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IMPORTANT FEE INFORMATION: Vanguard funds may charge an annual account service fee of $20 for fund balances below $10,000. Vanguard offers other share classes of these funds with different investment minimums and expense ratios.
Please note: When comparing funds, please consider all important factors, including information pertaining to fund fees, fund features, and fund objectives. While funds may track an index, the indexes and strategies employed in seeking to achieve an investment goal may be different. Each fund's investment object and strategy and index tracked to achieve investment goals may differ. For new investors, funding investment minimums may be different.
ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses. Unlike mutual funds, ETF shares are bought and sold at market price, which may be higher or lower than their NAV, and are not individually redeemed from the fund. ETFs are subject to market fluctuations of their underlying investments and may trade at a discount to NAV.
1. Fidelity beats Vanguard on expenses on 24 of 24 comparable stock and bond index funds, across all Vanguard share classes with a minimum investment of less than $3 billion. Total expense ratios as of December 30, 2020. Please consider other important factors including that each fund’s investment objectives, strategy, and index tracked to achieve its goals may differ, as well as each fund’s features and risks.
2. Fidelity now offers the Fidelity ZERO Large Cap Index Fund (FNILX), Fidelity ZERO Extended Market Index Fund (FZIPX), Fidelity ZERO Total Market Index Fund (FZROX) and Fidelity ZERO International Index Fund (FZILX) available to individual retail investors who purchase their shares through a Fidelity brokerage account.
3. Zero account minimums and zero account fees apply to retail brokerage accounts only. Expenses charged by investments (e.g., funds, managed accounts, and certain HSAs) and commissions, interest charges, or other expenses for transactions may still apply. See Fidelity.com/commissions for further details.
4. Expense ratio is the total annual fund operating expense ratio from the fund's most recent prospectus. As of March 1, 2019, Fidelity contractually lowered fund operating expense ratios on all comparable funds.
IMPORTANT FUND OBJECTIVE/COMPARISON INFORMATION: Fidelity® 500 Index Fund (tracks S&P 500®), Vanguard 500 Index Fund (tracks S&P 500®); Fidelity® Extended Market Index Fund (tracks DJ US Completion Total Stock Market Index), Vanguard Extended Market Index Fund (tracks S&P Completion Index); Fidelity® Total Market Index Fund (tracks Dow Jones U.S. Total Stock Market Index), Vanguard Total Stock Market Index Fund (tracks CRSP U.S. Total Market Index); Fidelity Large Cap Growth Index Fund (tracks Russell 1000 Growth Index), Vanguard Large Cap Growth Index (tracks CRSP US large Cap Growth Index); Fidelity Large Cap Value Index Fund (tracks Russell 1000 Value Index), Vanguard Large Cap Value Index Fund (tracks CRSP US Large Cap Value Index); Fidelity® Mid Cap Index Fund (tracks Russell Midcap® Index), Vanguard Mid-Cap Index Fund (tracks CRSP U.S. Mid Cap Index); Fidelity Mid Cap Growth Index Fund (tracks Russell Midcap Growth Index), Vanguard Mid-Cap Growth Index (tracks CRSP US Mid Cap Growth Index ), Fidelity Mid Cap Value Index Fund (tracks Russell Midcap Value Index), Vanguard Mid-Cap Value Index (tracks CRSP US Mid Cap Value Index), Fidelity Small Cap Index Fund (tracks Russell 2000 Index), Vanguard Small Cap Index Fund (tracks CRSP US Small Cap Index); Fidelity Small Cap Growth Index Fund (tracks Russell 2000 Growth Index), Vanguard Small-Cap Growth Index (tracks CRSP US Small Cap Growth Index), Fidelity Small Cap Value Index Fund (tracks Russell 2000 Value Index), Vanguard Small-Cap Value Index (tracks CRSP US Small Cap Value Index), Fidelity International Index Fund (tracks MSCI EAFE Index), Vanguard Developed Markets Index Fund (tracks FTSE Developed ex US All Cap Index); Fidelity® Global ex U.S. Index Fund (tracks MSCI ACWI ex U.S. Index), Vanguard