The Best S&P 500 Index Funds Of January 2023

VFINX bills itself as the first index fund built for retail investors. For example, $10,000 invested with the fund in 2011 would be worth about $35,000 in 2021. You need to prepare $3,000 in initial investment to get started with VFINX. Also, its sponsor Schwab is known for its investor-friendly investment products. For example, SWPPX doesn’t have a minimum investment requirement.

As you can see below, this is not the same index tracked by the Fidelity Total Market Index Fund. That said, an index fund could underperform and lose money for years, depending on what it’s invested in. But the odds that an index fund loses everything more money than god review are very low. The fund’s expenses are huge factors that could make – or cost – you tens of thousands of dollars over time. You’ll want to carefully examine what the fund is investing in, so you have some idea of what you actually own.

While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. The stocks of companies in emerging markets have historically outperformed US stocks. Over the past decade, the combined Schwab Emerging Markets Funds have achieved a total return of nearly 45% – compared to nearly 300% on the S&P 500. This fund does not invest in high-growth stocks or emerging markets.

An International Fund

In terms of the sub-sectoral breakdown, IT comprises the highest portion with 14.45%, followed by industrials and financials with 14.45% and 13.57%, respectively. The fund which is rebalanced quarterly, started trading in April 2003. The Invesco S&P 500 Equal Weight ETF provides exposure to S&P 500 companies with an equally-weighted approach.

Kent Thune did not hold positions in any of these bond funds as of this writing. This article is for information purposes only, thus under no circumstances does this information represent a specific recommendation to buy or sell securities. Large-caps tend to lag behind stocks of smaller capitalization during economy recoveries. Although the coronavirus recession certainly hasn’t been a garden-variety one, a rebounding U.S. economy still stands to benefit smaller firms as it would have in past recoveries.

With crude oil prices as high as $110 per barrel this summer, its highest level since the market collapsed in 2014 and 2015, stocks of major oil and gas companies have skyrocketed. These index funds offer diversification and stable long-term gains. Performance history helps to tell the story for Vanguard Balanced. In a volatile year like 2020, when the S&P 500 ended 18.4% higher for the year, VBIAX was up 16.4%.

• Fidelity’s S&P 500 index fund is the least expensive offering on our list, charging a miniscule annual expense ratio of 0.015%.
• The best performing index funds are not necessarily stacked with brokers, fancy slogans and a mission statement longer than the tax code.
• Given the current volatility in broader markets, several of the stocks in the ETF could soon come under increased pressure.
• One thing to be aware of is that, like the S&P 500 index, all three funds listed above are weighted by market capitalization.
• Index funds do not engage in fund research to try to beat the market; they simply strive to match it.
• Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.

Aggregate Bond Index, Bloomberg publishes sub-indices that make important changes to its flagship index. These sub-indices include a float adjusted index, which Vanguard uses for its total bond index fund. Bloomberg added this sub-index in 2009 to respond to the Federal Reserve’s QEbond buying. The float adjusted benchmark excludes securities held by the Fed. Because the Fed buys largely government bonds, this sub-index has a slightly lower allocation to government bonds and slightly higher allocation of corporate bonds than the flagship index.

These include the shift to electric vehicles and 5G mobile technology and a continued surge in cloud-based solutions. However, as tech stocks continue to nosedive in 2022, the fund was down through May by around 28% — significantly more than the S&P 500. Still, investing in Vanguard’s Growth ETF could present an opportunity to buy the dip. Tech stocks are heavily represented, accounting for 49.7% of the fund’s holdings, followed by consumer discretionary stocks (24%) and industrial stocks (10.3%). Energy stocks and utility stocks combined make up only 0.9% of the fund’s value.

Vanguard dividend increase ETF (VIG)

Our editorial team does not receive direct compensation from our advertisers. Bankrate senior reporter James F. Royal, Ph.D., what is envelope indicator covers investing and wealth management. His work has been cited by CNBC, the Washington Post, The New York Times and more.

If properly managed, the fund should earn more from increasing the value of its assets than from the cost of servicing debt. Basically, it takes your money, borrows three times as much, and then buys stocks. This is a large portfolio of more than 3,000 small and mid-cap stocks, most of which are American technology, financial, industrial, and healthcare companies. This creates a balance between risk and returns for most investors.

