A man says to his friend, “I’m invested in Vanguard index funds.” His friend replies, “Ah, but you repeat yourself.”
OK, perhaps I’m guilty of trying to be too clever. The point I’m making is that Vanguard’s name is every bit as closely tied to “index fund” as Google’s is to “search.” And it’s earned: Company founder Jack Bogle created the first index mutual fund back in 1975, and the company has spent the past 50-plus years perfecting its craft.
By the way: That original product is now one of the world’s largest mutual funds. Dozens of other Vanguard index funds have become juggernauts, too. That’s not just because Vanguard is able to keep fees low in a way that few other providers can—it’s because Vanguard tends to pick its tracking indexes well, and it’s not shy about changing them should it find better ways to achieve the fund’s goals.
All of that said, you likely don’t need to own every Vanguard index fund … but you might be interested in at least a few for your various portfolio needs.
Read on as I highlight some of Vanguard’s top index funds. Most of these are “core” strategies that make up the foundation of an investment portfolio, but a few are “satellite” holdings that investors can use to chase outperformance, collect income, and more.
Editor’s Note: Tabular data shown in this article is up-to-date as of Feb. 20, 2026.
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Disclaimer: This article does not constitute individualized investment advice. Securities, funds, and/or other investments appear for your consideration and not as personalized investment recommendations. Act at your own discretion.
Table of Contents
Why Index Funds?
An investment fund provides you with exposure to different parts of the market. Typically, if you’re buying one on the public markets, you’re buying collections of stocks and/or bonds, though they might hold other assets, too.
For most of their history, human managers decided exactly which investments the fund would buy. But in 1975, Vanguard changed all that with the advent of the index fund.
An index measures the performance of a group of assets, and those assets are determined by the index’s rules. An index fund “tracks” the index by actually investing in all (or in some cases, a representative sampling of) the underlying assets. An index’s strategy can be broad, like the S&P 500, which measures a wide assortment of American companies. Or it could be as specific as holding only U.S. and French companies that derive some of their revenues from the sale of pasta.
While I don’t recommend buying my hypothetical Franco-American Spaghetti Fund, I do recommend buying index funds in general.
For one, index funds are inexpensive. An actively managed index fund has one or more managers, all of whom expect to be paid for their troubles. An index fund technically has a manager overseeing the fund, but they’re not performing stock research and deciding on trades—the index’s rules determine those actions. Thus, fund providers can afford to charge (often much) lower expenses on index funds.
Index funds aren’t chumps, either. I’ll provide an eye-opening example a little later, but human managers often struggle to beat the benchmark indexes in the first place. So if you have a fund that simply tracks a benchmark index, and it’s also charging less than most of the human managers trying to beat that benchmark, well … that fund has a decent potential for success.
Also worth noting? Turnover—how much the fund tends to buy and sell holdings—is often extremely low in index funds, as only a handful of holdings tend to enter or leave the underlying index in a given year. Why does that matter? Turnover can generate capital gains, which funds must distribute to shareholders, and those gains distributions are taxable. But index funds’ capital gains distributions are typically small if not zero, making them very tax-efficient investments for taxable brokerage accounts.
Why Vanguard?
Vanguard Group is one of the largest asset managers in the world, currently boasting more than $12 trillion in assets under management (AUM).
Again, one of the primary drivers of that success is Vanguard’s dirt-cheap expenses. The average asset-weighted expense ratio for U.S. mutual funds and ETFs is 0.44%, or $4.40 annually for every $1,000 invested. Vanguard’s average, across 400-plus funds, is a scant 0.06%, or a mere 60¢ annually per $1,000 invested. That’s an astoundingly low number—one that means even when a Vanguard fund isn’t the absolute cheapest in its category, it’s still going to be one of your most cost-effective options.
