4 Top Vanguard Mutual Funds Amid Volatile Market Conditions
Major U.S. indexes like the S&P 500, the Nasdaq Composite and the Dow Jones Industrial Average have given investors positive returns of 14.8%, 18.6% and 3.8%, respectively, in the year-to-date period.
The Consumer Price Index (CPI) for the month of May remained unchanged after rising 0.3% in April. However, the year-over-year increase was 3.3%. Also, the Producer Price Index (PPI) fell 0.2% over the same period in comparison to 0.5% in April, mostly due to lower energy costs. The downtrend in both inflation numbers at the beginning of Q2 indicated that inflation is slowly cooling.
For the seventh time in a row, the Federal Reserve has kept benchmark interest rates unchanged in the range of 5.25-5.50% even after an improvement in May inflation numbers. To achieve its inflation target of 2%, the Fed will probably continue with its “higher for longer” policy. The central bank said that it does not yet have the confidence to begin lowering interest rates. However, Fed Chair Jerome Powell, in his comments, indicated the possibility of one rate cut this year.
In such a volatile situation, mutual fund investing can help 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.
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 trillion in assets under management globally till Dec 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.
We have thus selected four 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 9.8% and 15.9%, respectively. VQNPX has an annual expense ratio is 0.34%.
To see how this fund performed compared to its category and other 1, 2 and 3 Ranked Mutual Funds, please click here.
Vanguard Windsor II Investor VWNFX fund invests most of its net assets in common stocks of large and mid-cap domestic companies, which, according to its advisors, are undervalued. VWNFX 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.
Andrew D. Lacey has been the lead manager of VWNFX since Jan 7, 2007. Most of the fund’s exposure was in companies like Microsoft (6%), Alphabet (3.2%) and Amazon.com (2.5%) as of Jan 31, 2024.
VWNFX had three-year and five-year annualized returns of almost 7.4% and 14.9%, respectively. VWNFX has an annual expense ratio of 0.34%.
Vanguard Selected Value VASVX fund invests most of its net assets in common stocks of mid-cap domestic companies, which, according to its advisors, are undervalued and often have above-average dividend yield. VASVX advisors consider undervalued stocks as those that are out of favor with investors and are trading at below-average prices in relation to measures such as earnings and book value.
Richard Lawrence Greenberg has been the lead manager of VASVX since Feb 24, 2005. Most of the fund’s exposure was in companies like AerCap (3.5%), TE Connectivity (1.7%) and Baxter International (1.7%) as of Jan 31, 2024.
VASVX’sthree-year and five-year annualized returns of almost 7.2% and 14%, respectively. VASVX has an annual expense ratio of 0.43%.
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 the MSCI US Small Cap 1750 Index as the benchmark.
Cesar Orosco has been the lead manager of VSTCX since Feb 26, 2021, 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 5.8% and 13.3%, respectively. VSTCX has an annual expense ratio of 0.26%.
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