Founded by John C. Bogle in 1975, Vanguard is one of the world's largest investment management companies. The company offers about 190 domestic funds and 220 funds for foreign markets. It also offers asset management and financial planning services to clients throughout the globe.
Vanguard stands out from other mutual fund companies because it is owned by the funds themselves. The company believes that this structure helps management to focus more on shareholder interests. Among the notable advantages Vanguard claims to offer are low-cost and no-load funds.
For the 10-year period ended Sep 30, 2019, nine Vanguard money market funds, 45 Vanguard bond funds, 22 Vanguard balanced funds and 99 Vanguard stock funds beat their Lipper peer-group average.
Vanguard’s Performance in 2019
By the end of August 2019, Vanguard had around $5.6 trillion assets under management. The initial investment of the majority of mutual funds from the family ranges from $0 to $3,000. As of Dec 31, 2019, none of the Vanguard mutual funds carried any load.
Further, Vanguard Massachusetts Tax-Exempt Fund Investor Shares (VMATX) turned out as one of the best-performing mutual funds from the Vanguard family. The fund posted solid gains between July and September. VMATX, which invests a bulk of its assets in municipal bonds issued by Massachusetts state and local governments, has returned 9.9% in the past year.
Factors Supporting Growth
Vanguard invests in a variety of sectors that are sensitive, cyclical and defensive. From the sensitive sectors, maximum investments were made in the technology sector. Among the cyclical sectors, the fund family invested the most in the financial services sector, while among the defensive sectors it invested heavily in healthcare.
Technology Select Sector SPDR (XLK) has gained 50.6% in the past year, turning up as the best performer among the 11 S&P 500 sectors. The financial and healthcare sectors have also registered one-year annualized returns of 29.4% and 19.9%, respectively.
3 Best Funds to Buy Now
Given such bullish circumstances, we have highlighted three Vanguard mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) and are poised to gain from such factors. Moreover, these funds have encouraging three and one-year returns. Additionally, the minimum initial investment is within $5000.
We expect these funds to outperform 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.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Vanguard Wellington Fund Investor Shares (VWELX - Free Report) seeks appreciation of capital in the long-term and generate moderate current income. The fund invests the lion’s share of its assets in dividend-paying as well as non-dividend-paying common stocks of large-cap companies. The fund also invests assets, to a lesser extent, in investment-grade corporate bonds and mortgage-backed securities.
This fund has a history of positive total returns for over 10 years. Specifically, the fund's returns over the three year and one-year benchmarks are 10.8% and 14.2%, respectively. VWELX has an annual expense ratio of 0.25%, which is below the category average of 0.82%.
Vanguard Explorer Value Fund Investor Shares (VEVFX - Free Report) seeks to provide growth of capital in the long run. VEVFX mainly invests in stocks of small- and mid-cap domestic companies, which are considered undervalued. These stocks might provide above-average dividend yields.
This fund has a history of positive total returns for over 10 years. Specifically, the fund's returns over the three year and one-year benchmarks are 7.2% and 9.2%, respectively. VEVFX has an annual expense ratio of 0.55%, which is below the category average of 1.13%.
Vanguard LifeStrategy Moderate Growth Fund (VSMGX - Free Report) seeks reasonable level of income and long-term growth of capital and income. The fund invests in other Vanguard mutual funds according to a fixed formula that typically results in an allocation of about 60% of assets to common stocks and 40% to bonds.
The fund has a history of positive total returns for over 10 years. Specifically, the fund's returns over the three year and one-year benchmarks are 9.1% and 12.6%, respectively. VASGX has an annual expense ratio of 0.13%, which is below the category average of 0.82%.
Want key mutual fund info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>