These numbers are tiny, measured in mere basis points (a basis point is one one-hundredth of a percentage point). But they add up to massive savings. Christine Benz, Morningstar’s Director of Personal Finance and Retirement Planning, wrote in 2023 that in the previous year alone, “Vanguard’s cost advantage saved its investors collectively about $26 billion compared with what they would have shelled out if they had invested in funds with average expenses.”
Vanguard isn’t sitting still, either. That average expense ratio was 0.08% in 2024, then declined to 0.07% in 2025 after Vanguard cut expenses on 168 share classes across 87 funds. Its drop to 0.06% occurred in early 2026 when the company announced it would slash fees on another 84 share classes across 53 funds. All told, Vanguard estimates that’s $600 million in savings for investors, which the firm claims is its “largest-ever two-year combined cost reduction.”
Much of Vanguard’s success on the fee-fighting front can be chalked up to founder Jack Bogle, who created the first index mutual fund and helped proliferate this fund type. Now, low-cost index funds can be found the world over, bringing costs down for millions of investors—even those who don’t buy Vanguard’s products.
But Bogle, too, was responsible for more than just cheap investing. His investment philosophies helped shape Vanguard into the titan it is today, and sparked a group (the Bogleheads) who energetically follow in his footsteps.
How Were the Best Vanguard Index Funds Selected?
Vanguard boasts one of the largest collections of indexed mutual funds on the planet—more than 130 at last check. Not exactly the easiest number to pare down.
So, as I normally do, I’ve started by booting up Morningstar Investor and running a quality screen that I customize for every search. In this case, I began by including only Vanguard index funds that have earned the top Morningstar Medalist rating of Gold. Unlike Morningstar’s Star ratings, which are based upon past performance, Morningstar Medalist ratings are a forward-looking analytical view of a fund. Says Morningstar:
“For actively managed funds, the top three ratings of Gold, Silver, and Bronze all indicate that our analysts expect the rated investment vehicle to produce positive alpha relative to its Morningstar Category index over the long term, meaning a period of at least five years. For passive strategies, the same ratings indicate that we expect the fund to deliver alpha relative to its Morningstar Category index that is above the lesser of the category median or zero over the long term.”
As I’ve written in other Young and the Invested articles, a Medalist rating doesn’t mean Morningstar is necessarily bullish on the underlying asset class or categorization. It’s merely an expression of confidence in the fund compared to its peers.
Because one of the primary draws of Vanguard index funds is low fees, I also decided to only consider funds whose expense ratios are well below their category average. But that ended up being pretty redundant—most Vanguard index mutual funds already fit that bill.
From the remaining universe of several dozen Vanguard index funds, I selected a range of products that fit various portfolio goals and have good-to-great track records.
Lastly, all the Vanguard funds on this list have a $3,000 minimum initial investment. If that sounds steep, don’t worry—most Vanguard index mutual funds have ETF share classes that trade for as little as the price of one share (or less if you have a brokerage that allows fractional shares). So all the funds here should be quite accessible.
Related: Best Vanguard Retirement Funds for a 401(k) Plan
1. Vanguard 500 Index Fund Admiral Shares
— Style: U.S. large-cap stock
— Assets under management: $1.5 trillion*
— Dividend yield: 1.1%
— Expense ratio: 0.04%, or 40¢ per year for every $1,000 invested
Remember when I said Vanguard founder Jack Bogle created the first index fund? That fund, first called the First Index Investment Trust, was shortly thereafter rebranded as the Vanguard 500 Index Fund Admiral Shares (VFIAX)—a fund that’s not only still around today, but one of the largest funds, at more than a trillion dollars in assets across its various share classes. (The assets under management figure shown above specifically represents their Admiral Shares mutual fund class.)
VFIAX tracks the S&P 500 Index—the iconic, diversified benchmark that has played a starring role in mutual fund managers’ nightmares for decades. The latest data from S&P Dow Jones Indices’ SPIVA (S&P Indices versus Active) shows that a whopping 86% of actively managed large-cap funds have failed to beat the S&P 500 during the trailing 10-year period, and that number rises to 88% when looking at the past 15 years.
