In February 2024, James Martielli, head of investment and trading services for Vanguard, penned an article titled “How to recover the lost art of disciplined investing.”
In it, he recalled his father, an old-school investor who kept physical stock certificates in a gray metal lockbox, relied on newspaper quotes, and placed trades through phone calls or snail mail, each move costly and deliberate.
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His dad also reinvested dividends, contributed regularly, and stayed the course, a discipline Martielli credits in part to the friction of the times. There was no internet, no streaming market data and no Reddit-fueled swing trades.
Today, Martielli argues, that discipline is painfully needed again, especially in a world where, as he puts it, “the ridiculous ease of executing trades on a whim” has taken hold.
Zero-commission trades may seem investor-friendly, but they can lead to overtrading. Each trade is a decision that either adds or subtracts value, and the more often you trade, the more likely you are to erode returns over time.
That’s why even with a firm like Vanguard, which offers some of the most diversified and low-cost funds in the market, the other half of success must come from within the investor.
Buy-and-hold investing works. It’s not technically complicated, but it can be behaviorally hard. And in today’s market where virtually everything and anything is priced in within an instant, sticking to it might be the biggest edge you have.
Here’s a look at seven of the best Vanguard funds to buy and hold:
| Fund | Expense ratio |
| Vanguard 500 Index Fund Admiral Shares (ticker: VFIAX) | 0.04% |
| Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) | 0.04% |
| Vanguard Growth Index Fund Admiral Shares (VIGAX) | 0.05% |
| Vanguard Value Index Fund Admiral Shares (VVIAX) | 0.05% |
| Vanguard Dividend Appreciation Index Fund Admiral Shares (VDADX) | 0.07% |
| Vanguard Wellington Fund Investor Shares (VWELX) | 0.25% |
| Vanguard Target Retirement 2060 Fund (VTTSX) | 0.04% |
Vanguard 500 Index Fund Admiral Shares (VFIAX)
“The S&P 500 index should be a staple of every investor’s portfolio,” says Henry Yoshida, senior vice president of Retired.com. This index is widely quoted as a barometer of overall U.S. equity market performance alongside the Dow Jones Industrial Average and the Nasdaq-100, but is more diversified than either. It consists of 500 domestic stocks screened for liquidity, earnings quality and size.
Investors can obtain S&P 500 exposure cheaply via VFIAX at a 0.04% expense ratio. This fund is highly tax-efficient thanks to a low 2.3% turnover rate, which minimizes the size and frequency of capital gains distributions. Over the last 10 years, VFIAX has compounded at an annualized 12.8% return with dividends reinvested. However, it does require a $3,000 minimum initial investment.
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
“VTSAX gives you complete exposure to the entire U.S. stock market, from the ‘Magnificent Seven’ down to thousands of publicly traded small- and mid-cap stocks that could become the next Nvidia Corp. (NVDA) of the future,” Yoshida says. “Personally, it represents the majority of my personal investment portfolio since it is so diversified, low-cost and tax efficient — you can buy this fund and hold it forever.”
Unlike VFIAX, VTSAX does not track the S&P 500. The benchmark of choice for this Vanguard fund is the CRSP U.S. Total Market Index, which owns more than 3,500 small-, mid- and large-cap U.S. stocks. However, VTSAX is still market-cap weighted, so its top holdings still resemble that of VFIAX. This fund charges a 0.04% expense ratio and has the same $3,000 minimum investment requirement as VFIAX.
Vanguard Growth Index Fund Admiral Shares (VIGAX)
Strategic asset allocation can help investors remain in a core U.S. equity position while maximizing tax efficiency. One way to do that is by separating VTSAX into two equity styles — value versus growth — and holding the value component in a tax-sheltered account like a Roth IRA while holding the growth component in a taxable brokerage account. This is because growth stocks on average pay lower yields.
For the growth side, Vanguard offers VIGAX. This fund tracks the CRSP US Large Cap Growth Index, which is currently heavily concentrated in technology and consumer discretionary companies. However, it pays a very low 0.5% 30-day SEC yield, as most of this fund’s returns come from price appreciation instead of dividends. VIGAX charges a 0.05% expense ratio and requires the usual $3,000 minimum investment.
Vanguard Value Index Fund Admiral Shares (VVIAX)
VVIAX is the value-oriented counterpart to VIGAX’s growth-centric portfolio. This fund tracks the CRSP US Large Cap Value Index, which emphasizes sectors like financials, industrials, health care and consumer staples more. It is also significantly less tax-efficient due to a higher 2.2% 30-day SEC yield. Thus, investors should prioritize this Vanguard fund for tax-sheltered accounts to minimize drag.
VVIAX’s portfolio currently trades at significantly cheaper valuations compared to VIGAX. It has an average price-to-earnings and price-to-book ratio of 18.3 and 2.7, respectively, versus 35.2 and 10.7 for VIGAX. However, VVIAX doesn’t compromise on quality. On average, stocks in this fund’s portfolio have a 14.8% return on equity and a 10.5% earnings growth rate. VVIAX charges a 0.05% expense ratio.
Vanguard Dividend Appreciation Index Fund Admiral Shares (VDADX)
Dividends form an important part of total returns. Unless you need the income, reinvesting them can help your portfolio compound. More shares mean more dividends, which buy even more shares, which accelerates the dividend snowball. For this role, a Vanguard fund to consider is VDADX. As with VVIAX, this fund is worth prioritizing in a tax-sheltered account due to its higher 1.7% 30-day SEC yield.
VDADX tracks the S&P U.S. Dividend Growers Index, which requires a 10-year history of uninterrupted dividend growth and excludes the top 25% of highest-yielding companies. It uses a market-cap weighted strategy with a 4% cap on any single stock to mitigate concentration risk. Real estate investment trusts (REITs) are also excluded to keep the fund more tax efficient. VDADX charges a 0.07% expense ratio.
Vanguard Wellington Fund Investor Shares (VWELX)
“Launched in 1929, VWELX has seen it all: the Great Depression, World War II, the intense bear market of the 1970s, the subsequent bull market of the ’80s and ’90s, the global financial crisis and the COVID-19 pandemic, just to name a few,” says Brian Miller, senior investment specialist on the multi-asset solutions team at Vanguard. This Vanguard fund has delivered an annualized 8.3% return since inception.
VWELX’s “secret sauce” is rooted in a time-tested allocation strategy, consisting of two-thirds stocks and one-third bonds. For equities, the fund prioritizes large-caps and mid-caps in out-of-favor sectors, screened for value, quality and dividend yield. For bonds, VWELX favors investment-grade, intermediate-duration corporate bonds. The fund charges a 0.25% expense ratio and pays a 2.2% 30-day SEC yield.
Vanguard Target Retirement 2060 Fund (VTTSX)
“Vanguard’s suite of target retirement funds can be a complete portfolio solution for investors who want a simple, globally diversified portfolio that adjusts its risk profile over time,” Miller says. “Simply pick the target date closest to when you plan to retire, and the fund allocates your assets to a low-cost mix of stocks and bonds that gradually gets more conservative as you approach retirement.”
These types of Vanguard funds are best suited for long-term investors looking to put their portfolio on autopilot. For example, a worker aiming to retire around 2060 should select VTTSX if offered as part of their 401(k)-plan lineup. This fund currently features a portfolio of 90% global stocks and 10% global bonds, but will adjust over time to become more conservative. VTTSX charges a 0.08% expense ratio.
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7 Best Vanguard Funds to Buy and Hold originally appeared on usnews.com
Update 06/06/25: This story was published at an earlier date and has been updated with new information.
