Best Vanguard index funds 2022

In this article, we are going over the top six Vanguard Index funds that you can buy in 2022.

#6. NUMBER

at number six is VTIAX or the Vanguard Total international stock index fund. This fund seeks to track the performance of the footsie global all cap ex US Index, which is an Index designed to measure the stock market performance around the world excluding the United States.

I specifically chose to add this fun to the list because of its international exposure for the majority of investors having some international exposure in your portfolio will help to add diversification, especially for passive investors. That is if you are investing primarily in passive index funds or passive ETFs, which is what most of you are probably investing in without actually even realizing it.

This Vanguard fund currently holds about 7532 international stocks with top holdings and Taiwan Semiconductor, Nestle, Samsung, and a few others that you may or may not recognize the average 10-year return currently sits at 6.61% which means $10,000 invested 10 years ago would be worth close to $19,000 today.

I really want to emphasize that this fund is not designed to act as a core position within your portfolio. In other words, in my opinion, it definitely should not make up over 10 to 15% of your overall portfolio in terms of cost. This Index fund has an expense ratio of point, 11%, which means you'll pay $11 per year on $10,000 invested.

One very important thing that I want to point out about pretty much all Vanguards Index funds is that most of them do have a $3,000 minimum investment requirement and this fund is no exception. In order to invest your money, you'll need at least $3,000 however, there is a solution. Most Vanguard Index funds are also available as ETFs or exchange-traded funds for this fund. 

Specifically, the ETF equivalent is VXUS. And this ETF of course doesn't have any minimum investment requirements, just the price of one ETF which is currently trading for about $61. 

#5. NUMBER

The number 6 on the list is VMGAX or the Vanguard mega-cap growth Index fund. This Index fund seeks to track the performance of the crisp us mega-cap growth index and index that measures the investment return of the largest capitalization growth stocks in the US now this is a very niche index fund that focuses on a very small portion of the US stock market. 

This fund is currently holding 102 stocks with top holdings in Well, every one of the largest companies in the world that you'll definitely recognize. It's no wonder then that this index fund has given a 10-year return of 18.09%. This means $10,000 invested 10 years ago would be worth well over $57,000 today.

If you're looking to maximize diversification and limit your portfolio's volatility as much as possible, then this Index fund should not be a core holding in your portfolio but instead a non-core hold. Surprisingly, this index fund has a very low expense ratio of 0.06%. You will only have to pay $6 per year on $10,000 invested but of course, Vanguard can't just go and give you access to this fund that easy.

They will require a minimum deposit of $5,000 to begin investing but like with every fund on this list, this index fund is also available as an ETF, and that ETF is MGK or the Vanguard mega-cap growth ETF it's an exact replica of VMGAX except as an ETF.

#4. NUMBER

The number four on the list is VDIGX or the Vanguard Dividend Growth Fund. The benchmark for this actively managed fund is the s&p US dividend growers index which is designed to measure the performance of US companies that have followed a policy of consistently increasing dividends every year for at least 10 consecutive years. And yes, that was not a mistake. You heard me right. 

This fund is indeed actively managed. This is different from most of the passively managed funds that most of you are probably investing in the difference is simple. With an actively managed fund, a fund manager or management team makes day-to-day decisions about how to invest the fund's money, their main objective is to attempt to beat the returns of a market index.

In contrast, a passively managed fund simply follows a market index such as the s&p 500 or the Dow Jones Industrial Average passive funds do not have management teams making daily investment decisions. So these two different funds styles do have their pros and cons. 

Just understand that generally speaking, a passively managed fund will be a lot cheaper to own and historically have outperformed actively managed funds. Now this fund has a very small portfolio compared to most funds holding only 42 stocks with top holdings in TJ X, Colgate j&j, Coke, and a few others. 

As you can probably tell from the top holdings this fund is only investing in companies that have a proven dividend history. And so obviously, you're not going to see stocks like Amazon, Tesla, and Google because these companies don't pay a dividend in terms of performance. 

