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Index funds could help lower long-term costs

Get the high quality and low costs you'd expect from the company that introduced indexing to individual investors.

What are index mutual funds?

Instead of hiring fund managers to actively select which stocks or bonds the fund will hold, an index fund buys all (or a representative sample) of the securities in a specific index, like the S&P 500 Index.

The goal of an index fund is to track the performance of a specific market benchmark as closely as possible. That's why you may hear it referred to as a "passively managed" fund.

Index funds offer built-in benefits

Low costs

Because index funds hold investments until the index itself changes, they generally have lower management and transaction costs.

Lower risk through broader diversification

Some index funds give you exposure to potentially thousands of securities in a single fund.

Tax efficiency

Broad index funds generally don't trade as much as actively managed funds might, so they're typically generating less taxable income, which reduces the drag on your investments.

You can get an index fund anywhere—why Vanguard?

We started the indexing revolution

Vanguard launched the first index fund for individual investors in 1976, and we've been fine-tuning both our benchmark selections and tracking skills ever since.

Today we have more than 65 index mutual funds and nearly 70 index ETFs that track indexes across the bond and stock markets, both U.S. and international, as well as sector-specific areas of the markets.

We've made it our business to keep your costs low

The average Vanguard index fund expense ratio is 70% less than the industry average.**

Plus, you can now own lower-cost Admiral™ Shares for almost 40 of our index mutual funds for a minimum of just $3,000 each.

How would index funds fit into your portfolio?

Because of their low costs, broader diversification, and tax efficiency, index funds could be appropriate for any portion of your portfolio.

In fact, the right balance of four of our broadest index funds could give you a complete portfolio, with full exposure to U.S. and international stock and bond markets.

Get details on:

Need to figure out how much of your money to put into each of these funds? Start with your asset allocation—meaning, the combination of funds that could help you reach your goals.

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Market benchmark

An unmanaged group of securities whose overall performance is used as a standard to measure investment performance.

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Could actively managed funds help you beat the market?

Consider what's happened over the past 15 years1—only about 11% of active stock fund managers and 14% of active bond fund managers have outperformed their designated benchmarks.

When you're trying to track the markets and not beat them, you can worry less about how accurate your predictions may be.

Active stock fund managers

  • 11% outperformed benchmarks.
  • 89% underperformed benchmarks.

Active bond fund managers

  • 14% outperformed benchmarks.
  • 86% underperformed benchmarks.

footnote1Sources: Vanguard calculations, using data from Morningstar, Inc. Based on funds' excess returns relative to their prospectus benchmark for the 15-year period ending December 31, 2017.

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Asset allocation

The way an investment portfolio is divided among the broader asset classes of stocks, bonds, and short-term reserves. Also known as "asset mix."