The Mutual Fund Series: Vanguard

Welcome to a new series at – The Mutual Fund Series.

During each part of this weekly series, I will be looking at a specific mutual fund company.

Today's company is The Vanguard Group.

Vanguard is one of the largest mutual fund companies in the world.  Based in Valley Forge, Pennsylvania, they currently manage $1.3 TRILLION dollars for their clients and offer 150 domestic funds and additional funds in international markets.

What I Like About Vanguard

  • Target Retirement Funds.  Vanguard was one of the first companies to offer target retirement funds.  It is a fantastic idea to address the complete confusion that some people feel when making retirement mutual fund choices.  All one has to do is select their target retirement date and Vanguard will automatically shift the mutual fund to become less risky/volatile as one approaches retirement.  It really helps address the need to rebalance one's portfolio.
  • Very low annual expense ratios.  Vanguard is client-owned.  This means that the company is owned by those who invest with the company.  This results in Vanguard having the lowest management costs in the mutual fund industry.  The average expense ratio for their mutual funds is 0.20% (the industry averages around 1.50%).  This means that I get to keep more of the annual growth of my money.
  • Lots of mutual fund options.  With over 150 domestic funds and additional funds in the international markets, I have a lot of choice.  I like choices.
  • Full-service investment company.  Vanguard offers mutual funds, IRAs, Roth IRAs, 401(k) rollovers, 529s, ESAs, and brokerage services.

What I Would Like To See Improved At Vanguard

  • Lower "initial investment requirement".  Most of Vanguard's funds require an initial investment of at least $3,000.  This rules out a lot of beginning investors.  Of course, this is not a problem when someone is investing within the bounds of their company 401(k), 403(b), or other retirement plan where minimum investment requirements are usually removed.

Vanguard Mutual Funds I Own

  • I currently own one Vanguard mutual fund – Vanguard Institutional Index Fund [Ticker: VINIX].  I own this mutual fund as part of a 401(k).  You can see other mutual funds that I currently own by clicking HERE.
  • This mutual fund has a minimum investment requirement of $5,000,000.  The reason that I am able to own shares of this mutual fund is because it is offered as part of the company 401(k) plan.
  • It is a large-cap blend fund.

Vanguard Mutual Funds That I Am Considering Purchasing

  • Vanguard Target Retirement 2040 Fund [Ticker: VFORX]  This fund will automatically rebalance for me as I approach retirement.  I chose the 2040 fund because that is a target retirement year for me.  Vanguard has Target Retirement funds for every five year period from year 2005 to 2050.
  • Vanguard 500 Index Fund Investor Shares [Ticker: VFINX]  This fund tracks the performance of the S&P 500.  It has very low expense ratios.  It does need $3,000 to begin an individual investment.

What Vanguard funds do you own?  Do you have any Vanguard funds that you really like?  Dislike?

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  1. Todd on April 18, 2008 at 3:45 pm

    I am a huge fan of Vanguard as well, and just wanted to make a a comment. Even though the initial investments are somewhat high for new investors, this helps vanguard keep their expenses low and probably reduces fund turnover and trading as well. Go Vanguard!

  2. Fred Neyhard on April 21, 2008 at 4:53 pm

    Joe: I’m also a fan of the no-loads Vanguard funds. I currently only own one called Healthcare(052) I started this fund with a $3,000 initial investment and have not contributed one cent since 1990. The reason is that I give (tax advantage) 10% to a 401k plan at work. But the fund has grown from a $39 start to I believe it’s close to $128. a share or about $21,000 today. Not too bad for just letting the money grow and not adding to it. I know I should have put more into but the company’s 401k plan is using up most of my investing. Besides the 401k, I also have a pension plan and have been with the company 34 years. I figure with the aging population this healthcare sector fund has got to explode…even if you just buy aspirins.

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