Top Vanguard Funds for Retirement Diversity

Choosing to invest can be overwhelming. There are thousands of investment options for you to evaluate and choose, especially when trying to make the right asset allocation. Fortunately, in addition to sorting out and using too many mutual funds and exchange-traded funds (ETFs) to get the right allocation, there is an alternative method.

The funds provided by Vanguard Group can achieve a wide range of investments by investing in a few funds. With only three to five funds, you can achieve your diversified goals. In addition, many Vanguard funds can be used as mutual funds as well as ETFs, so you can use your favorite investment tools and achieve the same results. The following are some of Vanguard’s funds that can be easily allocated and diversified. (Note: All fund data as of November 30, 2017.)

U.S. stocks

Vanguard Total Stock Market Index Fund (VTSAX) is a mutual fund that invests in the U.S. stock market. The fund holds more than 3,600 stocks. This allows you to invest in large, medium and small cap stocks in one investment. Even better, the mutual fund and ETF version of Vanguard Total Stock Market (VTI) costs only 0.04%. It is difficult to beat this diversification and expense ratio.

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International stocks

Total International Stock Index Fund (VTIAX) covers a wide range of international stocks, including emerging markets and some international small-cap stocks. With more than 6,200 stocks in its portfolio, this may be your only international holding. The expense ratio of mutual funds is only 0.11%. Similarly, the ETF version of Vanguard Total International Stock (VXUS) has the same fees as mutual funds, so you can choose the fund that suits you best. (Also take a look: Common ETFs in retirement accounts.)

If you want to increase your exposure to emerging markets than the total international stock index provides, you can use the Vanguard Emerging Markets Index (VEMAX) to supplement your international exposure. For a fee of only 0.14%, you can access more than 1,000 stocks from emerging markets such as Brazil, India, and China. Similarly, the ETF version of Vanguard FTSE Emerging Markets (VWO) has the same expense ratio as mutual funds.

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Vanguard Total Bond Market Index Fund (VBTLX) will enable you to get involved in almost all areas of the US bond market. This includes government bonds and corporate bonds with maturities ranging from short-term to long-term, with an average effective period of 8.4 years. The expense ratio of the Vanguard Total Bond Market (BND) for mutual funds and ETFs is only 0.05%. (Also take a look: Evaluating bond funds: keep it simple.)

If you want to gain exposure to international bonds, then you can add Vanguard Total International Bond Index Fund (VTABX). The fund invests in bonds outside the United States, including governments and companies. Most of the fund invests in bonds in developed countries. The expense ratio of mutual funds and ETF Vanguard Total International Bond (BNDX) is 0.11%.

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Special fund

Vanguard offers many other professional funds that you can add to your portfolio to meet your needs and investment methods. Examples include Vanguard Dividend Appreciation Index Fund (VDADX), for those who want more dividend income; Vanguard Healthcare Fund (VGHCX), for those who want more exposure to healthcare companies; and Vanguard Real Estate Investment Trust Index funds (VGSLX) are used for real estate investment. (Also take a look: Index mutual funds and index ETFs.)

Bottom line

By using the extensive, low-cost funds provided by companies such as Vanguard, you can easily save for retirement without having to manage large amounts of funds, while still achieving correct asset allocation and diversification. (Also take a look: Top 3 Vanguard Managed ETFs.)


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