“I know guys that rate active managers, and even they’re like, ‘I’m not buying an actively managed; I’m just indexing,'” says Daniel Sotiroff, Senior Analyst for ETF and Passive Strategies at Morningstar. “You can’t improve upon [the S&P 500]. You can’t outdo it.”
So, rather than try to outdo it, maybe the best course of action is to join it.
Related: 11 Best Vanguard Funds for the Everyday Investor
The Vanguard 500 Index Fund Admiral Shares holds shares of 500 large, dominant U.S. companies. But it doesn’t hold them equally. The S&P 500 is “market-cap weighted,” which means the larger the company, the more weight the stock has in the index (and thus the more impact it has on returns). Thus, right now, VFIAX dedicates the greatest portions of its assets to large-cap stocks** like Nvidia (NVDA), Apple (AAPL), and Microsoft (MSFT), whose market caps are measured in trillions of dollars. VFIAX is also considered to a “blend” fund, which means it has relatively even exposure to value stocks and growth stocks.
Financial experts frequently suggest using an S&P 500 fund as the core of your portfolio given its exposure to hundreds of larger, more financially stable companies across all sectors—from tech to health care to real estate. Because of this diversity of holdings, the S&P 500 not only provides access to the growth of the American economy, but a modest level of dividend income, too. VFIAX’s yield might not seem like much right now. However, reinvested over time, the S&P 500’s dividends make up roughly 35% to 50% of the index’s returns over the very long term (depending on the time period and study you’re looking at).
Also, as I mentioned before, most Vanguard index mutual funds have an ETF share class. Here, VFIAX’s sister Vanguard ETF is the Vanguard S&P 500 ETF (VOO, 0.03%), which currently trades at around $630 share.
* Many Vanguard funds have multiple share classes, including ETFs. Listed net assets for Vanguard funds in this story refer to assets under management across all of a given fund’s share classes.
** There are different ways to define “cap” levels. We’re adhering to Morningstar’s definition, which says the largest 70% of companies by market capitalization within a fund’s “style” are large-caps, the next 20% by market cap are mid-caps, and the smallest 10% by market cap are small caps.
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2. Vanguard High Dividend Yield Index Fund Admiral Shares
— Style: U.S. large-cap dividend stock
— Assets under management: $84.5 billion
— Dividend yield: 2.3%
— Expense ratio: 0.08%, or 80¢ per year for every $1,000 invested
Investors who want a higher level of income than what the S&P 500 provides, but still want to enjoy the growth potential of equities, can do so for a very low annual fee by purchasing the Vanguard High Dividend Yield Index Fund Admiral Shares (VHYAX) and its basket of high-yield dividend stocks.
The name says it all. This Vanguard index mutual fund is constructed to deliver a high level of income, which it does by tracking an index of stocks that pay higher-than-average dividends. The result is a fairly conservative, largely blue-chip portfolio of 560 stocks weighted by market cap.
Related: 7 Best Vanguard Dividend Funds [Low-Cost Income]
“Vanguard High Dividend Yield strikes a balance between higher yield and distressed yield traps,” Morningstar Analyst Bryan Armour says. “Market-cap weighting also emphasizes larger, more stable firms that should have the capacity to continue making dividend payments. This mitigates the impact of yield traps because their weight drops as their prices fall.”
VHYAX provides decent exposure to sectors defined by their defensive nature and higher-than-average dividends, such as health care (13%) and consumer staples (11%). However, its biggest sector allocation is to financials, which currently command more than 20% of assets. Top holdings are a who’s who of mega-cap dividend payers, including Broadcom (AVGO), JPMorgan Chase (JPM), Exxon Mobil (XOM), and Johnson & Johnson (JNJ). The end result is exactly what the fund aims for: a higher-than-average yield that’s more than twice what the S&P 500 delivers.
Vanguard High Dividend Yield Index Fund does not, however, hold real estate investment trusts (REITs). Its underlying index explicitly excludes them.
