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3 Best Vanguard Funds to Dive Into Growth Stocks

Want low-cost mutual funds with growth potential? Look no further.

The best Vanguard funds, at least in the public eye, are the biggest index funds in the world like Vanguard Total Stock Market Index (VTSMX) or Vanguard 500 Index (VFINX). But the best Vanguard funds in terms of long-term performance by historical perspective are generally the funds that invest in growth stocks.

3 Best Vanguard Funds to Dive Into Growth StocksWhile there is nothing wrong with investing in the boring, plain vanilla index funds that can beat the more exciting actively managed funds over the long run, why not seek out some of the best Vanguard funds that can beat the major market indices?

In other words, we sought out the best funds that have all of the primary attributes of categories, styles or sectors that tend to win over the long haul. And within those fund categories, we chose low-cost Vanguard funds that invest in growth stocks and which have outstanding performance records.

With that backdrop, here are the best Vanguard funds for investors wanting to dive into growth stocks.

Best Vanguard Funds for Growth Stocks: Vanguard Growth Index (VIGRX)

Best Vanguard Funds for Growth Stocks: Vanguard Growth Index (VIGRX)Expenses: 0.23%, or $23 for every $10,000 invested
Minimum Initial Investment: $3,000

Investors looking for a solid core holding with a combination of U.S. large-cap and mid-cap stocks will like what they see in the Vanguard Growth Index (VIGRX).

The VIGRX portfolio once tracked the MSCI U.S. Prime Market Growth Index, but on April 16, 2013, it changed to the CRSP U.S. Large Cap Growth Index, which includes big growth companies like Apple (AAPL), Amazon (AMZN) and Facebook (FB).

The change in benchmark index appears to be working well for the fund and its shareholders. Performance for the Growth Index fund ranks ahead of the average large-growth fund in the year-to-date and three-, five-, 10- and 15-year returns.

Best Vanguard Funds for Growth Stocks: Vanguard Small Cap Growth Index (VISGX)

Best Vanguard Funds for Growth Stocks: Vanguard Small Cap Growth Index (VISGX)Expenses: 0.23%
Minimum Initial Investment: $3,000

If you want to get a little bit more on the aggressive growth side, one of the best Vanguard funds for this is Vanguard Small Cap Growth Index (VISGX).

VISGX is one of the cheapest funds of its kind, which is a big advantage in the small-cap portfolio world, where more research and analysis is often required to find the best small-cap stocks. But that’s not a problem for an index fund!

Although VISGX does hold some mid-cap stocks, the average market cap is still relatively small at $2.9 billion, which is just a bit higher than the average small-cap fund at $2.7 billion.

The top sectors in the fund are technology, consumer cyclicals and real estate, and the cap-weighted indexing style makes the top holdings Signature Bank (SBNY), Waste Connections (WCN) and Middleby Corp (MIDD).

VISGX is behind the small-growth category average for short-term returns but the cheap expense ratio, which according to Vanguard is 83% lower than the average expense ratio of funds like it, helps in the long run, as evidenced by the category-busting returns for the 10- and 15-year periods.

Best Vanguard Funds for Growth Stocks: Vanguard Health Care (VGHCX)

Best Vanguard Funds for Growth Stocks: Vanguard Health Care (VGHCX)Expenses: 0.34%
Minimum Initial Investment: $3,000

One of the best sector funds in the mutual fund universe also happens to be a growth stock fund, Vanguard Health Care (VGHCX).

VGHCX offers investors just what the doctor ordered in terms of a well-diversified mix of large-cap growth healthcare stocks, including Bristol-Myers Squibb (BMY), Allergan (AGN) and UnitedHealth Group (UNH).

The fund isn’t too heavy in biotechnology stocks, which helped to avoid the big biotech rout in 2015. Year-to-date, VGHCX is sitting on a nice gain of 13.2%, which compares to 8.8% for the average health sector fund. Long-term returns either match or beat category averages.

The health sector is also a good defensive play for the inevitable market correction and a smart long-term growth fund to capitalize on an aging population and further advances in medicine.

As of this writing, Kent Thune did not personally hold a position in any of the aforementioned securities. His No. 1 holding is his privately held investment advisory firm in Hilton Head Island, SC. Under no circumstances does this information represent a recommendation to buy or sell securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/12/best-vanguard-funds-vghcx-visgx-vigrx/.

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