTSAX is one of the best Vanguard mutual funds for investors looking for broad exposure to the U.S. stock market. Its low expense ratio means it may have better performance potential over the long term. As a passively managed fund, VTSAX has the advantage of tax efficiency, as it trades stocks less frequently, resulting in reduced taxable capital gains distributions.

2. Vanguard S&P 500 ETF (VOO)

Key details

• Date created: November 1, 1998
• Expense ratio: 0.03%
• 5-year return: 10.988%
• Minimum investment: $1
• Dividend yield: 1.55%
• Risk level: High

The Vanguard S&P 500 ETF is the best exchange traded fund from Vanguard for gaining exposure to the best US stocks. It tracks the S&P 500 index, which includes stocks from a broad range of sectors and industries. 

VOO is one of the most popular Vanguard exchange traded funds and consists of 503 stocks while employing a market-cap-weighted approach to capture the growth potential of leading industry players. It’s also a robust performer and has delivered similar returns to the index it tracks since its inception.  

3. Vanguard Total International Stock ETF (VSUX)

Key details

• Date created: January 26, 2011
• Expense ratio: 0.07%
• 5-year return: 2.3%
• Minimum investment: $1
• Dividend yield: 2.88%
• Risk level: Moderate

The best fund from Vanguard for investors seeking exposure to global markets is The Vanguard Total International Stock ETF. As its name suggests, VXUS offers investors exposure to international equity markets; however, it does not include stocks from the United States. 

It tracks the performance of the FTSE Global All Cap ex US Index, which includes international stocks from developed and emerging markets. VSUX is one of the top equity funds and is a diverse ETF, although almost 40% of its holdings belong to European companies, which means it’s more susceptible to regional economic downturns. 

4. Vanguard Total Bond Market Index Fund (VBTLX)

Key details

• Date created: November 12, 2021
• Expense ratio: 0.05%
• 5-year return: 0.85%
• Minimum investment amount: $3,000
• Dividend yield: 3.01%
• Risk level: Low

The best Vanguard fund for investors seeking exposure to the bond market is the Vanguard Total Bond Market Index Fund. VBTLX invests in a diverse range of investment grade U.S. Treasuries, government bonds, and mortgage-backed securities. Its investments all have varying maturities, including short, intermediate, and long term issues. 

The fund’s main objective is to offer a well-balanced portfolio of fixed income securities while keeping risk at a minimum. It’s important to consider interest rate fluctuations before investing in VBTLX; however, the fund’s comprehensive approach to the bond market makes it a top Vanguard fund for investors wanting to add stability to their portfolio away from the equity market. 

5. Vanguard Real Estate ETF (VNQ)

Key details

• Date created: September 23, 2004
• Expense ratio: 0.12%
• 5-year return: 9.41%
• Minimum investment amount: 1 share
• Dividend yield: 4.14%
• Risk level: Moderate

The Vanguard Real Estate ETF provides investors with exposure to the real estate sector by investing in stocks issued by real estate investment trusts (REITs) and companies involved in the acquisition of various rea estate properties such as office buildings, hotels, and more. 

The ETF aims to track the performance of the MSCI US Investable Market Real Estate 25/50 Index. VNQ is well diversified and includes REITs covering the whole market; it also pays a healthy dividend making it one of the best Vanguard funds for income. 

6. Vanguard Information Technology ETF (VGT)

Key details

• Date created: January 26, 2004
• Expense ratio: 0.10%
• 5-year return: 189%
• Minimum investment amount: $1
• Dividend yield: 0.71%
• Risk level: Moderate

Vanguard Information Technology is an exchange traded fund (ETF) comprising over 300 technology stocks. The fund aims to track the investment performance of the MSCI US Investable Market Information Technology 25/50 Index, which is comprised of small, medium, and large technology companies in the United States.  

VGT is one of the best performing Vanguard funds and, in the past 5 years, has delivered nearly 200% in returns. The fund includes some of the best tech companies in the world, including Microsoft, Apple, and Nvidia, however, isn’t as equally spread as other ETFs, meaning one or two stocks can impact its performance. 