FTSE All-World ex-US Index Fund (tracks FTSE All-World ex-US Index); Fidelity Total International Index Fund (tracks MSCI ACWI ex US IMI Index), Vanguard Total International Index Fund (tracks FTSE Global All Cap ex US index); Fidelity Emerging Markets Index Fund (tracks MSCI Emerging Index), Vanguard Emerging Markets Index Fund (tracks FTSE Emerging Markets All Cap China A Transition Index); Fidelity® Real Estate Index Fund (tracks MSCI US IMI Real Estate 25/25 Index), Vanguard REIT Index Fund (tracks MSCI US REIT Index); Fidelity US Bond Index fund (tracks Bloomberg Barclays U.S. Aggregate Bond Index), Vanguard Total Bond Market Index Fund (tracks Bloomberg Barclays U.S. Aggregate Float Adjusted Index); Fidelity Municipal Bond Index Fund (tracks Bloomberg Barclays Municipal Bond Index), Vanguard Tax-Exempt Bond Index Fund (tracks S&P National AMT-Free Muni Bond Index), Fidelity Short Term Treasury Bond Index Fund (tracks Bloomberg Barclays 1-5 Year U.S. Treasury Index), Vanguard Short-Term Treasury Index Fund Admiral (tracks Bloomberg Barclays U.S. 1–3 Year Government Float Adjusted Index); Fidelity Intermediate Term Treasury Bond Index Fund (tracks Bloomberg Barclays 5-10 Year U.S. Treasury Index), Vanguard Intermediate-Term Treasury Index Fund Admiral (tracks Bloomberg Barclays U.S. 3–10 Year Government Float Adjusted Index); Fidelity Long Term Treasury Bond Index Fund (tracks Bloomberg Barclays U.S. Treasury Long Index), Vanguard Long-Term Treasury Index Fund Admiral (tracks Bloomberg Barclays U.S. Long Government Float Adjusted Index).; Fidelity Short-Term Bond Index Fund (tracks Bloomberg Barclays U.S. 1 – 5 Year Government/Credit Bond Index), Vanguard Short-Term Bond Index Fund (tracks Bloomberg Barclays U.S. 1 – 5 Year Government/Credit Bond Index); With the exception of the Fidelity 500 Index Fund and Vanguard 500 Index Fund which both track the S&P 500, the Vanguard and Fidelity funds track different indexes, which may have different characteristics an investor should consider. Fidelity and Vanguard funds have similar investment objectives. Fidelity MSCI Sector ETFs are passively managed ETFs indexed to the MSCI USA IMI Sector Indexes. Vanguard Sector ETFs are passively managed ETFs indexed to the MSCI U.S. IMI 25-50 Sector Indexes.
Third-party trademarks and service marks are the property of their respective owners. All other trademarks and service marks are the property of FMR LLC or its affiliated companies.
Indexes are unmanaged. It is not possible to invest directly in an index.
System availability and response times may be subject to market conditions.
Diversification does not ensure a profit or guarantee against loss.
Because of their narrow focus, sector funds tend to be more volatile than funds that diversify across many sectors and companies.
Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.
Before investing in any mutual fund or exchange-traded fund, you should consider its investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus, an offering circular, or, if available, a summary prospectus containing this information. Read it carefully.
Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917
How To Invest In Vanguard Index Funds
Investing in index funds is a great way to diversify your portfolio and reduce fees to a minimum. Vanguard index funds are a popular option: There are more than 60 Vanguard index mutual funds that track a wide variety of domestic and international stock and bond indexes. Here’s what you need to know about Vanguard index funds and how to choose the right fund for your portfolio.
What Are Vanguard Index Funds?
When you buy shares of a Vanguard index fund, your money is invested in a diversified portfolio of assets that track an underlying market index. Vanguard founder Jack Bogle invented the index fund when it launched the Vanguard 500 (VFINX) in 1976.
With over 40 years of experience, Vanguard’s funds have delivered consistent long-term returns—according to the company, 84% of its index funds have performed better than their peer-group averages over the past decade.