It seems like an odd exclusion, if only because REITs tend to be one of the market’s highest-yielding sectors. One possible explanation? Most common stocks, like those held in this Vanguard fund, pay qualified dividends, which enjoy favorable tax treatment at the long-term capital gains tax rate. Most REIT dividends, however, are non-qualified, which are taxed as ordinary income at federal income tax rates. By excluding REITs, VHYAX can pay out 100% qualified dividend income, helping shareholders avoid a potential tax headache.
VHYAX is offered in ETF form, too: The Vanguard High Dividend Yield ETF (VYM, 0.04% expense ratio) trades around $155 per share.
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3. Vanguard Dividend Appreciation Index Fund Admiral Shares
— Style: U.S. large-cap dividend stock
— Assets under management: $120.0 billion
— Dividend yield: 1.6%
— Expense ratio: 0.07%, or 70¢ per year for every $1,000 invested
Never buy an investment fund without looking under the hood. That advice goes double for dividend funds, where the word “dividend” in the name doesn’t necessarily mean you’re collecting a fat yield.
Take Vanguard Dividend Appreciation Index Fund Admiral Shares (VDADX) and its sub-2% yield, for instance.
This Vanguard dividend fund targets U.S. companies that consistently increase their cash distributions over time. Its tracking index is made up of firms that have improved their payouts on an annual basis for at least 10 consecutive years. High yield isn’t a priority. In fact, VDADX’s underlying index actually implies that high current yields are a liability, as it excludes the 25% highest-yielding eligible companies.
Why? Well … without getting too far into the weeds, high dividends can sometimes be the result of significant price drops, and in some cases might not be sustainable.
Related: The 13 Best Mutual Funds You Can Buy for 2026
That said, VDADX’s different view on dividends produces two important potential benefits:
- High quality: Only firms with strong financials and excellent cash flows can afford to keep paying shareholders more every year. So, in a way, VDADX’s commitment to dividend growers acts like a quality screen, ensuring you’re owning a higher grade of stock.
- Higher yield on cost over time: These companies might not yield much right now, but if they continue raising their dividends, you should enjoy a higher “yield on cost”—what you’re actually earning based on the price at which you bought an investment. (Example: A $100 stock paying $1 in annual dividends yields 1% [$1 / $100 = 1%]. But if you bought the stock at $50 a couple of years ago, your yield on cost is actually 2% [$1 / $50 = 2%] … plus you enjoyed a 100% price gain along the way.)
VDADX holds roughly 340 predominantly large-cap stocks with bulletproof balance sheets and the ability to churn out cash—which they increasingly fork over to shareholders in the form of dividends. All of these dividend-growth stocks have raised their payouts for at least 10 years, but some have much longer histories of uninterrupted improvement. That includes Dividend Aristocrats, which are stocks that have raised their cash distributions annually for at least 25 consecutive years. And it even includes a few Dividend Kings (Aristocrats whose streaks are at 50 years or longer) such as Procter & Gamble (PG) and J&J.
However, like Vanguard High Dividend Yield Index, you won’t get any exposure to REITs here, either.
I mentioned above that all the Vanguard index funds on this list have relatively low expenses. VDADX is a great example. The average fee on large-cap funds like this is 0.68%, according to Morningstar. But Vanguard Dividend Appreciation charges a mere 0.07%. Fees are even lower for VDADX’s ETF class, Vanguard Dividend Appreciation ETF (VIG, 0.04% expense ratio), which goes for about $220 per share.
Related: 7 Best High-Dividend ETFs for Income-Hungry Investors
4. Vanguard Small-Cap Index Fund Admiral Shares
— Style: U.S. small-cap stock
— Assets under management: $162.3 billion
— Dividend yield: 1.3%
— Expense ratio: 0.05%, or 50¢ for every $1,000 invested
Small-cap companies exhibit more potential for explosive growth than their larger peers, so investors who have both an interest in additional upside and a healthy risk appetite often try to chase down the market’s more diminutive firms.
