9 Best Vanguard Mutual Funds for May 2024

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Mutual funds give you exposure to a wide range of investments in a single asset by pooling money from many investors and investing it into various stocks, bonds and other holdings. Investors who buy shares in the fund receive part ownership of it and also share income generated when investments rise in value.

See Also: 5 Genius Things All Wealthy People Do With Their Money

One of the top names in the mutual fund industry is Vanguard, the Pennsylvania-based brokerage giant. A the end of 2023, Vanguard Group ranked as the biggest brokerage firm in the U.S. with $8.6 trillion in assets under management, according to an analysis from US News.

Vanguard Overview

Vanguard offers more than 400 Vanguard funds for investors to choose from. To invest in a fund, you’ll need to make a minimum initial investment — usually about $3,000, but some funds are cheaper. You then pay yearly fees to maintain the fund based on the percentage of money you have invested in it. This is known as the expense ratio.

You can choose from two basic types of funds:

• Investor Shares: These carry a minimum investment of $3,000 and feature an expense ratio that typically ranges from 0.08% to 0.13%.
• Admiral shares: These also carry a minimum investment of $3,000 and feature an expense ratio that typically ranges from 0.04% to 0.60%

You can purchase Vanguard funds directly from the company or by opening a brokerage account elsewhere. Vanguard funds can also be accessed through retirement plans such as 401(k)s and IRAs.

Top Vanguard Mutual Funds

Although Vanguard offers more than 200 funds, some stand out because of their low costs, high returns and suitability for certain types of investors. Here’s a look at the nine best Vanguard funds for May 2024.

1. Vanguard 500 Index Fund Admiral Shares (VFIAX)

This fund tracks the S&P 500 index and features low costs and strong returns, though your investment is primarily restricted to large-cap stocks that make up the index. At a glance:

At a Glance

Pros

• Tracks a popular index.
• Strong historical performance.
• A long record of operations and high assets under management.

Cons

• Only offers access to U.S. large- and mid-cap stocks.
• Top-heavy due to to the index’s market-cap weighting.
• More than 30% is concentrated in information technology stocks.

2. Vanguard High-Yield Tax-Exempt Fund (VWAHX)

This is considered a good choice for bond investors seeking tax-exempt income. It invests at least 80% of its assets in investment-grade municipal bonds, with the goal of providing a high level of federally tax-exempt income. Here are the details at a glance:

Pros

• Provides tax-exempt income.
• Low costs compared with other funds.
• Strong historical performance.

Cons

• Credit and interest-rate risk can lead to volatility.
• Not a good fit for all tax brackets.
• Might not appeal to those who prefer stocks.

3. Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)

Vanguard’s VTSAX funds aims to give investors exposure to mid-cap, small-cap and microcap stocks that are not available with S&P 500 index funds. The fund tracks the Dow Jones U.S. Total Stock Market Index and holds more than 3,800 stocks. Take a look at some figures:

Pros

• Strong overall representation of the U.S. stock market.
• High AUM and low fees.
• Very good historical performance.

Cons

• Minimal international diversification.
• High concentration of technology stocks.
• Small-cap stocks included in the fund can often be volatile.

4. Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX)

This fund provides lower risk than those that are invested in 100% equities because it holds government Treasurys and investment-grade corporate bonds of all maturities, making it a good choice for older investors with lower risk tolerance. VBTLX tracks the Spliced Bloomberg U.S. Aggregate Float Adjusted Index, giving you a good all-around investment option.

Pros

• Low expense ratio.
• Diversified across issuers and maturities.
• Low risk compared with other funds.

Cons

• It could lose value if interest rates rise.
• Lower expected returns than equities.
• Lower tax efficiency than equities.

5. Vanguard Balanced Index Fund Admiral Shares (VBIAX)

With the Vanguard Balanced Index Fund, offers have access to a 60-40 mix of stocks and bonds. This provides a balanced approach that has historically done well because stocks push values up during bull markets and bonds help soften the blow during bear markets. The VBIAX fund works well for medium-term investors with a moderate risk tolerance.

Pros

• Historically good risk-return metrics.
• A low expense ratio.
• Hands-off management style.

Cons

• A lack of international diversification.
• Can lose value if stocks and bonds fall together.
• Lower expected returns than 100% equities.

6. Vanguard Total International Stock Index Fund Admiral Shares (VTIAX)

This is a good option for investors who want exposure to international markets. The VTIAX fund provides access to more than 8,500 international equities from both developed and emerging markets. One of the main advantages is that you can invest in international equities without converting currencies or buying U.S. depositary receipts.

Pros

• Diversified across international developed and emerging markets.
• Fairly low expense ratio.
• Provides easy access to a wide cross-section of international stocks.

Cons

• Higher fees than U.S. equity funds.
• Historically lower returns vs. U.S. equity funds.
• Not as tax-efficient as U.S. equity funds.

7. Vanguard Total International Bond Index Fund Admiral Shares (VTABX)

This is another international fund, except that it provides access to bonds around the world. Owning shares of the VTABX fund helps investors diversify their bond holdings beyond just U.S. bonds. The fund tracks the Bloomberg Global Aggregate Ex-USD Float Adjusted RIC Capped Index Hedged, which holds more than 7,000 foreign government and investment-grade corporate bonds of all maturities.

Pros

• Access to diverse mix of international bonds.
• Diversified across issuers and maturities.
• Lower-risk than many other funds.

Cons

• Value might decline if interest rates rise.
• Lower returns than equity funds.
• Higher expense ratio than U.S. bond funds.

8. Vanguard Total World Stock Index Fund Admiral (VTWAX)

The Vanguard Total World Stock Index Fund holds more than 9,500 stocks from U.S. and foreign markets and tracks the Spliced Total World Stock Index version of the FTSE Global All Cap Index. The fund is roughly divided into 60% U.S,.30% foreign developed and 10% foreign emerging markets, though the percentage changes depending on shifts in global stock markets.

Pros

• Very diversified across investable markets.
• Provides access to small-, mid- and large-cap stocks from all 11 sectors.
• Good mix of U.S. and international holdings.

Cons

• Higher fees compared with similar funds.
• No fixed-income exposure unless combined with another bond fund.
• Lower returns than many U.S.-only funds.

9. Vanguard Target Retirement 2050 Fund (VFIFX)

This fund keeps costs low by investing only in Vanguard funds rather than individual securities. About 90% of shareholder money is held in stocks via funds, with the rest split between bonds and cash-like assets.

Pros

• Low minimum investment vs. other funds
• Provides income and stability
• Comparatively low costs.

Cons

• Holdings not very diversified.
• Might not appeal to those who prefer exposure to stocks.
• Investment risk of each target date fund changes over time.

Information is accurate as of April 24, 2024.

Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.

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