An index fund is a type of mutual fund that aims to match the performance of a specific market benchmark or index as closely as possible, such as the S&P 500, an equity index tracks 500 of the leading publicly held U.S. companies. Other major indexes include the Dow Jones Industrial Average (DJIA), the Nasdaq Composite and the Wilshire 5000.
There are indexes for nearly every market and every asset class. Vanguard index funds buy all of the stocks or bonds—or a representative sample—that are included in the index it aims to track.
There is always a level of risk involved with Vanguard index funds: Risk corresponds to the stock or bond market the index fund tracks. For example, a Vanguard index fund that tracks stocks will generally be riskier than one that tracks investment-grade bonds.
How Do Vanguard Index Funds Work?
When you invest in a Vanguard index fund, you’re investing in hundreds or even thousands of securities at once. If some securities perform poorly, the other investments held by the Vanguard index fund can help mitigate the risk, protecting your investment. Index funds provide instant diversification and low costs, without having to put in a ton of work yourself.
Vanguard index funds are professionally managed; you can buy or sell mutual funds over the phone, and you can set up automatic investments or withdrawals.
As of May 31, 2020, Vanguard offers 62 index mutual funds, including funds in the following categories:
- U.S. bond funds: Adding bonds funds to your portfolio can help balance the risks associated with any stock funds you may hold. Vanguard U.S. bond funds invest in U.S. corporate bonds, U.S. Treasurys and Treasury-backed securities.
- U.S stock funds: Vanguard U.S. stock funds invest in domestic companies, including large-cap, mid-cap and small-cap companies.
- Balanced funds:Balanced funds invest in a mix of stocks and bonds to provide a balance of income and growth. Target-date funds, a popular choice for retirement investors, are included in this group.
- International stock funds: Vanguard international stock funds invest in companies based outside of the U.S.
- International bond funds: International bond funds add diversification and invest in both government and corporate bonds issued outside the U.S.
- Sector and specialty funds: If you have a particular interest in a certain industry and are comfortable with additional volatility, you may be interested in sector and specialty funds. You can invest in specific industries, such as energy, health care and real estate.
Vanguard Index Fund Costs and Fees
Vanguard index funds can be very cost-effective investments: As of Dec. 31, 2019, Vanguard’s average mutual fund expense ratio was 0.10%. With a no-load mutual fund—meaning there are no sales fees when you buy fund shares or when you sell fund shares—you don’t have to worry about paying commissions, either.
However, you do need to have some money saved before you can start investing. According to the company, 43 of Vanguard’s index funds are available at the Admiral Shares level, meaning there is a $3,000 minimum investment requirement.
How to Choose a Vanguard Index Fund
When deciding which Vanguard index fund you’d like to buy, first consider the type of index you’d prefer your choice of fund to track. Then check out the fees and costs associated with different funds that track the same index. For more insight, check out our guide to asset allocations and model portfolios.
Pick an index
When it comes to index mutual funds, it’s important to pick the right index for your needs. There are literally hundreds to choose from. You can pick an index based on industry, company size, location or asset type.
If you’re overwhelmed by the options, consider choosing a target-date fund, balanced-fund or a broad-market index that tracks the performance of a large segment of the stock market to get started.
Index mutual funds tend to have lower costs than other investment options, making them the right choice for long-term investing. However, there are still costs you should consider, including expense ratios and fees.
The expense ratio is how much of the fund’s assets go toward administrative and operational expenses, cutting into your returns. According to Vanguard, the average expense ratio across its index mutual funds is 73% less than industry average.
Vanguard may charge purchase and redemption fees to buy or sell shares of its funds. Many of the company’s funds are free of such fees, but a select few charge 0.25% to 1.00% for purchases and redemptions.
Top Vanguard Index Funds
Vanguard has over 60 index mutual funds to choose from. Which fund is best for your portfolio is dependent upon your investment strategy, comfort level with risk and your financial goals.
Let’s look at five leading Vanguard index mutual funds, all of which offer very low expense ratios and have delivered good 10-year average annual returns. All five funds can be purchased via Vanguard Admiral Shares, requiring a minimum investment of $3,000.
