vanguard is one of the world’s largest investment management firms, founded in 1975 by John C. Bogle. Serving clients around the world with wealth management and financial planning services, it is one of the most trusted names when it comes to pension managers and individual investors.
There are many reasons for this, not the least of which is longevity. The firm’s fee-aware and forward-thinking approach to fund management has helped its clients achieve significantly higher investment returns than more traditional funds.
As of January 31, 2021, the organization had over $7.2 trillion in assets under management and offered nearly 209 domestic funds and 232 overseas market products. Additionally, Vanguard is unique among mutual fund companies as it is wholly owned by the funds. This structure allows the company to focus more on the interests of shareholders. Vanguard claims to offer low-cost no-load funds as one of its benefits.
Vanguard mutual funds have outperformed other similar mutual funds over time due to their low-fee management method. In fact, 178 of 199 Vanguard funds have outperformed their peer group average over the past decade.
The majority of the family’s mutual funds have an initial investment of $0 to $3,000. None of Vanguard’s mutual funds had an utilization as of December 31, 2021.
The 3 best mutual funds to buy right now
We’ve highlighted three Vanguard mutual funds Investor Shares of the Vanguard Wellington Fund VWELX, Vanguard New York Long-Term Tax-Exempt Fund Investor Shares VNYTX andInvestor Shares of the Vanguard Short-Term Treasury Fund VFISX. Each of these funds carries a Zacks Mutual Fund Rank #1 (Strong Buy). These funds show encouraging three- and one-year returns. Additionally, the minimum initial investment is $3000.
We expect these funds to outperform their peers going forward. Remember, the goal of the Zacks Investment Fund Rank is to help investors identify potential winners and losers. Unlike most fund rating systems, the Zacks Investment Fund Rank focuses not only on past performance but also on the likely future success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and portfolio diversification without the multiple commission fees associated with stock purchases is the primary reason to park money in mutual funds (read more: Mutual Funds: Pros, Cons, and How They Make Investors Money).
Investor Shares of the Vanguard Wellington Fund was incorporated in July 1929 and is managed by the Wellington Management Company. VWELX is classified by Zacks in the Allocation Balanced segment, which is an area of opportunity. The Fund’s objective is to achieve income and long-term capital growth while minimizing risk to capital. The Vanguard Wellington Fund Investor Shares’ assets are split between common stocks and bonds, with an average of 65% invested in stocks and 35% in bonds.
Vanguard Wellington Fund Investor Shares invests the lion’s share of its assets in dividend-paying and non-dividend-paying common stocks of large capitalization companies. VWELX also invests to a lesser extent in investment grade corporate bonds and mortgage-backed securities.
Vanguard Wellington Fund Investor Shares has a 10+ year history of positive total returns. Specifically, VWELX’s returns across the three-year and one-year benchmarks are 11.9% and 9.9%, respectively. The fund has 3- and 5-year Sharpe ratios of 1.01 and 0.90, respectively. Needless to say, a sharp ratio greater than 0.5 generally results in outperforming the market over the long term. The annual expense ratio of 0.24% is below the category average of 0.84%.
As of November 30, 2021, 21.88% of the assets of the Vanguard Wellington Fund Investor Shares were invested in corporate bonds. To see how this fund has performed compared to its category and other #1 and #2 rated mutual funds, please click here.
Vanguard New York Long-Term Tax-Exempt Fund Investor Shares is managed by Vanguard Group Manages, founded in April 1986. VNYTX is classified by Zacks in the muni-bonds segment, which is an area of opportunity. The goal of the fund is to generate high income that is tax-free at both the federal and state levels. Investor Shares of the Vanguard New York Long-Term Tax-Exempt Fund invest primarily in high-quality, long-term municipal bonds issued by the New York state, local and provincial government agencies.
Vanguard New York Long-Term Tax-Exempt Fund Investor Shares have had positive total returns for over 10 years. Specifically, VNYTX’s returns across the three- and one-year benchmarks are 3.6% and 3.5%, respectively. Vanguard New York Long-Term Tax-Exempt Fund Investor Shares have a 3-year and 5-year Sharpe Ratio of 0.61 and 0.60, respectively. The annual expense ratio of 0.17% is below the category average of 0.81%.
Vanguard New York Long-Term Tax-Exempt Fund Investor Shares has invested 83.11% of its assets in Total Misc Bonds. To see how this fund has performed compared to its category and other #1 and #2 rated mutual funds, please click here.
Investor Shares of the Vanguard Short-Term Treasury Fund is managed by the Vanguard Group. VFISX was launched in October 1991. Vanguard Short-Term Treasury Fund Investor Shares is classified in the Zacks Govt Bond-Short segment. The aim of the fund is to generate high interest income. VFISX invests in repurchase agreements, which are contracts whereby a bank or securities dealer sells government assets and agrees to buy them back at a specified date and price. Investor Shares in the Vanguard Short-Term Treasury Fund also invest in classic derivatives such as futures and options contracts where they allow a transaction to be effected at a lower cost than purchasing actual bonds.
Investor shares of the Vanguard Short-Term Treasury Fund have had positive total returns for over 10 years. Specifically, VFISX’s returns across the three- and one-year benchmarks are 1.8% and 1.4%, respectively. Investor shares of the Vanguard Short-Term Treasury Fund have a 3-year sharp ratio of 0.85. The annual expense ratio of 0.20% is below the category average of 0.64%.
Vanguard Short-Term Treasury Fund Investor Shares has invested 5.90% of its assets in US Treas Note Bonds. To see how this fund has performed compared to its category and other #1 and #2 rated mutual funds, please click here.
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