Few investment firms have left such a lasting mark that an entire investment philosophy bears their name and marque.
One example is Pimco, the fixed-income giant that, under Bill Gross, popularized the “total return” approach to bond investing, an active strategy that went beyond collecting interest to also include capital appreciation.
But among retail investors, Vanguard arguably has had the strongest and most enduring impact. Unlike traditional Wall Street fund families, Vanguard was created with everyday investors in mind.
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The firm is structured as a shareholder-owned entity, meaning its fund investors are also owners. This rare application of a cooperative model within a capital markets framework remains one of the unique aspects of the firm.
Vanguard’s late founder and long-time chairman John Bogle championed simple, low-cost, buy-and-hold index investing. Bogle’s legacy is best captured by what a 2009 Morningstar article coined “The Vanguard Effect.”
This phenomenon describes the industry-wide fee compression sparked by Vanguard. As more investors flocked to Vanguard’s funds, competitors were forced to lower their fees in order to stay competitive, creating a positive spillover effect across the entire fund industry.
That philosophy has remained embedded in Vanguard’s DNA and is visible in its ever-expanding fund family, which now includes 94 exchange-traded funds (ETFs) and 267 mutual funds.
Today, long-term investors of all ages and risk profiles can build well-diversified portfolios entirely from Vanguard’s low-fee fund lineup.
Here’s a look at seven of the best Vanguard funds to buy and hold:
| Fund | Expense ratio |
| Vanguard S&P 500 ETF (ticker: VOO) | 0.03% |
| Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) | 0.04% |
| Vanguard High Dividend Yield ETF (VYM) | 0.06% |
| Vanguard Dividend Appreciation ETF (VIG) | 0.05% |
| Vanguard Real Estate ETF (VNQ) | 0.13% |
| Vanguard Wellington Fund Investor Shares (VWELX) | 0.25% |
| Vanguard Target Retirement 2070 Fund (VSVNX) | 0.08% |
Vanguard S&P 500 ETF (VOO)
“The S&P 500 index should be a staple of every investor’s portfolio,” says Henry Yoshida, senior vice president of Retired.com. This benchmark provides investors with exposure to 500 of the largest U.S. companies weighted by market capitalization. It ensures a baseline level of quality by screening for sufficient liquidity and earnings consistency. For exposure to the S&P 500, Vanguard offers VOO.
VOO currently holds the distinction of being the largest U.S.-listed ETF, with over $656 billion in assets under management. Investors have steadily flocked to this ETF owing to a combination of historically strong, hard-to-outperform returns and a rock-bottom 0.03% expense ratio. Vanguard also offers S&P 500 exposure in mutual fund form via the Vanguard 500 Index Fund Admiral Shares (VFIAX).
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
The Vanguard Total Stock Market Index Fund Investor Shares (VTSMX) was created in 1992 as a way to provide low-cost, core U.S. equity exposure across small-, mid-, and large-cap stocks. Today, the same strategy can be accessed with VTSAX, a modernized variant. This “Admiral Shares” class fund charges a low 0.04% expense ratio compared to 0.14% for VTSMX, but it requires a $3,000 minimum investment.
“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 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.”
Vanguard High Dividend Yield ETF (VYM)
Investors who prefer income instead of share price appreciation may find a dividend ETF like VYM useful. This ETF tracks the FTSE High Dividend Yield Index, which targets the higher-yielding half of the U.S. domestic stock market. Unlike some dividend ETFs, VYM is highly diversified, with over 580 holdings. It charges a low 0.06% expense ratio and currently pays a 2.6% 30-day SEC yield.
VYM’s portfolio has a natural tilt toward mature companies that also trade at lower valuations, making it a quasi-value ETF. Growth-centric sectors like technology, communications and consumer discretionary are underweighted relative to the S&P 500. Instead, VYM emphasizes blue-chip stocks from the financial, industrial and consumer staples sectors and more. Real estate is excluded entirely.
Vanguard Dividend Appreciation ETF (VIG)
Vanguard doesn’t offer a dividend aristocrats ETF, as none of its funds require companies to have 25 consecutive years of dividend hikes. But VIG offers a lower-cost alternative that’s built around a similar premise with an added focus on quality. The ETF tracks the S&P U.S. Dividend Growers Index, which includes only companies with at least a 10-year track record of increasing their dividends.
However, VIG’s benchmark takes additional steps to avoid yield traps. It excludes the top 25% of companies with the highest dividend yields, screening out firms that may be financially distressed. The remaining stocks are market cap weighted, which favors larger, more stable blue chips. However, a 4% cap on any single stock helps limit concentration risk, something the S&P 500 doesn’t do.
[Read: 7 Dividend Stocks to Buy and Hold Forever]
Vanguard Real Estate ETF (VNQ)
Both VIG and VYM intentionally exclude real estate equities like real estate investment trusts (REITs) for tax efficiency reasons. Omitting REITs helps keep more of their dividend income qualified for favorable tax treatment. For investors looking to shore up real estate exposure in tax-sheltered accounts like a Roth IRA, VNQ is a natural complement. It tracks the MSCI US Investable Market Real Estate 25/50 Index.
In classic Vanguard fashion, this REIT ETF doesn’t try to actively pick winners. Instead, it passively owns the entire U.S. real estate sector at market-cap weights. That means the portfolio spans nearly every subsector of real estate, including hotels, hospitals, office buildings, data centers, telecom towers, retail space, self-storage, timberland and residential housing. VNQ charges a 0.13% expense ratio.
Vanguard Wellington Fund Investor Shares (VWELX)
Few funds have delivered shareholder value for as long as VWELX has. “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 director on the multi-asset solutions team at Vanguard.
VWELX is one of the few non-index-based Vanguard funds. It actively allocates two-thirds of its portfolio to large- and mid-cap stocks in out-of-favor sectors. These are screened for value, quality and dividend yield. The remaining one-third is dedicated to investment-grade bonds, which lowers volatility and generates higher income. The fund has returned an annualized 8.4% since its inception date.
Vanguard Target Retirement 2070 Fund (VSVNX)
“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.”
Target-date funds like VSVNX use a dynamic asset allocation strategy. Early in their lifespan, these funds tend to be equity heavy with a globally diversified portfolio of stocks. However, as time goes on and investors age, VSVNX will gradually add more and more fixed-income assets. By the 2070 retirement date, this fund will be geared toward income and capital preservation instead of growth.
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7 Best Vanguard Funds to Buy and Hold originally appeared on usnews.com
Update 08/04/25: This story was published at an earlier date and has been updated with new information.