Vanguard 500 Index Fund (VFIAX)
- Asset Class: Domestic Stock
- Expense Ratio: 0.04%
- 10-Year Average Annual Return: 15.31%
- Purchase Fee: None
The Vanguard 500 Index Fund fund invests in 500 of the largest public companies in the United States, including Microsoft, Apple, Amazon and Facebook. It tracks the performance of the S&P 500 and invests in different industries like communication services, energy, and health care.
Vanguard Intermediate-Term Corporate Bond Index Fund (VICSX)
- Asset Class: Intermediate-term bond
- Expense Ratio: 0.07%
- 10-Year Average Annual Return: 5.06%
- Purchase Fee: 0.25%
The Vanguard Intermediate-Term Corporate Bond Index Fund invests in bonds issued by industrial, utility and financial companies with maturities between five and 10 years. It tracks the performance of the Barclays Capital U.S. 5-10 Year Corporate Bond Index.
Vanguard Growth Index Fund (VIGAX)
- Asset Class: Domestic Stock-General
- Expense Ratio: 0.05%
- 10-Year Average Annual Return: 17.92%
- Purchase Fee: None
The Vanguard Growth Index Fund invests in large U.S. companies in industries that tend to grow at a faster rate than the rest of the market, such as consumer goods and services. The fund aims to match the performance of the MSCI US Prime Market Growth Index.
Vanguard Large-Cap Index Fund (VLCAX)
- Asset Class: Domestic Stock-General
- Expense Ratio: 0.05%
- 10-Year Average Annual Return: 15.41%
- Purchase Fee: None
The Vanguard Large-Cap Index Fund gives you exposure to U.S. stocks in the top 85% of market capitalization, investing in large companies in the financial, health care, industrial, and oil and gas industries. Major companies in this fund include Johnson & Johnson, Berkshire Hathaway, Visa and Procter & Gamble. It tracks the performance of the CRSP U.S. Large Cap Index.
Vanguard Developed Markets Index Fund (VTMGX)
- Asset Class: International/Global Stock
- Expense Ratio: 0.07%
- 10-Year Average Annual Return: 6.65%
- Purchase Fee: None
The Vanguard Developed Markets Index Fund invests in a range of large, mid and small companies in markets outside of the United States, particularly in the health care and technology sectors. Major businesses within the fund include Toyota, Astrazeneca and Samsung Electronics. The fund tracks the performance of the FTSE Developed All Cap ex US Index.
How to Invest in a Vanguard Index Fund
Once you’ve decided which index mutual funds are best for you, you can open up an account in under 10 minutes.
- Decide which kind of account you will use. If you’d like to use Vanguard index funds to save for retirement, you can open a traditional IRA, Roth IRA or self-employed IRA. If you’d like to invest your money for other goals, you can also open a taxable brokerage account.
- Link your banking information. Next, link your bank information, including your checking account number and routing number. Before you can make any transactions, Vanguard will ask you to verify your account information by confirming a small deposit to the linked account. This process can take a few days to complete.
- Buy shares. Once your bank account has been verified, your account is ready and you can begin buying and trading shares. Just click on the link that says “Buy and Sell,” and enter the fund name to buy the index mutual fund you want.
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10 Best Vanguard Funds for Beginning Investors
Many new investors turn to Vanguard funds to get them started. That's because Vanguard is one of the largest investment companies in the world.
Vanguard makes it easy to invest with many high-quality, low-cost, no-load mutual funds available. Since there are so many funds to choose from, we make it easy with a list of top-notch Vanguard funds.
Investing in Just One Fund With Vanguard
Most beginning investors don't start their first portfolio off with a variety of mutual funds. They either need to keep things simple or don't have the cash to meet the required minimum investment.
One mutual fund is not always enough to be diversified, and it's not only new investors who should keep that in mind.
These three balanced funds from Vanguard are good options if you want to start by investing in only one fund:
- Vanguard Wellesley Income Investor Shares (VWINX): This fund has a balance of roughly one-third stocks and two-thirds bonds, which makes for a fairly low-risk way to get started. Keep in mind that lower risk usually means lower average returns, compared to stock funds, because stock funds carry higher market risks. Still, VWINX has been a top performer, compared to other conservative allocation funds. VWINX has a $3,000 minimum initial investment requirement.
