Some asset managers design fund lineups that are explicitly geared toward short-term trading or income generation rather than long-term ownership.
In particular, many exchange-traded fund (ETF) issuers have leaned heavily into leveraged products that are no longer tied to broad benchmarks such as the S&P 500 or Nasdaq-100, but instead track far more concentrated and volatile exposures.
This includes sector-leveraged ETFs, single-stock leveraged ETFs, cryptocurrency-linked leveraged ETFs and other products built to amplify short-term moves.
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Other ETF issuers have taken a different route by embedding derivatives into fund structures to generate unusually high distribution yields, often with monthly or even weekly payouts.
While these payouts can look attractive on the surface, a meaningful portion is often classified as return of capital, which is essentially an investor receiving their own money back.
Over time, many of these strategies have delivered weak total returns relative to their underlying reference assets, despite eye-catching yields that have drawn in less experienced investors.
One major asset manager has largely refused to follow these trends: Vanguard. Vanguard offers no leveraged ETFs, no options-heavy income products and relatively few expensive thematic or alternative funds. Instead, Vanguard has stayed focused on low-cost, broadly diversified strategies designed for long-term investors.
That does not mean Vanguard’s lineup is small. Today, the firm offers 370 funds in total, spanning 267 mutual funds and 103 ETFs.
It’s also worth noting that Vanguard has been steadily expanding into active management. While the company built its reputation on passive indexing, a growing number of Vanguard funds are now overseen by portfolio managers supported by research teams.
Even so, these active offerings still reflect Vanguard’s core philosophy, with expense ratios that remain highly competitive for their peer category.
Here are seven of the best Vanguard funds to buy and hold in 2026:
| Fund | Expense ratio |
| Vanguard Total Stock Market Index Fund Admiral Shares (ticker: VTSAX) | 0.04% |
| Vanguard 500 Index Fund Admiral Shares (VFIAX) | 0.04% |
| Vanguard High Dividend Yield Index Fund Admiral Shares (VHYAX) | 0.08% |
| Vanguard Dividend Appreciation Index Fund Admiral Shares (VDADX) | 0.07% |
| Vanguard Balanced Index Fund Admiral Shares (VBIAX) | 0.07% |
| Vanguard Wellington Fund Investor Shares (VWELX) | 0.25% |
| Vanguard Target Retirement 2070 Fund (VSVNX) | 0.08% |
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 of the future,” says Henry Yoshida, senior vice president at Retired.com. “Personally, it represents the majority of my personal investment portfolio since it is so diversified, low-cost and tax efficient.”
VTSAX tracks the CRSP US Total Market Index, which includes more than 3,500 U.S. stocks. The fund uses a market-cap-weighted methodology, meaning larger companies receive higher weights. That structure keeps annual turnover low at about 2.1% and supports strong tax efficiency. VTSAX charges a 0.04% expense ratio and requires a $3,000 minimum initial investment.
Vanguard 500 Index Fund Admiral Shares (VFIAX)
“The S&P 500 index should be a staple of every investor’s portfolio,” Yoshida says. While the CRSP U.S. Total Market Index is broader in terms of holdings, the S&P 500 remains the most widely quoted U.S. equity benchmark and has a long performance history. In practice, the two indexes are very similar, since the largest companies dominate both portfolios due to market-cap weighting.
VFIAX tracks the S&P 500 for a 0.04% expense ratio, with the same $3,000 minimum investment as VTSAX. Tax efficiency is a standout feature, supported by a low annual turnover rate of roughly 2.3%. The S&P 500’s inclusion criteria around size, liquidity and earnings quality also tilt the portfolio toward strong fundamentals, with the fund’s holdings showing an average return on equity of 27%.
Vanguard High Dividend Yield Index Fund Admiral Shares (VHYAX)
If you are a buy-and-hold investor who relies on your portfolio for periodic income, VHYAX may be appealing. The fund currently offers a 2.4% 30-day SEC yield, which may appear modest, but after reinvestment of dividends, VHYAX has delivered a competitive 12.7% annualized total return over the past five years. VHYAX charges a 0.08% expense ratio and requires a $3,000 minimum investment.
VHYAX tracks the FTSE High Dividend Yield Index. The methodology excludes real estate investment trusts (REITs) and removes companies that have not paid a regular dividend over the past year or are not expected to pay one. The remaining stocks are ranked by dividend yield and then weighted by market capitalization. The result is a diversified portfolio of about 563 stocks with a large-cap value bias.
Vanguard Dividend Appreciation Index Fund Admiral Shares (VDADX)
If you do not need current income but still want exposure to dividend-paying companies, VDADX offers a different approach. The fund charges a 0.07% expense ratio, requires a $3,000 minimum investment and pays a lower 1.6% 30-day SEC yield. Even so, its historical total returns have been competitive, particularly when dividends are reinvested, reflecting a greater emphasis on growth rather than yield.
VDADX screens for companies that have increased their dividends for at least 10 consecutive years, while excluding the top 25% of stocks with the highest yields. This is done to avoid firms where elevated payouts may signal underlying issues. The remaining holdings are weighted by market capitalization, with a 4% cap on any single stock. Like VHYAX, REITs are excluded to improve tax efficiency.
[Read: 6 Best Monthly Dividend ETFs to Buy Today]
Vanguard Balanced Index Fund Admiral Shares (VBIAX)
All of the Vanguard funds discussed so far are 100% equity portfolios, which can offer strong long-term growth but also come with higher volatility. In severe market downturns such as the Great Recession, stocks can fall sharply and remain depressed for extended periods. For long-term investors with a lower tolerance for drawdowns, a balanced Vanguard fund like VBIAX can be owned for a low 0.07% expense ratio.
VBIAX uses a traditional 60% allocation to U.S. stocks and 40% to U.S. bonds, implemented entirely through index tracking. The equity sleeve mirrors a broad U.S. stock market approach similar to VTSAX, while the bond allocation spans Treasurys, investment-grade corporate bonds and mortgage-backed securities. The fund charges a 0.07% expense ratio and requires a $3,000 minimum investment.
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, head of multi-asset product management at Vanguard. Since inception, VWELX has delivered a hard-to-beat 8.4% annualized total return.
The core of VWELX’s success is its actively managed structure, which blends two-thirds equities with one-third fixed income. The equity sleeve currently holds 82 large- and mid-cap stocks selected for above-average dividend yields and lower valuation multiples. The bond allocation is concentrated in intermediate-term investment-grade corporate bonds. VWELX charges a 0.25% expense ratio.
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.”
For example, a Gen Z investor just entering the workforce and opening a 401(k) may find a target-date fund like VSVNX among their plan options. Designed for investors planning to retire around 2070, the fund is currently growth-oriented, with roughly 90% allocated to global equities and about 10% to global bonds. Over time, the allocation will gradually shift toward bonds to prioritize capital preservation.
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7 Best Vanguard Funds to Buy and Hold originally appeared on usnews.com
Update 01/28/26: This story was published at an earlier date and has been updated with new information.
