Vanguard 500 Index Fund

Scorecard
4 / 5 Stars
Lipper
5 5 5 5 5
Zacks Investment Research
---
Standard & Poor's
5 / 5 Stars
TheStreet.com
A+ (Buy)

U.S. News evaluated 481 Large Blend Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

See all Vanguard funds

See full Large Blend rankings

See more fund rankings

Performance

The fund has returned 24.39 percent over the past year, 16.40 percent over the past three years, 18.67 percent over the past five years, and 7.66 percent over the past decade.

Trailing Returns Updated 06.30.2014
Year to date 7.0%
1 Year 24.4%
3 Years (Annualized) 16.4%
5 Years (Annualized) 18.7%
10 Years (Annualized) 7.7%

See more VFINX performance

Summary

The Vanguard 500 Index fund is a strong pick for investors looking to track the S&P 500 and not spend a lot of dough on fund expenses.

As of July 03, 2014, the fund has assets totaling $176.51 billion. Its portfolio consists of stocks of large U.S. companies. The fund tracks Standard & Poor’s 500 Index.

While the fund is inexpensive to own, it has been undercut by exchange-traded funds as well as other mutual fund rivals. But not for long. Earlier this year, Vanguard made big news when it announced that it will create an ETF share class for this fund. That share class will carry an expense ratio of just 0.06 percent. The fund has returned 24.39 percent over the past year and 16.40 percent over the past three years.

From 1999 to 2009, the fund suffered through “the lost decade” along with its blue-chip benchmark. The S&P 500 hit both high and low returns over the past 10 years, practically evening out in the end, meaning little or no returns for many long-term investors. Morningstar says, “Over time, however, this fund’s low expense ratio and portfolio of domestically domiciled, global blue chips should serve investors well.” The fund has returned 18.67 percent over the past five years and 7.66 percent over the past decade.

Investment Strategy

The fund attempts to replicate the S&P 500 by investing virtually all of its assets in the stocks that make up that index. It holds each stock in about the same proportion as its weighting by the index.

Role in Portfolio

Morningstar calls this fund a core holding, saying, “With broad sector diversification, skilled management, low costs, and high tax efficiency, what’s not to like? However, the fund’s mega-cap bias and dearth of foreign holdings mean it shouldn’t be exclusively relied upon to complete a portfolio. Investors should consider pairing the fund with offerings that provide exposure to small and foreign stocks.”

Management

Michael Buek has managed the fund since 1991, having worked at Vanguard since 1987. Buek worked closely with previous fund manager Gus Sauter, Vanguard’s current chief investment officer.

Fees

Vanguard 500 Index Fund has an expense ratio of 0.17 percent.

See more VFINX fees

Risk

As the fund invests mainly in large-cap stocks, overall performance can suffer when large-cap stocks lose favor in the overall market. 

See more VFINX risk

Fund Opinions

The fund's Value Line Overall Rank, a measure of risk-adjusted performance and relative growth in fund returns, is 1 on a scale of 1 to 5, with 1 being the best and 5 the worst.

Value Line 2014-06-11

The fund's Value Line Growth Persistence rank, which awards funds that consistently outperform their broad universes, is 2 for one year, 2 for five years, and 3 for 10 years. Scores are on a 1 to 5 scale, with 1 being the best and 5 the worst.

Value Line 2014-06-11

The fund's Value Line Risk Rank, a measure of volatility, is 3 on a scale of 1 to 5, with 1 being the least volatile and 5 the most.

Value Line 2014-06-11

In the August 2009 edition of Morningstar's Fund Family Reports, Dan Culloton, says, "The demise of this fund has been greatly exaggerated. It still whips most of its peers over time, and its largest holdings are looking particularly attractive."

2010-01-27

Morningstar gives this fund a stewardship rating of B on a scale of A to F, saying, “This isn’t Jack Bogle’s Vanguard, but it’s still a fine steward of shareholders’ wealth. The family’s mutual ownership structure helps it offer low fees and keep investor interests paramount. A blemish-free regulatory record and loyal fund owners and employees also help make this a trustworthy fund.”

Morningstar 2010-12-01

In the annual Lipper/Barron’s Fund Families Survey for 2009, Vanguard ranks 40th out of 61 fund families surveyed.

2010-02-17

Morningstar gives this fund a stewardship rating of B on a scale of A to F, saying, “This isn’t Jack Bogle’s Vanguard, but it’s still a fine steward of shareholders’ wealth. The family’s mutual ownership structure helps it offer low fees and keep investor interests paramount. A blemish-free regulatory record and loyal fund owners and employees also help make this a trustworthy fund.”

Morningstar 2010-12-01

In the annual Lipper/Barron’s Fund Families Survey for 2009, Vanguard ranks 40th out of 61 fund families surveyed.

2010-02-17