Whether you’re building a new ETF portfolio or enhancing an existing one, Vanguard index funds … [+]
Experienced and novice investors love Vanguard index funds. In October 2024, Morningstar estimated Vanguard had a leading 29% market share in U.S. assets under management. Let’s explore what makes this fund family so popular and meet six Vanguard funds performing well against their peers.
Why Invest in Vanguard Index Funds?
Many investors choose Vanguard index funds for their low expense ratios and attractive market exposures. The Vanguard name is also well-regarded as the original index fund manager—the company launched the first index fund in 1976.
A fund’s expense ratio quantifies how much shareholders pay for the fund’s administrative costs. Fund expenses dilute returns, so a lower ratio is better.
Index funds normally have low expense ratios because they are cheaper to operate than actively managed funds. Vanguard is proudly a low-cost provider of this already cost-efficient investment product. In February 2025, the company lowered expense ratios across 87 funds. Vanguard estimates the reduction will save investors $350 million in 2025.
Criteria Used When Ranking These Index Funds
One strategy to identify the best and cheapest Vanguard index funds is to screen on expense ratios and Morningstar Ratings. The Morningstar Rating is a comparative measure of a fund’s risk-adjusted returns. A five-star rating, the highest possible, indicates a fund has historically performed well against its peers. Note that Morningstar re-rates funds monthly, and ratings do not guarantee future performance. See Morningstar Ratings 101 for more information.
As of late February 2025, nine Vanguard funds had five-star ratings. Those nine funds were ordered from lowest expense ratio to highest. The top six were selected for inclusion.
6 Top Vanguard Index Funds to Buy Now
The table below includes six Vanguard funds with five-star Morningstar Ratings and expense ratios below 0.10%. Ratings are from Morningstar and fund metrics are from Vanguard.com.
For more fund investing ideas, see best ETFs for 2025 and income investing ETFs.
1. Vanguard S&P 500 ETF (VOO)
- Share price: $546.75
- Expense ratio: 0.03%
- 10-year average annual return: 13.71%
- 1-year return: 26.29%
- SEC 30-day yield: 1.19%
- Number of holdings: 505
Vanguard S&P 500 ETF Overview
Vanguard’s S&P 500 ETF invests in every S&P 500 company. The fund’s goal is to replicate the performance of the S&P 500 index, commonly used as a benchmark for the entire stock market.
Why VOO Fund Is A Top Choice
VOO’s predecessor was Vanguard’s First Index Investment Trust, launched in 1976. Today, VOO is the world’s largest ETF with $1.4 trillion in net assets.
VOO has the elements of a solid core holding: The 0.03% expense ratio is cost-efficient, and the portfolio provides exposure to an appealing segment. The S&P 500 includes the largest, most successful companies on U.S. stock exchanges. The index can be volatile but has historically delivered a long-term annualized return of 7% net of inflation.
2. Vanguard Mega Cap ETF (MGC)
- Share price: $215.44
- Expense ratio: 0.07%
- 10-year average annual return: 14.35%
- 1-year return: 27.69%
- SEC 30-day yield: 1.06%
- Number of holdings: 197
Vanguard Mega Cap ETF Overview
Vanguard’s mega-cap fund tracks the CRSP US Mega Cap Index. The index includes 195 of the largest U.S. companies by market capitalization.
Why MGC Is A Top Choice
Historically, large companies were often more stable and predictable than their smaller counterparts. For that reason, many conservative equity investors favored mega-cap and blue-chip stocks.
That trend has changed. Today, technology companies dominate market-cap-weighted indexes. For example, AI chipmaker Nvidia (NVDA)—a stock known for its volatility—is the third largest company in the S&P 500 and the CRSP US Mega Cap Index.
Still, the MGC portfolio offers an interesting collection of stocks. The holdings include growth players like Nvidia and Microsoft (MSFT), alongside value plays like Berkshire Hathaway (BRK.A) and JPMorgan Chase (JPM). You get these same top stocks in an S&P 500 fund but with less concentration. Head-to-head, the mega-cap index outperforms the S&P 500 slightly, albeit with more volatility.