7. Vanguard Growth Index Fund (VIGAX)

Key details

• Date created: November 13, 2000
• Expense ratio: 0.05%
• 5-year return: 13.22%
• Minimum investment amount: $3,000
• Dividend yield: 0.61%
• Risk level: Moderate

The Vanguard Growth Index Fund follows a buy and hold approach focusing on large cap stocks. The fund aims to track the performance of the CRSP US Large Cap Growth Index, which provides exposure to companies with strong growth potential. 

With a portfolio that includes 240 stocks, the fund offers investors a diversified investment strategy across various industries. However, it’s worth noting that the fund has a notable emphasis on the technology sector, which could impact performance if the industry suffers a downturn.

8. Vanguard Dividend Appreciation (VIG)

Key details

• Date created: April 21, 2006
• Expense ratio: 0.06%
• 5-year return: 65.37%
• Minimum investment amount: $1
• Dividend yield: 1.91%
• Risk level: High

The Vanguard Dividend Appreciation ETF aims to track the performance of the S&P U.S. Dividend Growers Index, which focuses on companies with a history of increasing their dividends consistently. It focuses on large-cap equities that have demonstrated the ability to grow their dividend payouts year after year.

While the fund includes a broad range of sectors, the largest weightings are seen in technology, financials, and consumer discretionary industries. VIG provides investors with exposure to a diverse set of businesses with the potential for long-term growth and stability.

9. Vanguard Value ETF (VTV)

Key details

• Date created: January 26, 2004
• Expense ratio: 0.04%
• 5-year return: 47.49%
• Minimum investment amount: $1
• Dividend yield: 1.91%
• Risk level: Moderate

The best Vanguard fund for value investors is the Vanguard Value ETF. The exchange traded fund is designed to expose investors to large capitalisation value stocks in the U.S. market. It seeks to track the performance of the CRSP US Large Cap Value Index – which measures the returns of value oriented companies. 

With a portfolio comprising 340 stocks, VTV provides broad market representation, which can enhance long-term growth potential and reduce individual stock risk. The Vanguard Value ETF is particularly suitable for investors with a long-term investment horizon of 10 years or longer and prioritises capital growth as their primary objective. 

10. Vanguard Small Cap Index Fund (VB)

Key details

• Date created: December 10, 2009
• Expense ratio: 0.29%
• 5-year return: 25.11%
• Minimum investment amount: £25
• Dividend yield: 1.79%
• Risk level: High

There are lots of funds that track small cap stocks and the best Vanguard index fund for smaller companies is VB. The Vanguard Global Small-Cap Index Fund (VB) aims to deliver long-term capital growth by closely tracking the performance of the MSCI World Small Cap Index. This index consists of stocks from small-sized companies operating in developed markets. 

VB provides investors with exposure to diverse industries; the fund holds stocks from the United States, Europe, and Asia, contributing to its global diversification. With a portfolio of 4,423 stocks, VB provides broad market exposure and reduces the impact of any single company on its performance.

11. Vanguard Mid Cap Index Fund (VIMAX)

Key details

• Date created: December 11, 2001
• Expense ratio: 0.05%
• 5-year return: 40.55%
• Minimum investment amount: $3,000
• Dividend yield: 1.69%
• Risk level: High

The Vanguard Mid-Cap Index Fund Admiral Shares is a top choice for investors seeking broad exposure to mid-cap U.S. equities at a low cost. This index fund aims to closely track the performance of the CRSP US Mid Cap Index, which consists of medium-sized companies. 

With a diverse range of sectors, including significant weightings in technology, healthcare, and industrials, the Vanguard Mid-Cap Index Fund provides investors with exposure to various market segments. By holding 343 stocks in its portfolio, the fund ensures broad representation across mid-cap companies, reducing the impact of individual stock performance on overall returns. 

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What is a Vanguard index fund?