Why the growth potential? Well, they benefit from the business law of large numbers, for one: It’s much easier to double your revenues from $1 million than $1 billion. But also, as these stocks become noticed by institutional investors and fund managers, large investments can help drive their prices further higher, too.
Related: The 12 Best Vanguard ETFs for 2026 [Build a Low-Cost Portfolio]
There’s a catch, however. Smaller stocks are frequently riskier and more volatile. A more diminutive company’s revenues might be dependent on just one or two products or services, meaning a single disruption could have massive financial consequences. Small caps also have less access to capital than their larger peers, meaning they’re less likely to get a lifeline should they suffer from broader economic headwinds.
High risk, high reward. A small company could feasibly double overnight … or get cut in half.
But if you wanted to harness small caps’ upside while mitigating some of that risk, you could invest in a small-company fund, such as the Vanguard Small-Cap Index Fund Admiral Shares (VSMAX).
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Vanguard scatters that risk across 1,320 U.S. stocks. To be precise, they’re not all “true” small caps—a good third of the portfolio includes smaller mid-cap stocks. But this kind of bleed isn’t unusual for cap-based funds; different fund companies and index providers may define each cap class by different thresholds.
Single-stock risk is extremely minimal in VSMAX. The fund’s biggest holding, SanDisk (SNDK), accounts for more than 1% of the fund’s assets. No other component makes up more than 0.6%. Yes, that means you won’t enjoy the full potential of any wild upswing in any individual stock, but you also won’t feel the full brunt of a collapse, either.
VSMAX is also available as an ETF: The Vanguard Small-Cap ETF (VB, 0.03% expense ratio), which goes for around $280 per share currently.
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5. Vanguard Mid-Cap Index Fund Admiral Shares
— Style: U.S. mid-cap stock
— Assets under management: $198.7 billion
— Dividend yield: 1.5%
— Expense ratio: 0.05%, or 50¢ per year for every $1,000 invested
Mid-cap stocks are the “Goldilocks” holding of the investment world. They’re bigger, more stable, and have better access to capital than their small-cap brethren, but they tend to be nimbler and have more upside potential to their big brothers in the large-cap space. Unfortunately, they often go ignored by people who gravitate either toward big, “safe” blue chips or potent small-caps … to their detriment.
Big mistake.
Related: The 10 Best ETFs for Beginners [2026]
Here’s what Oregon-based equity manager Jensen Investment Management found in a study of mid-caps: “Since 1978, mid-cap stocks have outperformed small-caps over each of these rolling time periods: five, 10, 20, 30 and 40 years. They’ve even bested large-caps over the 30- and 40-year windows. These returns came with lower volatility than small-caps as well, making the evidence even more compelling. That means mid-caps haven’t just delivered better performance—they’ve done it more consistently, with fewer drawdowns.”
If you’d like to inject your portfolio with some mid-cap exposure, you can do so cost-effectively with the Vanguard Mid-Cap Index Fund Admiral Shares (VIMAX).
Related: The 11 Best Fidelity Funds You Can Own
This Gold-rated fund owns almost 290 stocks. It’s not a pure mid-cap fund, with roughly 10% to 15% of assets veering into large-cap territory. VIMAX also boasts less concentration among top holdings than similar funds. Like with VSMAX, only one stock—miner Newmont (NEM)—is weighted above 1%.
Again, as is common among Vanguard index mutual funds, VIMAX has a sister ETF: the Vanguard Mid-Cap ETF (VO, 0.03% expense ratio), which trades at $305 per share.
Related: The 7 Best Index Funds for Beginners
6. Vanguard Total Stock Market Index Fund Admiral Shares
— Style: U.S. total-market stock
— Assets under management: $2.1 trillion
— Dividend yield: 1.1%
— Expense ratio: 0.04%, or 40¢ per year for every $1,000 invested
You don’t necessarily need to buy several index funds to be invested in U.S. stocks of all sizes. You can just buy the whole darn stock market (or a reasonable facsimile) in one fund.
The Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) is “designed to provide investors with exposure to the entire U.S. equity market.” Technically, it doesn’t invest in the entire U.S. equity market. But if we’re being pragmatic, its 3,500-company holdings list is as close as you’ll ever need.
Related: The 7 Best Mutual Funds for Beginners
You’re not getting those different stock sizes in equal amounts. Total-market funds are often market cap-weighted and lean heaviest on large caps. VTSAX is no exception, with fully 70% of assets invested in large caps, with another 20% in mid caps and the remainder in small companies. And that market-cap weighting also ensures that mega-caps such as Nvidia, Apple, and Microsoft still have the greatest influence on performance.
The upside to buying Vanguard Total Stock Market Index? Sweet simplicity. One click of the “Buy” button gives you extraordinary U.S. stock-market exposure … and at just 0.04% annually, you’re practically stealing it. This is easily one of the best Vanguard index funds you can buy to build a portfolio core.
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The downside? VTSAX doesn’t make sense if you want levels of large-, mid-, and/or small-cap exposure that are different than what the fund provides. If that’s the case, you could ignore this fund and just build your U.S. stock portfolio with large-, mid-, and small-cap funds, or you could buy VTSAX and augment with large-, mid-, or small-cap funds to get the perfect allocation for you.
For what it’s worth, Vanguard Total Stock Market seems to be just fine for plenty of investors. The fund has amassed more than $2 trillion in assets across its share classes. This includes the Vanguard Total Stock Market ETF (VTI, 0.03% expense ratio) at around $340 per share currently.
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7. Vanguard International Dividend Appreciation Index Fund Admiral Shares
— Style: Foreign large-cap growth stock
— Assets under management: $9.4 billion
— Dividend yield: 1.8%
— Expense ratio: 0.16%, or $1.60 per year for every $1,000 invested
You might have noticed that all of the aforementioned funds have had a specifically U.S.-centric bent. That’s good—U.S. markets have long been among the most productive in the world, and if you believe in the American economy’s ability to keep growing, that should remain the case.
But most experts would tell you that it’s worth having at least some exposure to international stocks. That’s because every now and then (including in 2025), the rest of the world will beat America. And the Vanguard International Dividend Appreciation Index Fund Admiral Shares (VIAAX) is one of the best Vanguard index funds for that job.
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Vanguard International Dividend Appreciation Index has a similar thrust to Vanguard Dividend Growth in that it’s interested in owning high-quality companies, which it does by identifying and holding companies with a history of increasing their dividends. VIAAX tracks the S&P Global Ex-U.S. Dividend Growers Index, which consists of international firms that have improved their payouts on an annual basis for at least seven consecutive years. Also, as an additional quality screen, the index excludes the 25% highest-yielding eligible companies from the index. REITs are kept out, too.
VIAAX is most invested in developed European and Asian markets such as Japan, Switzerland, and the U.K., though it’s also heavily concentrated in Canadian stocks. The fund also offers some exposure to emerging markets such as India and China.
Many of the 330 dividend-growth stocks it holds will be plenty familiar to Americans—it’s loaded with blue-chip multinational firms like Japanese tech titan Sony (SNE), Swiss food giant Nestlé (NSRGY), and German software firm SAP (SAP). Also, as is common with developed-country funds, VIAAX’s yield is higher than comparable U.S. funds.
You can get this Vanguard fund as an ETF, too: the Vanguard International Dividend Appreciation ETF (VIGI, 0.07% expense ratio), which you can buy for around $95 per share.
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8. Vanguard Total World Stock Index Fund Admiral Shares
— Style: Global large-cap growth stock
— Assets under management: $76.6 billion
— Dividend yield: 1.7%
— Expense ratio: 0.09%, or 90¢ per year for every $1,000 invested
Much like Vanguard Total Stock Market Index Fund provides exposure to most of the U.S. stock market, Vanguard Total World Stock Index Fund Admiral Shares (VTWAX) plugs you into most of the world’s equities.
