Vanguard mutual funds are professionally managed investment vehicles offered by The Vanguard Group, one of the most reputable asset management firms in the world. It wasfounded by John C. Bogle in May 1975 and is headquartered in Valley Forge, PA. As of January 2025, the company had approximately $10.4 trillion in global assets under management. The firm manages 428 funds globally, with 212 available in the United States, covering a broad spectrum of investment options.

Vanguard is investor-owned, which aligns its interests with those of its clients. Its long-standing reputation for transparency, ethical practices and risk-conscious investing adds trustworthiness. In February 2025, Vanguard announced its largest fee reduction in five decades, lowering expense ratios across its fund offerings. This move is projected to save investors more than $350 million in 2025 alone. Notably, the average expense ratio for Vanguard's actively managed fixed-income funds and ETFs is 0.10%, a significantly inexpensive number.

Interest rates have not come down in 2025, as was expected earlier. Amid these higher interest rates and market volatility, Vanguard is also emphasizing its fixed-income offerings. The firm believes that bonds are well-positioned to provide attractive income and higher returns, especially if downside economic risks materialize. This strategic focus aligns with their view that the era of "higher-for-longer" interest rates will persist, setting the foundation for solid fixed-income returns over the next decade.

Thus, in 2025, buying Vanguard mutual funds remains a smart choice for both new and experienced investors due to their combination of low costs, broad diversification and a strong reputation for investor-first practices. Beyond low fees, they offer built-in diversification across asset classes, sectors and global markets. Whether an investor is looking for U.S. large-cap exposure, international equities, or fixed-income options, Vanguard has a range of funds to match most investment goals.

Hence, it will be prudent to invest in Vanguard mutual funds if one is seeking stability and growth potential in a market that is expected to remain volatile for a while. Astute investors should consider such funds at present. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

We have thus selected three mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), have positive three-year and five-year annualized returns and minimum initial investments within $5000, as well as carry a low expense ratio.

Vanguard Selected Value Fund (VASVX Quick QuoteVASVX - Free Report) invests primarily in undervalued stocks of mid-size U.S. companies. VASVX advisors define undervalued stocks as those that are out of favor with investors and are trading at prices below average in relation to measures such as earnings and book value. These stocks often have above-average dividend yields.

Richard Lawrence Greenberg has been the lead manager of VASVX since February 2005. The three top holdings for VASVX are AerCap (2.3%), Corebridge (2%) and Gildan Activewear (1.9%).

VASVX’s 3-year and 5-year annualized returns are 7% and 21.5%, respectively, and its net expense ratio is 0.42%. VASVX has a Zacks Mutual Fund Rank #1. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Vanguard Equity Income Fund (VEIPX Quick QuoteVEIPX - Free Report) normally invests in common stocks of mid-size and large companies whose stocks typically pay above-average levels of dividend income and are undervalued relative to similar stocks. In addition, the advisors generally look for companies that they believe are committed to paying dividends consistently.

Sharon Hill has been the lead manager of VEIPX since February 2021. The three top holdings for VEIPX are Broadcomm (4.8%), JPMorgan (4.5%) and Johnson & Johnson (2.7%).

VEIPX’s 3-year and 5-year annualized returns are 7.9% and 16.4%, respectively, and its net expense ratio is 0.27%. VEIPX has a Zacks Mutual Fund Rank #1.

Vanguard LifeStrategy Growth Fund (VASGX Quick QuoteVASGX - Free Report) invests in a variety of Vanguard mutual funds that reflect an allocation of approximately 20% of the fund’s assets to fixed-income securities and 80% to common stocks.

Roger A. Aliaga-Díaz has been the lead manager of VASGX since February 2023. The three top holdings for VASGX are Vanguard Total Stock Market (49.2%), Vanguard Total International Stock (30.8%) and Vanguard Total Bond Market (13.6%).

VASGX’s 3-year and 5-year annualized returns are 5.3% and 12%, respectively, and its net expense ratio is 0.14%. VASGX has a Zacks Mutual Fund Rank #1.

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