5 Top Vanguard Mutual Funds Amid Volatile Market Conditions

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Vanguard, one of the world’s largest asset management corporations, was founded by John C. Bogle on May 1, 1975. Headquartered in Vally Forge, PN, the company had $8.2 trillion in assets under management globally till Jul 31, 2023. Vanguard had more than 20,000 employees worldwide and offered 208 funds in the United States and 215 in foreign markets to 50 million investors as of Dec 31, 2023.

Vanguard is owned entirely by funds — a unique feature among mutual fund firms. According to the company, this structure allows management to focus more on shareholder interests. Among the most significant advantages, Vanguard claims to offer low-cost, no-load funds. This means that the fund doesn’t charge investors when fund shares are being bought or sold.

Investors are keenly awaiting the April Consumer Price Index (CPI) data to be released on May 15 by the Bureau of Labor Statistics. According to the Reuters poll of economists, CPI for the month of April is expected to have climbed 3.4% year over year. CPI is the most important gauge for the Federal Reserve’s interest rate decision ahead. Owing to a rise in short-term inflation expectations, consumer sentiment hit a six-month low. With the Fed’s 2% inflation target still at play, uncertainty remains over whether the Fed will be able to create a soft landing for the economy.

In such a situation, mutual fund investing can be a preferred choice for those who wish to diversify their portfolio among various asset classes but lack professional expertise in managing funds. Vanguard mutual funds should be good choices since they provide low-cost, uncomplicated equity, fixed-income and multi-asset funds that can help investors meet their goals.

We have thus selected five Vanguard mutual funds that have wide exposure in sectors like finance, industrial cyclical, technology, retail trade, non-durable, and health since they have given a positive return and are expected to perform well in the near future.

These funds boast a Zacks Mutual Fund Rank #1 (Strong Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000, and carry a low expense ratio of less than 1%. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Vanguard Growth and Income Fund VQNPX invests most of its net assets in stocks that provide dividend income as well as the potential for capital appreciation. VQNPX advisors use quantitative approaches to select a broadly diversified group of stocks that have investment characteristics like companies listed on the S&P 500 Index but are expected to provide a higher total return than that of the index.

Hal W. Reynolds has been the lead manager of VQNPX since Sep 29, 2011. Most of the fund’s holdings were in companies like Microsoft (7%), Apple (5%) and Amazon.com (4.6%) as of Dec 31, 2023.

VQNPX’s three-year and five-year annualized returns are 8.5% and 13.3%, respectively. VQNPX has an annual expense ratio is 0.32%.

To see how this fund performed compared to its category and other 1, 2 and 3 Ranked Mutual Funds, please click here.

Vanguard Windsor Investor Shares VWNDX fund invests most of its net assets in common stocks of large and mid-cap domestic companies, which, according to its advisors, are undervalued. VWNDX advisors consider undervalued stocks as those that are out of favor with investors and are trading at prices below average in relation to measures such as earnings and book value.

Richard S. Pzena has been the lead manager of VWNDX since Aug 1, 2012. Most of the fund’s exposure was in companies like Chubb (1.8%), Edison International (1.8%) and Metlife (1.8%) as of Jan 31, 2024.

VWNDX’s three-year and five-year annualized returns of almost 7.4% and 11.8%, respectively. VWNDX has an annual expense ratio of 0.42%.

Vanguard Strategic Equity VSEQX fund invests most of its net assets in small-cap U.S. companies, which, according to the advisor have right balance between strong growth prospects and reasonable valuations relative to their industry peers. VSEQX advisors use quantitative techniques to evaluate all of the securities using MSCI US Small Cap 1750 Index as the benchmark index, with a risk profile similar to that of the index.

Cesar Orosco has been the lead manager of VSEQX since Feb 25, 2021. Most of the fund’s exposure is in companies like Builders Firstsource (0.9%), Fifth Third Bankcorp (0.8%) and Docusign (0.8%) as of Dec 31, 2023.

VSEQX’s had three-year and five-year annualized returns of almost 5.7% and 10.7%, respectively. VSEQX has an annual expense ratio of 0.17%.

Vanguard Health Care VGHCX fund invests most of its net assets in stocks of domestic and foreign companies, that are principally engaged in the development, production, or distribution of products and services related to the healthcare, pharmaceutical, medical supply industries, and businesses dealing with hospitals and other healthcare facilities. VGHCX advisors may also invest in companies engaged in medical, diagnostic, biochemical, and other research and development activities

Jean M Hynes has been the lead manager of VGHCX since May 28, 2008. Most of the fund’s exposure was in companies like Eli Lilly (7.6%), UnitedHealth Group (6.9%) and Astrazeneca (5.5%) as of Jan 31, 2024.

VGHCX’s three-year and five-year annualized returns of almost 5.6% and 10.1%, respectively. VGHCX has an annual expense ratio of 0.35%.

Vanguard Strategic Small-Cap Equity Investors VSTCX fund invests most of its net assets in small-cap U.S. companies, which, according to the advisor, have the right balance between strong growth prospects and reasonable valuations relative to their industry peers. VSTCX advisors use quantitative techniques to evaluate all the securities using MSCI US Small Cap 1750 Index as the benchmark.

Cesar Orosco has been the lead manager of VSTCX since Feb 26, 2011, and most of the fund’s exposure is in companies like Coca-Cola (0.8%), Eagle Materials (0.8%) and Toll Brothers (0.8%) as of Dec 31, 2023.

VSTCX’s three-year and five-year annualized returns of almost 4.9% and 10%, respectively. VSTCX has an annual expense ratio of 0.26%.

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