The broader S&P 500 has a long-term average return of nearly 9.8% for the last 90 years. Most funds fail to surpass the staggering return despite having high profile and skillful fund managers. But, there are some Vanguard funds that have been able to beat this return. Such funds have been able to provide healthy returns amid several market troughs and peaks that have occurred during this phase.
Vanguard funds, in fact, have a high degree of diversification that has helped them earn A+ rating. Its expense ratios also come in below industry averages — most are less than 0.5% and few are even below 0.1%.
Vanguard, thus, becomes a natural choice for investors. Needless to say, Vanguard is also distinctively different from the other mutual fund companies because it is owned by the funds. The company believes that this structure helps management focus better on shareholders’ interests.
Let us, now, take a look at Vanguard funds from various investment categories that have a record of beating the S&P 500:
Vanguard Funds With a Record of Beating the S&P 500: Vanguard US Growth Portfolio (VWUSX)
Investors who prefer a diversified collection of large-cap stocks often turn to Vanguard US Growth Portfolio (MUTF:VWUSX). This mutual fund seeks to provide long-term capital appreciation, while a large portion of its assets will be invested in securities issued by U.S. companies. Since its inception, this Zacks Rank #1 (Strong Buy) fund has yielded a one-year average return of about 10.6%.
VWUSX has a history of strong positive total returns for over 10 years. Specifically, the fund has returned 25.6% over 1 year, 13.9% over 3 years and 16.7% in 5 years.
The Vanguard US Growth Investor fund, managed by Vanguard Group, carries an expense ratio of 0.43%, below the category average of 1.08%.
Vanguard Funds With a Record of Beating the S&P 500: Vanguard Strategic Equity Fund (VSEQX)
As the name indicates, Vanguard Strategic Equity Fund (MUTF:VSEQX) invests in mid-capitalization domestic equity securities. The advisor selects securities that it believes offer an appropriate balance between strong growth prospects and reasonable valuations relative to their industry peers. Since its beginning, this Zacks Rank #1 fund has yielded a yearly average return of around 10.9%.
VSEQX has a history of strong positive total returns for over 10 years. Specifically, the fund has returned 13.1% over 1 year, 9.8% over 3 years and 13.6% in 5 years.
The Vanguard Strategic Equity Investor fund, managed by Vanguard Group, carries an expense ratio of 0.18%, less than the category average of 1.06%.
Vanguard Funds With a Record of Beating the S&P 500: Vanguard Tax-Managed Small Cap Fund (VTMSX)
Investors looking to focus on small-cap stocks should consider Vanguard Tax-Managed Small Cap Fund (MUTF:VTMSX). This fund also keeps tax consequences to a minimum. Vanguard recommends those in the higher income tax bracket with a long-term goal to invest in this fund.
This Zacks Rank #2 (Buy) fund has returned an average of almost 11.4% per year since its inception in 1999. Over the previous 10 years, the average return has climbed nearly 12.2%. Much of that return has come in the last 12 months, as the fund has returned more than 20%.
VTMSX has a history of strong positive total returns for over 10 years. Specifically, the fund has returned 20.3% over 1 year, 13.5% over 3 years and 14.5% in 5 years.
The Vanguard Tax-Managed Small Cap Admiral fund, managed by Vanguard Group, carries an expense ratio of 0.09% versus the category average of 1.15%.
Vanguard Funds With a Record of Beating the S&P 500: Vanguard International Growth Fund (VWIGX)
The Vanguard International Growth Fund (MUTF:VWIGX) mostly tracks stocks of companies located outside the United States and is expected to diversify its assets in countries across developed and emerging markets.
Since its creation in 1981, this Zacks Rank #1 fund has yielded a yearly average return of around 10.8%. VWIGX has adopted an aggressive approach in finding fast-growing companies in foreign growth markets.
VWIGX has a history of strong positive total returns for over 10 years. Specifically, the fund has returned 19.8% over 1 year, 12.1% over 3 years and 11.6% in 5 years. Specifically, the fund’s returns over the 1, 3, 5 year benchmarks; 1 year 19.8%, 3 year 12.1%, and 5 year 11.6%.
The Vanguard International Growth Investor fund, managed by Vanguard Group, carries an expense ratio of 0.45%, below the category average of 1.16%.
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