- Vanguard Star Fund (VGSTX): This fund invests in roughly 60% stocks and 40% bonds and short-term reserves, which makes for a medium-risk stock fund that is good for those with medium risk tolerance and long-term investment objectives. This fund only requires a $1,000 minimum initial investment.
- Vanguard Target Retirement 2050 (VFIFX): Vanguard has a few different target retirement funds to choose from. VFIFX can serve as a good example. These types of funds, also called "target-date retirement funds," invest in a way that fits the length of time. The longer the time until the target year, the higher the number of stocks in the fund. As the target year gets closer, the allocation will slowly shift to bonds. VFIFX is for people who are planning to retire around the year 2050. It has a minimum initial investment of $1,000.
Passive Investing With Vanguard Index Funds
Index mutual funds match or track the components of a market index, so they often combine broad market exposure with low portfolio turnover and expenses. Vanguard has dozens of index funds. Here, we highlight some good ones for new investors. All of those listed below have a $3,000 minimum initial investment.
- Vanguard Balanced Index (VBIAX): Like the Vanguard Star fund, this fund has a moderate allocation of roughly 60% stocks and 40% bonds, making it a medium-risk stock fund. It's good for those with medium risk tolerance and long-term investment objectives. And because it blends stock and bond indexes, it's like having two Vanguard index funds in one.
- Vanguard 500 Index (VFIAX): This was the first index fund for individual investors, and it tracks the Standard & Poor's 500 Index (S&P 500). It's one of the best ways to gain exposure to a large segment of the U.S. stock market in just one mutual fund. Although investing in 500 of the largest companies in the U.S. provides diversification, the fund's 100% exposure to stocks could mean more risk if you don't own other funds. VFIAX can be an outstanding fund to use as the core of a portfolio that contains other funds.
- Vanguard Total Stock Market Index Admiral Shares (VTSAX): This fund offers exposure to the entire U.S. stock market at a low cost. It is like Vanguard 500 Index; however, instead of getting exposure to about 500 of the largest U.S. stocks, you get exposure to more than 3,000 stocks for companies of different sizes.
- Vanguard Total Bond Market Index Admiral Shares (VBTLX): This fund is like VTSAX, but instead of investing in the entire U.S. stock market in one mutual fund, you get the entire U.S. bond market in one fund. So, when you're ready to expand your portfolio and balance the risk with a low-cost, diversified bond index fund, VBTLX could be a good choice.
- Vanguard Total International Stock Market Index Admiral Shares (VTIAX): By now, you're catching on to the "total market" idea. This fund offers coverage of stocks around the entire world outside of the U.S. If you're ready to diversify your portfolio by adding foreign stock, you can do it with VTIAX.
Vanguard Small-Cap Stock and Sector Funds
Once you've built your portfolio around the basics of large-cap U.S. stocks, international stocks, and bonds, you might want to add a more aggressive fund. This can add more diversity and potential for higher returns. You might take a look at a small-cap stock fund and maybe a few sector funds.
Here are two Vanguard funds that could meet those needs. Each of them has a $3,000 minimum initial investment.
- Vanguard Explorer Investor Shares (VEXPX): This fund invests in more than 600 small-cap stocks, which are seen as more aggressive than large-cap stocks. But this high relative risk can translate into higher returns in the long run. Exposure to hundreds of different stocks can reduce risk, compared to more concentrated small-cap stock funds.
- Vanguard Health Care Investor Shares (VGHCX): This fund invests completely in the health care sector, which includes pharmaceutical firms, medical supply companies, and research firms. Thanks to advances in technology and an aging population, VGHCX has been a top-performing fund for more than 25 years. But keep in mind that investing in just one sector is generally a bigger risk than investing in a broadly diversified stock index fund.
Vanguard funds are some of the best mutual funds for beginners, because of their wide variety of no-load funds with low expense ratios. But even advanced investors and other professionals use Vanguard funds.
Once you become more experienced, you may be able to combine several of these Vanguard funds into one portfolio.