In terms of sectors, we see consumer discretionary with 22.5%, followed by industrials (21.1%), healthcare (15.1%) and technology (12.9%). SDY currently has 112 holdings, that range from financials (17.15%) to consumer staples (15.23%), industrials (14.1%), utilities (14.27%) and materials (8.61%). The fund has reached a net asset value of almost $19.7 billion since it started trading in November 2005. The fund, which started trading in January 2010, follows the FTSE Emerging Index. Its net market value has reached over $9.4 billion since inception in January 2010.

Here are the nine best index funds to add to your portfolio for steady, low-cost growth.

Recent studies have shown that ESG investments can outperform traditional ones as a result of increased sustainability awareness. Therefore, interested investors should keep FITLX on their radar. FITLX, which has 279 holdings, follows the MSCI USA ESG Index. This fund is also weighted towards IT (28.76%), followed by health care (13.43%), consumer discretionary (12.06%), communication services (12.02%), and financials (11.09%). The fund is up close to 17% YTD and hit a record high in early September.

The S&P 500 is one of the most widely-followed stock market indices in the world and there are many funds that invest based on the index. The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site.

A Total World Stock Market Index Fund

Because all S&P 500 index funds perform very similarly, the amount you’re paying in fees becomes incredibly important when picking a fund. Vanguard is one of the biggest names in the industry, and its S&P 500 index fund historically outperforms the benchmark index. Offering a dividend yield of 1.63% and a next-to-nothing expense ratio, investors could do far worse than this fund with an impressive two-decade-long performance history. In addition, all three funds closely duplicate or exceed the historical performance of their benchmark index.

T. Rowe Price QM U.S. Bond Index Fund (PBDIX)

It’s also the most expensive fund on our list, at 45 basis points. While the fund invests primarily in U.S. bonds, it also invests in debt issued by foreign entities. The fund does require a minimum investment of $3,000, but charges a low fee of five basis points. Of note, the fund holds very little cash, suggesting that its portfolio more closely tracks the index. To help you choose the right option, Forbes Advisor has surveyed the market and selected seven of the best U.S. total bond index funds available today. The ETF has a 52 week low of $52.05 and a 52 week high of $96.88.

The stocks of companies in emerging markets have historically underperformed compared to U.S. stocks. Between 2012 and 2021, the Schwab emerging market funds, on a combined basis, had total returns of about 67%. The S&P 500, meanwhile, racked up total returns of more than 350%. Since index funds are passively managed, they are actually more likely over the long term to outperform funds with active managers.

Perhaps best of all, the passive investing style of ETFs lead to much lower fees and costs than actively managed mutual funds. Given the benefits of ETFs, it should come as no surprise they remain a preferred investment vehicle. These tactical calls include what stocks to buy, what price to buy, which stocks to sell, what price to sell, etc. This type of investment is called active investing, and the funds are called actively managed mutual funds.

Motley Fool Investing Philosophy

With supply chain woes expected to persist for some time, the VanEck Semiconductor ETF is only appropriate for investors with a long time horizon and a relatively high risk tolerance. But, with the semiconductor market projected to almost double by 2030, buying this index fund in a bear market could be a smart play for long-term investors. As of March 31, 2022, the index fund’s largest concentration was in healthcare (16.1%), financials (15.9%), and industrials (15.4%). The fund’s expense ratio, at 0.1%, is relatively low, especially for one that offers exposure to the companies with the most growth potential.

Last year taught investors that it’s never wise to make broad predictions about capital markets and the broader economy – at least not without a backup plan. COVID wrecked just about every prediction out there, and some outside shock could do the same in 2021. The fund’s 12-month dividend yield as of May 2022, was 2.71% — well above the S&P 500’s 1.46%. Finally, FZROX is the newest fund to make our list, with an inception date of August 2, 2018. The fund has $11.3 billion under management and a trailing twelve-month yield of 1.10%, both as of September 30, 2021.

Right now, it is a buy-and-hold that investors might want to wait for a pullback in. While VOO is down almost 17% this year at $365 per share, the drop reflects the fact that the S&P 500 index itself is down this faithful finance year. And best of all, Vanguard’s S&P 500 ETF is extremely affordable to own, with an expense ratio of only 0.03%. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.