An index fund is a portfolio of stocks or bonds designed to mimic the composition and performance of a financial market index. They have low expenses and fees, making them an attractive investment for long-term investors.
An index fund is a passively managed stock or bond portfolio that seeks to replicate the performance of its benchmark index by holding all or a representative sample of the securities in that index. They will typically have low turnover rates, with investments held for at least one year and often many years.
Like all investments, however, they carry certain risks and are not guaranteed or indicative of future performance. There is always the potential for negative returns even if the market rises over time.
Below are the top best index funds.
Vanguard High Dividend Yield Index Fund (VYM) seeks to track the performance of the North American Dividend Aristocrats Index, a collection of companies that have consistently paid higher dividends for at least 25 consecutive years. In addition to high-quality large-cap dividend stocks, it selects from other select equity and fixed-income sectors to provide exposure to a diverse selection of asset classes.
Fidelity Low-Priced Stock Fund (FLSTX) is an actively managed fund seeking long-term capital appreciation and short-term income. A portfolio manager manages the fund by utilizing various strategies and methodologies to identify undervalued securities suitable for the fund's investment objectives.
Vanguard Total Stock Market Index Fund ETF (VTI) seeks to track the performance of the CRSP US Total Market Index, a free float-adjusted market capitalization index designed to measure the performance of all U.S.-domiciled equity securities trading on the New York Stock Exchange or Nasdaq over-the-counter market.
Vanguard REIT Index Fund ETF (VGSLX) is an exchange-traded fund incorporated in the USA. It is designed to provide investment results that correspond to the performance of an index. Under U.S. GAAP, the fund's investments are primarily in companies engaged in the rental real estate business.
Vanguard Mega Cap Index Fund (VMEFAX) seeks long-term capital appreciation by investing primarily in stocks of the largest 30 U.S.-based companies as classified by Standard & Poor's Global Composite Stock Price Index (Total Return). The fund is divided into three sub-investment strategies: Growth, Value, and Small-Cap Value.
Vanguard Total Bond Market ETF (BND) seeks to track the performance of the CRSP US Total Bond Index. This free float-adjusted price index measures the value of investments in U.S. Treasury and Agency debt securities. The fund has a sizeable allocation to foreign bonds, and U.S. government debt securities dominate its underlying index.
Vanguard High Dividend Yield Index Fund (VYM) is a good fund for investors looking for growth in a portfolio. Since it is diversified, investors can see many companies in various industries. This way, an investor's portfolio can remain diverse even if their favorite company has a downturn in the market. Another advantage of this fund is that it has no hidden costs, and its expense ratio of 0.08% is low compared to other funds rated highly by Morningstar.