3. Vanguard Mega Cap Value ETF (MGV)
- Share price: $130.94
- Expense ratio: 0.07%
- 10-year average annual return: 11.30%
- 1-year return: 20.48%
- SEC 30-day yield: 2.06%
- Number of holdings: 137
Vanguard Mega Cap Value ETF Overview
The Vanguard Mega Cap Value ETF replicates the CRSP US Mega Cap Value Index. The index includes the largest value stocks, covering about 70% of U.S. market capitalization. There are 136 index constituents.
Why MGV Fund Is A Top Choice
The value focus of MGV should appeal to bargain-hunting, risk-averse equity investors. You won’t find too many fast-moving tech stocks in this portfolio. The fund favors financials, health care and industrials. The technology sector is represented but by less prominent stocks such as Broadcom (AVGO), IBM (IBM) and Qualcomm (QCOM).
Relative to VOO, MGV has produced slightly lower returns. The fund does deliver a reasonable yield of 2.06%, so it might be a candidate for those who favor dividend ETFs.
4. Vanguard Russell 1000 Growth ETF (VONG)
- Share price: $102.51
- Expense ratio: 0.07%
- 10-year average annual return: 17.07%
- 1-year return: 32.55%
- SEC 30-day yield: 0.48%
- Number of holdings: 396
Vanguard Russell 1000 Growth ETF Overview
Vanguard’s VONG fund invests in Russell 1000 Growth stocks. This index currently includes 395 Russell 1000 stocks with higher price-to-book ratios, higher two-year earnings forecasts and higher five-year sales-per-share growth.
Why VONG Fund Is A Top Choice
VONG provides nice return potential by focusing on stocks with growth characteristics. The earnings growth rate for this portfolio is 24.9%. The same metric for VOO is 18.9%.
This fund has outperformed the others on this list, with a five-year average annual return of 18.82%. High concentrations of Apple (AAPL), Microsoft, Nvidia and Amazon (AMZN) have driven much of that growth.
One trade-off for the appreciation potential is lower cash returns. VONG’s 30-day SEC yield is 0.48%.
5. Vanguard Health Care ETF (VHT)
- Share price: $270.45
- Expense ratio: 0.09%
- 10-year average annual return: 9.36%
- 1-year return: 7.05%
- SEC 30-day yield: 1.38%
- Number of holdings: 416
Vanguard Health Care ETF Overview
Vanguard’s health care fund invests in about 400 large, mid and small cap companies that provide medical products, services or technology. The benchmark index is the MSCI US IMI Health Care 25/50.
Why VHT Fund Is A Top Choice
According to a Deloitte survey in December 2024, health care industry leaders are mostly optimistic about the year ahead. Nearly 70% of survey respondents expect a 2025 revenue increase and 71% expect a boost in profits.
VHT is a good position for capitalizing on higher health care profits. Like all funds on this list, VHT has performed well against peers. It also has a low expense ratio of 0.09% and pays a moderate SEC 30-day yield of 1.38%. The portfolio includes Zepbound-maker Eli Lilly (LLY), diversified health care company UnitedHealth (UNH) and biopharma Abbvie (ABBV).
6. Vanguard Information Technology ETF (VGT)
- Share price: $610.47
- Expense ratio: 0.09%
- 10-year average annual return: 21.09%
- 1-year return: 25.63%
- SEC 30-day yield: 0.47%
- Number of holdings: 316
Vanguard Information Technology ETF Overview
Vanguard’s technology ETF holds large, mid and small tech stocks, including hardware and software providers and semiconductor companies. The benchmark index is MSCI US IMI Info Technology 25/50.
Why VGT Fund Is A Top Choice
AI has fueled a surge in tech stocks over the last two years. Many experts believe the trend will continue. According to The Wall Street Journal, AI spending is projected to grow at a compound annual rate of 29% between 2024 and 2028.
VGT provides broad exposure to the technology sector, from Nvidia and other big names to exciting mid-caps like Astera Labs (ALAB). Note that the fund is market-cap-weighted, so the mega caps will drive the overall performance. That could be good or bad, depending on your outlook and risk tolerance.
Bottom Line
Whether you’re building a new ETF portfolio or enhancing an existing one, Vanguard index funds are worth a look. They have low fees and cover popular market segments, broad to niche. You can double-down on growth, find value bargains or tweak your sector exposure. It’s no wonder Vanguard is the most popular fund family in the U.S.
