Mutual funds provide instant broad diversification and are commonly the investment vehicle found in menus for employer-sponsored retirement plans such as a 401k. They trade at the true intrinsic value of the fund known as the NAV or Net Asset Value, allowing investors to avoid price fluctuation due to market forces during intraday trading. Vanguard has some of the lowest-cost, highest-liquidity mutual funds around. Here we’ll look at the best Vanguard mutual funds for 2022.
Note that most Vanguard index funds no longer offer Investor Shares to new investors, so all the mutual funds here are the Admiral Shares share class.
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In a hurry? Here’s the list:
- VFIAX – Vanguard 500 Index Fund
- VTSAX – Vanguard Total Stock Market Index Fund
- VTIAX – Vanguard Total International Stock Index Fund
- VTWAX – Vanguard Total World Stock Index Fund
- VBTLX – Vanguard Total Bond Market Index Fund
- VTABX – Vanguard Total International Bond Index Fund
- VSIGX – Vanguard Intermediate-Term Treasury Index Fund
- VICSX – Vanguard Intermediate-Term Corporate Bond Index Fund
- VTAPX – Vanguard Short-Term Inflation-Protected Securities Index Fund
VFIAX – Vanguard 500 Index Fund
VFIAX is Vanguard’s mutual fund for the famous S&P 500 index, which is comprised of the 500 largest profitable companies in the United States and is considered a barometer of the U.S. stock market, as it is roughly 82% of the total U.S. stock market by weight. This is a market segment coveted by retirees for broad, diversified exposure to U.S. large cap stocks, which are less volatile than small- and mid-caps. VFIAX has an expense ratio of 0.04%.
VTSAX – Vanguard Total Stock Market Index Fund
VTSAX is one of the most popular mutual funds out there, with over $1 trillion in assets. The fund provides broad access to the total U.S. stock market via over 4,000 holdings across large caps, mid caps, and small caps.
This more holistic U.S. market exposure provides a greater degree of diversification than the S&P 500. Small and mid-cap stocks have greater expected returns than large cap stocks, so many opt for this fund to get exposure to them. Specifically, these smaller stocks make up about 18% of the fund by weight.
VTSAX seeks to track the CRSP US Total Market Index and has an expense ratio of 0.04%.
VTIAX – Vanguard Total International Stock Index Fund
Our previous two mutual funds only capture U.S. stocks. I’ve written elsewhere why it’s likely wise to diversify globally in stocks. U.S. investors can add stocks outside America in one fell swoop with VTIAX, which is the entire international stock market outside the U.S.
VTIAX seeks to track the FTSE Global All Cap ex US Index and has an expense ratio of 0.11%.
VTWAX – Vanguard Total World Stock Index Fund
VTWAX is a combination of the previous two funds. It is the total world stock market, allowing investors to be globally diversified with the use of one single fund. This simplicity can be valuable. In owning VTWAX, you can brag to your friends that you own over 9,000 stocks in your portfolio.
This mutual fund seeks to track the FTSE Global All Cap Index and has an expense ratio of 0.10%.
VBTLX – Vanguard Total Bond Market Index Fund
On the fixed income side, VBTLX allows investors to capture the total U.S. bond market, including both government bonds and corporate bonds. Alongside VTSAX and VTIAX, this fund rounds out the trifecta of the extremely popular Bogleheads 3 Fund Portfolio. VBTLX has an effective intermediate duration of about 7 years.
The fund seeks to track the Bloomberg U.S. Aggregate Float Adjusted Index and has an expense ratio of 0.05%.
VTABX – Vanguard Total International Bond Index Fund
Vanguard also has a total bond market fund for international bonds outside the U.S. The ticker is VTABX. The conclusion on geographical bond diversification seems to be that for U.S. investors, buying international bonds is unlikely to hurt the portfolio but is also unlikely to help it. The fund is USD-hedged, so no need to worry about foreign currency fluctuations.
VTABX seeks to track the Bloomberg Global Aggregate ex-USD Float Adjusted RIC Capped Index and has an expense ratio of 0.11%.
VSIGX – Vanguard Intermediate-Term Treasury Index Fund
Total bond market funds include both treasury bonds and corporate bonds. Treasury bonds specifically may be preferable for their lower correlation to stocks. Treasuries, also known as government bonds, are also the safest type of bonds, particularly when we’re talking about U.S. government bonds. I myself solely use U.S. treasury bonds in my own portfolio. VSIGX is a one-size-fits-most U.S. treasury bond of an intermediate duration.
The fund seeks to track the Bloomberg US Treasury 3-10 Year Bond Index and has an expense ratio of 0.07%
VICSX – Vanguard Intermediate-Term Corporate Bond Index Fund
Those specifically seeking income may look to corporate bonds with their relatively higher yields. VICSX, which holds intermediate corporate bonds from U.S. firms, is a popular choice for such investors.
This fund seeks to track the Bloomberg Barclays U.S. 5-10 Year Corporate Bond Index and has an expense ratio of 0.07%.
VTAPX – Vanguard Short-Term Inflation-Protected Securities Index Fund
Incorporating inflation-linked bonds may be a prudent move for retirees, for whom sudden high inflation can derail a retirement plan. Those seeking short-term inflation-linked bonds, called TIPS or Treasury Inflation Protected Securities, can use VTAPX.
The fund seeks to track the Bloomberg Barclays US Treasury TIPS (0-5 Y) Index and has an expense ratio of 0.06%.
Do you own any of these Vanguard mutual funds? Let me know in the comments.
Don’t want to do all this investing stuff yourself or feel overwhelmed? Check out my flat-fee-only fiduciary friends over at Advisor.com.
Disclosures: I am long VFIAX in my own portfolio.
Interested in more Lazy Portfolios? See the full list here.
Disclaimer: While I love diving into investing-related data and playing around with backtests, I am in no way a certified expert. I have no formal financial education. I am not a financial advisor, portfolio manager, or accountant. This is not financial advice, investing advice, or tax advice. The information on this website is for informational and recreational purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. Do your own due diligence. Past performance does not guarantee future returns. Read my lengthier disclaimer here.