The Balance does not provide tax, investment, or financial services or advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk, including the possible loss of principal.
Frequently Asked Questions (FAQs)
What are the best Vanguard funds for long-term investors?
The best Vanguard funds for long-term investors are those that have lower expense ratios than other funds. We have broken down the top 10 Vanguard funds for long-term investors so you can find the best options for you.
How much do you need to start a Vanguard account?
You don't need any money to start a Vanguard account as long as you receive documents online. However, the minimum amount for funds begins at $1,000, and most require at least $3,000.
Vanguard mutual fund fees & minimums
The average Vanguard mutual fund expense ratio is 83% less than the industry average.*
See the difference low-cost mutual funds can make
See how Admiral™ Shares help keep your costs under control
Account service fees
Account service fees are automatically waived when you register for secure access to our website and let us send account documents to you electronically. They're also waived for clients with at least $50,000 in qualifying Vanguard assets.
If none of those waivers apply, a $20 fee will be charged annually for each fund account in which you have a balance of less than $10,000.
Avoid account service fees by signing up for e-delivery
See what you get as a Voyager or Flagship Services client
Purchase & redemption fees
Very few Vanguard funds charge fees when you buy and sell shares. The fees are designed to help those funds cover higher transaction costs and protect long-term investors by discouraging short-term, speculative trading.
Fees vary from 0.25% to 1.00% of the amount of the transaction.
See which funds charge purchase & redemption fees
Fees you won't pay at Vanguard
Vanguard funds never charge front-end or back-end loads or other sales commissions.
And you'll have access to thousands of commission-free ETFs and more than 160 no-transaction-fee mutual funds from Vanguard and other companies.**
Minimum fund vanguard investment index
Costs, fees & minimums
footnote*Vanguard average expense ratio: 0.09%. Industry average expense ratio: 0.54%. All averages are asset-weighted. Industry averages exclude Vanguard. Sources: Vanguard and Morningstar, Inc., as of December 31, 2020.
footnote**Vanguard Digital Advisor is an all-digital service that targets an annual net advisory fee of 0.15% across your enrolled accounts, although your actual fee will vary depending on the specific holdings in each enrolled account. To reach this target, Vanguard Digital Advisor starts with a 0.20% annual gross advisory fee to manage Vanguard Brokerage Accounts. However, we’ll credit you for the revenues that The Vanguard Group, Inc. ("VGI"), or its affiliates receive from the securities in your Digital Advisor managed portfolio (i.e., at least that portion of the expense ratios of the Vanguard funds held in your portfolio that VGI or its affiliates receive). Your net advisory fee can also vary by enrolled account type. The combined annual cost of Vanguard Digital Advisor's annual net advisory fee plus the expense ratios charged by the Vanguard funds in your managed portfolio will be 0.20% for Vanguard Brokerage Accounts. For more information, please review Form CRS and the Vanguard Digital Advisor Brochure.
Vanguard Digital Advisor’s services are provided by Vanguard Advisers, Inc. ("VAI"), a federally registered investment advisor. VAI is a subsidiary of VGI and an affiliate of VMC. Neither VAI, Digital Advisor, VGI, nor VMC guarantees profits or protection from losses.
footnote***Some funds have higher minimums to protect the funds from short-term trading activity. Fund-specific details are provided in each fund profile.
You must buy and sell Vanguard ETF Shares through Vanguard Brokerage Services (we offer them commission-free) or through another broker (which may charge commissions). See the Vanguard Brokerage Services commission and fee schedules for limits. Vanguard ETF Shares are not redeemable directly with the issuing fund other than in very large aggregations worth millions of dollars. ETFs are subject to market volatility. When buying or selling an ETF, you will pay or receive the current market price, which may be more or less than net asset value.
Advice services are provided by Vanguard Advisers, Inc., a registered investment advisor, or by Vanguard National Trust Company, a federally chartered, limited-purpose trust company.
The services provided to clients who elect to receive ongoing advice will vary based upon the amount of assets in a portfolio. Please review the Forms CRS and Vanguard Personal Advisor Services Brochure for important details about the service, including its asset-based service levels and fee breakpoints.
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