The aforementioned VTSAX is a “foreign” or “international” fund, which means it deals explicitly in stocks from outside the U.S. A “global” or “world” fund like VTWAX, however, invests both domestically and internationally.
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Vanguard Total World Stock Index sports a massive portfolio of 10,000 stocks, and no, that’s not a typo. Holdings are predominantly large-cap in nature, with a median market cap of almost $150 billion. As is typical of a global fund, the U.S. accounts for the majority (63%) of assets, while the remainder is spread across roughly 40 countries—from significant holdings in companies from Japan (6%) and the U.K. (3%) to marginal allocations to countries such as Chile (0.1%) and Qatar (0.1%). Top holdings are decidedly American, though, peppered with Apple, Amazon (AMZN), and other big S&P 500 names.
The international bent also helps raise the dividend profile somewhat, with a fund yield of roughly 60 basis points more than an S&P 500 fund. (A basis point is one one-hundredth of a percentage point.)
This Vanguard fund has ETF shares, too: The Vanguard Total World Stock ETF (VT, 0.06% expense ratio) trades at $140 per share.
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9. Vanguard Intermediate-Term Corporate Bond Index Fund Admiral Shares
— Style: Intermediate-term corporate bond
— Assets under management: $61.8 billion
— SEC yield: 4.7%*
— Expense ratio: 0.06%, or 60¢ per year for every $1,000 invested
Most investors will want some exposure to bonds—debt issued by governments, companies, and other entities that pay interest to bondholders. But how much will largely depend on your age.
Bonds tend to be much less volatile than stocks, for better or worse; it limits downside, yes, but it also limits upside. Instead, most of the return from bonds comes from the steady stream of interest income they produce. They’re not great for generating wealth, which is your prime concern when you’re younger, but they’re outstanding for protecting wealth, which becomes increasingly pivotal as you age.
But it’s tough to go out and buy a single bond. Data and research on individual issues is much thinner than it is for publicly traded stocks, plus, some bonds have minimum investments in the tens of thousands of dollars. So, your best (and most economical) bet is to buy a bond fund, which can provide you with access to hundreds if not thousands of bonds.
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For instance, the Vanguard Intermediate-Term Corporate Bond Index Fund Admiral Shares (VICSX) allows you to invest in more than 2,200 investment-grade corporate bonds with maturities of between five and 10 years.
Investment-grade corporates are a little riskier than similar-maturity Treasuries, but you get a bit more yield as a result … and they’re not exactly poor-quality bonds. VICSX’s portfolio is split roughly 50/50 between BBB-rated bonds (the lowest investment-grade rating) and A-rated or above. Meanwhile, the focus on intermediates provides a fair blend of risk and income.
Duration (a measure of interest-rate risk) is 6.0 years, which implies that a 1-percentage-point increase in market interest rates would lead to a 6.0% short-term decline in the fund, and vice versa.
VICSX’s ETF version is the Vanguard Intermediate-Term Corporate Bond ETF (VCIT, 0.03% expense ratio), which goes for about $85 per share.
* SEC yield reflects the interest earned across the most recent 30-day period. This is a standard measure for funds holding bonds and preferred stocks.
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10. Vanguard Short-Term Treasury Index Fund Admiral Shares
— Style: Short-term U.S. Treasury bond
— Assets under management: $30.4 billion
— SEC yield: 3.5%
— Expense ratio: 0.06%, or 60¢ per year for every $1,000 invested
Investors who want to significantly reduce risk might prefer the Vanguard Short-Term Treasury Index Fund Admiral Shares (VSBSX), which focuses on a subset of bonds that have very low risk for two reasons: they have short maturities, and they’re issued by the U.S. Treasury.
