Vanguard balanced funds may be the best mutual funds in the market today that don’t get the respect that they deserve.
Although millions of investors have taken advantage of the many benefits of Vanguard’s balanced funds, they’d arguably be some of the biggest funds in the world (by measure of assets under management) if only more investors knew of their boring but beautiful virtues.
Rather than spend time and unnecessary expenses on two or three mutual funds to meet an investment objective, why not buy one cheap, balanced fund that serves all of your needs?
Balanced funds can serve as a good standalone investment or as a solid core holding to build upon for a broadly diversified portfolio. And Vanguard balanced funds are among the best of their kind on the market today.
A Look at Vanguard’s Balanced Funds
Vanguard Balanced Index (MUTF:VBINX): This balanced fund from Vanguard offers low-cost, passively-managed approach to diversified investing. The asset allocation is approximately 60% stocks and 40% bonds, which makes VBINX a fine choice for investors with moderate risk tolerance. The equity side of the fund includes blue chips such as Apple Inc. (NASDAQ:AAPL), Alphabet Inc (NASDAQ:GOOGL) and Microsoft Corporation (NASDAQ:MSFT). The annualized return since its 1992 inception is an impressive 8%, which rivals that of most stock funds with riskier allocations. The expense ratio for VBINX is just 0.22%, or $22 for every $10,000 invested.
Vanguard Convertible Securities (MUTF:VCVSX): Vanguard’s VCVSX invests in convertible bonds, which are bonds that can be converted into stocks. This type of security can potentially provide investors optimal exposure to the upside of stocks while minimizing the downside with a fixed income feature. Investors buying shares of VCVSX are typically looking for a combination of income and long-term growth. Expenses for VCVSX are 0.34%.
Vanguard STAR (MUTF:VGSTX): This balanced fund from Vanguard is fund of fund, which means the underlying holdings are other mutual funds. The holdings for VGSTX include 11 Vanguard funds, diversified across several categories, including large-cap growth, large-cap value, intermediate-term bond, short-term bond, and international stock. With a minimum initial investment of just $1,000, the STAR fund is one of few Vanguard funds with minimums below $3,000. Expenses are 0.32%.
Vanguard Tax-Managed Balanced (MUTF:VTMFX): Vanguard’s VTMFX is a low-cost, passively-managed fund that balances growth and income with an allocation consisting of approximately 50% stocks and 50% bonds. The stocks are mid- and large-caps and the bonds are municipal bonds that are tax-free at the federal level, which makes VTMFX a smart choice for a taxable account. Expenses are a low 0.11% and the minimum initial purchase is $10,000.