Best Mutual Fund #5: Vanguard 500 Index Fund (VFINX)
For sensible, low-cost exposure to equities, it is hard to beat Vanguard 500 Index Fund (VFINX).
VFINX, which is a popular offering in a number of 401k plans, provides exposure to the S&P 500 at a bargain basement price. The original index fund tracks the 500 largest companies — which account for about 75% of the total value of the stock market. And the Investor-class shares do so for a rock-bottom cost of 0.17% in expenses.
This fund can be viewed as a portfolio building block that provides broad-based exposure to a variety of sectors. Reflecting the current makeup of the S&P 500, 18% of VFINX is in the information technology sector, and 16% is in financial names. Current top holdings include Apple, Exxon Mobil (XOM), Google, Microsoft and General Electric (GE).
VFINX is up 28% YTD and has grown at an annualized 7.4% over the past decade. This performance lands it in the top 33% of its Morningstar large blend category.
While I am a big proponent of the right active management in mutual funds, this passive Vanguard offering’s combination of performance and dirt-cheap cost puts it among the best mutual funds you can find.
- Read More: 2 Great Dividend Stocks for Retirement
Bill Wysor is the editor of The Relevant Investor. As of this writing, he was long FLPSX.
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