It’s an investment product offered by Vanguard that aims to track or mirror the performance of a specific market index, such as the S&P 500 or the Total Bond Market index. Vanguard is one of the largest investment management companies in the world. Founded in 1975 by John C. Bogle, it is now recognised as a leader in providing low cost index funds. 

Vanguard erates on a mutual structure. The company is owned by its funds and in turn, the funds are owned by their shareholde; thisis means Vanguard’s interests are aligned with those of its investors. 

How much do Vanguard index funds cost?

For most passive funds the cost is less than 0.5% per year. Each index fund charges an annual maintenance or management fee, which is referred to as the fund’s ‘expense ratio’ and given as a percentage of your investment. 

For active funds, you may have to pay 0.75% or more. That type of mutual fund is run by active managers, so you’re paying for the time and expertise of the fund managers who decide which stocks to invest in.

In addition, you may have to pay a trading fee when you buy or sell a stake in a mutual fund. Some trading platforms charge a fee each time you make an investment. This varies depending on the brokerage you use; most services don’t charge any commission, others charge a couple of pounds each time.

How to choose the right Vanguard funds for you

Our experts ranked the best index funds based on a range of factors, from the annual running cost to the risk profile of each fund. You should use the same features to pick the mutual funds that suit your expectations and investment goals.

• Annual management fee. Each mutual fund charges an annual fee as a percentage of your investment. Passive funds tend to be cheaper, while active funds are more expensive. When you invest in Vanguard index funds, you’re normally looking to buy and hold for a few years. Small fee differences can add up to a big variation in returns over the long term, so you should favour mutual funds with the lowest maintenance fees.
• Fund size. The more money in an index fund, the more stable its performance is likely to be. Funds with low assets under management (AUM) can rely too heavily on the performance of one or two stocks and lack the diversification investors want. 
• Index fund weighting. Each index fund tracks a stock market index, but there can be big differences in how the fund tracks its benchmark index. Pay close attention to the weighting in particular. An index fund that scales its weighting so that a larger percentage, say 10%, goes into one or two stocks is going to be far more affected by the performance of those companies than one which invests 5% in all stocks equally.
• Risk profile. Each index fund factsheet has to report its risk profile on a scale between 1 and 7, with 7 being the riskiest. This synthetic risk and reward measure (SRRI) is an industry standard that you can use to compare risk across asset management companies. Less risk is better, but many people choose to have a balance of different risk profiles in their portfolio, as the riskier ones can generate higher returns (as well as higher losses).
• Hedging and currency risk. Every index fund is denominated in a particular currency, such as GBP or USD. That means that fluctuations in the strength of that currency can act as a drag or boost on performance. If your fund is in GBP and the pound is weak relative to USD, that means the fund will underperform the same fund denominated in USD. Some index funds hedge their currency risk to avoid this, others don’t.
• Share class. Some funds generate income from dividends. For these types of funds there are two share classes: income and accumulation. The former means that any income is paid out automatically, while accumulation means the money is automatically reinvested. Accumulation is more convenient, while income means you might build up spare cash in your brokerage account. An index fund can be one or the other, while some offer a choice between both.

Are Vanguard index funds a good investment?

Yes, Vanguard index funds are among the best type of investment for many investors. If you’re seeking stability over the long term, then investing in the best Vanguard index funds is the easiest and often cheapest way to grow a portfolio. Vanguard is known for its low cost approach, which means its funds’ expense ratios are typically lower compared to actively managed funds. 

Many of the best Vanguard index funds offer broad market exposure and track a specific index. This means you can invest in the wider market while tailoring your investment to a certain industry or type of investment. This diversification helps to reduce the risk associated with individual stock selection and can provide a more stable investment experience.

Vanguard has a wide range of index funds and finding the best one can be challenging. To find the best Vanguard index funds for 2024, you can check our list above. Once you’ve found your preferred investment, you’ll need to use a broker that offers these markets and if you click on the blue button below, you’ll be taken to our recommended platforms.

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