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5 Best Vanguard Mutual Funds to Buy in June

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Vanguard, the biggest provider of low-cost passive funds is expected to beat competitor BlackRock by 2022 in terms of asset under management (AUM). Vanguard has managed to post relatively better asset growth in the last few years than BlackRock.

Moreover, Vanguard posted strong inflows till April and is expected to get more attention from investors in the coming months. Also, all of its funds have no sales load, which makes it a strong investment. In this context, strong performance by most of the mutual funds of this fund family calls for investment in the major Vanguard mutual funds in June.

What Contributed to Vanguard’s Strong Fund Performance?

According to Pensions & Investments, Vanguard's AUM in 2017 was $4.94 billion, more than 78% of BlackRock’s AUM during the same period. This was significantly higher than 2009’s figure when Vanguard’s AUM constituted around only 45% of BlackRock’s AUM.

Further, Vanguard posted compound annual assets growth of 16% in the last eight years, while BlackRock's asset growth was only 8.2%. Hence, if the fund family manages to maintain this momentum it may surpass its rival by end 2021 or early 2022.

Moreover, Vanguard generated net inflows of $12.3 billion till April and became one of the top fund families to register strong inflows, according to Morningstar. Also, as of Apr 30, 2018, the fund family attracted around $3.98 billion in investment. The initial investment of the majority of Vanguard mutual funds ranges from $0 to $3,000.

Other Key Factors Contributing to Vanguard’s Gains

As of Apr 30, 2018, out of the total number of funds under Vanguard, all were no-load funds. According to data by Vanguard and Morningstar together, as of Dec 31, 2017, Vanguard’s average expense ratio was 0.11% that was significantly lower than the industry average’s expense ratio of 0.67%.

Vanguard invests in a variety of sectors that are sensitive, cyclical and defensive. Among the sensitive sectors, technology is the largest holding. As for the cyclical sectors, the fund family invests the maximum in the financial sector. It also invests heavily in defensive sectors like healthcare.

Sector-wise data from Morningstar shows that technology, financials, and healthcare mutual funds have posted a positive average one-year return of 26%, 17.7% and 20.1%, respectively.

Buy These 5 Top Performing Vanguard Mutual Funds

Mutual funds from the Vanguard stable are expected to perform favorably in coming months. In this context, we have selected five Vanguard mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy).

We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.

These funds have encouraging one-year and three-year annualized returns. Also, these funds have minimum initial investment less than $5000 and low expense ratios.

Vanguard LifeStrategy Growth Investor (VASGX - Free Report) invests in other Vanguard mutual funds with asset allocation of nearly 80% in equity securities and about 20% in debt securities and bonds. VASGX seeks appreciation of capital as well as growth of income.

VASGX carries an expense ratio of 0.14% compared with the category average of 0.59%. Moreover, VASGX requires a minimal initial investment of $3,000. The fund has one-year and three-year returns of 11.2% and 7.1%, respectively.

Further, a team has been managing VASGX since 1994. Further, as of the last filing, financial services and technology were the top sectors for VASGX.

Vanguard Diversified Equity Investor (VDEQX - Free Report) is a "fund of funds," which means that the fund invests in other Vanguard mutual funds instead of any particular securities. The fund may invest in those funds that allocate their assets in small-, mid- and large-cap U.S. companies.

VDEQX carries an expense ratio of 0.36% compared with the category average of 1.03%. Moreover, VDEQX requires a minimal initial investment of $3,000. The fund has one-year and three-year returns of 15.5% and 9.5%, respectively.

Further, William A. Coleman is one of the fund managers of VDEQX since 2013. Further, as of the last filing, technology, financial services, and healthcare were the top sectors for VDEQX.

Vanguard Emerging Markets Stock Index Investor (VEIEX - Free Report) invests its assets in common stocks of companies based in emerging markets. VEIEX normally adopts an investment approach that tracks the overall performance of the benchmark FTSE Emerging Markets All Cap China A Inclusion Index. This index includes around 4,032 companies with different market caps and from different emerging markets.

VEIEX carries an expense ratio of 0.32% compared with the category average of 1.02%. Moreover, VEIEX requires a minimal initial investment of $3,000. The fund has one-year and three-year returns of 16.7% and 3.9%, respectively.

Further, Michael Perre is one of the fund managers of VEIEX since 2008. Further, as of the last filing, financial services and technology were the top sectors for VEIEX.

Vanguard High Dividend Yield Index Investor (VHDYX - Free Report) seeks to track the performance of a benchmark, FTSE High Dividend Yield Index that measures investment returns of common stocks of companies that are characterized by a high dividend yield. The index consists of common stocks of companies that pay above-average dividends.

VHDYX carries an expense ratio of 0.15% compared with the category average of 0.91%. Moreover, VHDYX requires a minimal initial investment of $3,000. The fund has one-year and three-year returns of 9.6% and 9.2%, respectively.

Further, William A. Coleman is one of the fund managers of VHDYX since 2016. Further, as of the last filing, technology, financial services, and healthcare were the top sectors for VHDYX.

Vanguard Value Index Investor (VIVAX - Free Report) invests nearly all its assets in stocks of companies that are included on the CRSP US Large Cap Value Index. VIVAX seeks to replicate the performance of the index by investing a proportion of its assets in each stock as its weighting in the index.

VIVAX carries an expense ratio of 0.17% compared with the category average of 0.91%. Moreover, VIVAX requires a minimal initial investment of $3,000. The fund has one-year and three-year returns of 11.2% and 9.5%, respectively.

Further, Gerard C. O’Reilly is one of the fund managers of VIVAX since 1994. Further, as of the last filing, financial services, healthcare, and technology were the top sectors for VIVAX.

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