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Maturity helps determine risk. Generally speaking, the longer the bond, the greater the risk that the bond might not be repaid. Interest rates come into play, too. When rates go higher, new bonds pay more, which tempt people to sell their old bonds for the new, higher-paying bonds. But the temptation is much greater when you’re dealing with longer-term bonds with lots of payments remaining—and not so great for short-term bonds with one or just a couple payments left.
Meanwhile, U.S. Treasury bonds, which are backed by the full faith and credit of the U.S. government, are some of the highest-rated bonds on the planet. Is there 100% certainty they’ll be repaid? No. But is there a higher likelihood of repayment than the vast majority of issuers out there? You betcha.
Related: The 7 Best Fidelity Index Funds for Beginners
Vanguard Short-Term Treasury Index invests in more than 90 Treasury bond issues with maturities of between one and three years. And the lower risk is reflected in the averaged duration, which currently sits at just 1.9 years—thus, a 1-percentage-point hike in interest rates would knock VSBSX just 1.9% lower, versus a roughly 6% hit for the corporate bond fund VICSX. The flip side? VSBSX wouldn’t rise as much if interest rates declined.
That’s OK, as long as you know what you’re buying. If all you want is portfolio protection that can still generate some yield (at well more than 3% currently), VSBSX is one of the best Vanguard mutual funds you can buy. Or, if you prefer ETFs, you can purchase the Vanguard Short-Term Treasury ETF (VGSH, 0.03%), which goes for roughly $60 per share.
Related: 9 Best Vanguard Retirement Funds [Save More in 2026]
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What Is the Minimum Investment Amount on Vanguard Mutual Funds?
Vanguard funds are known for being shareholder-friendly. The Vanguard mutual fund company blazed new trails with the index fund, and Vanguard has done more than any other investment firm to keep costs to a minimum for investors.
But there is one hitch. Many of Vanguard’s cheapest funds in terms of fees have initial investment minimums of around $3,000.
If that is a problem for you, don’t sweat it. Most popular Vanguard index funds are also available as ETFs. Most self-directed HSAs will allow you to buy as little as one share, and some even allow for fractional shares. And if you use a commission-free brokerage, you can buy those ETFs without incurring additional fees. ETF prices vary, of course, but many cost less than $100, and they rarely exceed $400 per share.
Why Does a Fund’s Expense Ratio Matter So Much?
Every dollar you pay in expenses is a dollar that comes directly out of your returns. So, it is absolutely in your best interests to keep your expense ratios to an absolute minimum.
The expense ratio is the percentage of your investment lost each year to management fees, trading expenses and other fund expenses. Because index funds are passively managed and don’t have large staffs of portfolio managers and analysts to pay, they tend to have some of the lowest expense ratios of all mutual funds.
This matters because every dollar not lost to expenses is a dollar that is available to grow and compound. And over an investing lifetime, even a half a percent can have a huge impact. If you invest just $1,000 in a fund generating 5% per year after fees, over a 30-year horizon, it will grow to $4,116. However, if you invested $1,000 in the same fund, but it had an additional 50 basis points in fees (so it only generated 4.5% per year in returns), it would grow to only $3,584 over the same period.
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15 Best Long-Term Stocks to Buy and Hold Forever
As even novice investors probably know, funds—whether they’re mutual funds or exchange-traded funds (ETFs)—are the simplest and easiest ways to invest in the stock market. But the best long-term stocks also offer many investors a way to stay “invested” intellectually—by following companies they believe in. They also provide investors with the potential for outperformance.
So if you’re looking for a starting point for your own portfolio, look no further. Check out our list of the best long-term stocks for buy-and-hold investors.
The 10 Best-Rated Dividend Aristocrats Right Now
Dividend growth puts more cash in our pockets and signals that the company we’re invested in is confident in its ability to keep churning out profits. And there’s no more heralded group of dividend growers than the Dividend Aristocrats, which are companies that have paid higher cash distributions each year for at least a quarter-century.
But even Aristocrats aren’t created equally. Check out which dividend growers Wall Street loves the best right now in our list of the top-rated Dividend Aristocrats.
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