This fund has a 10-year return of 13.94% which means $10,000 invested 10 years ago would have grown to about $38,000. Today definitely still impressive growth especially from an index fund that focuses primarily on dividend-paying stocks instead of growth stocks now because this index fund is actively managed, it is a little bit more expensive with an expense ratio of 0.26%. 

You can expect to pay $26 per year on $10,000 invested. Now this one does have the $3,000 minimum investment requirements. There are some really great cheap ETF alternatives. Although Vanguard doesn't listen exact ETF equivalent to this index fund, I do believe that both VIG and VYM are amazing ETF alternatives.

#3. NUMBER

Now at number three is VIGAX or the Vanguard growth index fund. This fund seeks to track the performance of the crisp us large-cap growth index, a benchmark representing the growth stocks of large US companies. And so this index fund is not only hyper-focused on growth stocks, but large-cap growth stocks. 

This presents a problem in that this index fund is not very diversified. But ideally, you would combine this fund with another index fund whose holdings include not only large-cap stocks but mid and small-cap stocks as well. And further, down the list, there will be some index funds that give you that type of exposure. This index fund holds 267 stocks. 

Its top holdings include companies like Apple, Microsoft, Google, Amazon, and so forth. And because this fund focuses on growth, it makes sense that the average tenure return is currently sitting at 17.41%, which means $10,000 invested 10 years ago would be worth close to $55,000 today.

The expense ratio for this fund is one of the lowest on the list so far coming in at 0.05%. You will only have to pay $5 per year on $10,000 invested and unfortunately, this index fund also has the $3,000 minimum investment requirement, but an identical ETF alternative is VUG or the Vanguard Growth ETF and so if you can't afford that $3,000 minimum investment This is a perfect alternative.

#2. NUMBER

The number two is VFIAX or the Vanguard 500 index fund. This fund offers exposure to the s&p 500 index, which is an index that tracks the performance of 500 of the largest companies in the US stock market. The VFIAX is arguably one of the Best Buy and hold investments that you can include within your portfolio. 

If you want a fund that uses the s&p 500 as its benchmark like this one because it invests in the s&p 500 It should come as no surprise that this fund holds about 500 socks with top holdings in Apple, Microsoft, Google and many other top US companies this fund has returned an average of 15.39% annually over the past decade.

So, if you invested $10,000 from 10 years ago would have grown to about $44,000 today. This index one has one of the lowest expense ratios on the list at 0.04% You'll only have to pay $4 per year on $10,000 invested and to avoid that $3,000 minimum investment requirement you can simply invest in VOO which is the ETF equivalent which also has a smaller expense ratio.

Now most investors who are using this index fund within their portfolio are using it as a core holding core holdings are the central investments of any long-term portfolio and they usually make up a vast majority of the portfolio's investment it is absolutely critical that you have a core holding in your portfolio that has a history of reliable growth and consistent returns. 

Going back to the example from earlier if we take a look at number six on the list VTIAX you would not want to include the index fund as a core holding within your portfolio because that fund does not have reliable growth and consistent returns when compared to other better funds. But your main core holdings should always be something with consistent growth and reliability such as an s&p 500 fund or something else similar.

#1. NUMBER

The number one index fund on this list is VTSAX or the Vanguard Total Stock market index fund. VTSAX seeks to track the performance of the Chris us total stock market index, which is an index that represents virtually the entire US stock market, including large mid-small, and micro-cap stocks

And with an average tenure of return of 15% $10,000 invested 10 years ago would be worth about $43,000 today, but you may be thinking to yourself right now, Joshua, why is this index fund number one on the list if the past returns are not as high as some of the others that you mentioned on this list.

And it has a lot to do with the fact that this fund still gives a really good return while also being diversified across multiple sectors and market caps. For example, this fund currently holds about 4139 stocks, that's four times the number of stocks held in the previous index fund with top holdings in Apple, Microsoft, Google, etc.

The expense ratio is also very small for this index fund at 0.04%. You only have to pay $4 per year on $10,000 invested. And finally, if you want to invest in this fund without that $3,000 requirement, you can simply invest in the ETF equivalent which is VTI, or the Vanguard Total Stock Market ETF.