If you found that your investments underperformed in 2023, take solace in the fact that you're not alone – in fact, even professional fund managers often struggle to outperform this benchmark. So instead of trying to pick the next hot fund in 2024, consider focusing instead on controllable elements with your investment selection. This primarily entails the level of diversification and fees paid, both of which are critical factors that can significantly impact long-term returns if not properly managed.
In this context, Vanguard funds emerge as a compelling choice. The firm's investor-owned structure inherently aligns with the goal of minimizing fees, leading to a substantial difference in their funds' expense ratios compared to the industry average. For instance, Vanguard's average exchange-traded fund, or ETF, and mutual fund expense ratio stands at just 0.08%, compared to the industry average of 0.47%. Here are some of the best Vanguard funds to buy and hold, from its current selection of 267 mutual funds and 84 ETFs:
Vanguard 500 Index Fund Admiral Shares (ticker: VFIAX). To track the S&P 500 net of a small fee, investors can use VFIAX. This Admiral Shares mutual fund requires a $3,000 minimum investment but charges a very low 0.04% expense ratio. This fund has been a powerhouse over the past decade, returning an annualized 12% over the 10-year trailing period ending Dec. 31, 2023. The fund also charges no purchase, redemption or 12b-1 fees.
Vanguard Total Stock Market ETF (VTI). "I still believe that a quality ETF for a long-term growth portfolio from Vanguard is VTI, especially for investors who are not really near retirement," says Jim Penna, senior manager of retirement services at VectorVest Inc. "VTI holds all of the 'Magnificent 7' stocks, so it's a nice way to capture all seven of the names." These outperforming stocks – Apple Inc. (AAPL), Microsoft Corp. (MSFT), Amazon.com Inc. (AMZN), Nvidia Corp. (NVDA), Alphabet Inc. (GOOGL, GOOG), Meta Platforms Inc. (META) and Tesla Inc. (TSLA) – all sit in the top holdings of VTI, which charges a low 0.03% expense ratio.
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VANGUARD FUNDEXPENSE RATIO
Vanguard 500 Index Fund Admiral Shares (ticker: VFIAX)0.04%
Vanguard Total Stock Market ETF (VTI)0.03%
Vanguard Total International Stock Index Fund Admiral Shares (VTIAX)0.11%
Vanguard Total World Stock ETF (VT)0.07%
Vanguard Dividend Appreciation ETF (VIG)0.06%
Vanguard Wellington Fund Investor Shares (VWELX)0.25%
Vanguard Target Retirement 2070 Fund (VSVNX)0.08%
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