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 Vanguard Mutual Funds was our first in a series of articles covering families of mutual funds. We used the same format throughout the series so that you can make some comparisons between these various families. We start by talking briefly about the overall structure of Vanguard, provide you with a feel for their fee structure and finish up with an overview of some of their top rated mutual funds.
Vanguard Family of Funds
Vanguard is one of the world's largest investment companies, managing nearly $900 billion in U.S. based mutual funds. The company has around 12,000 employees and claims 9 million shareholder accounts with assets of $1.1 trillion. The corporate headquarters for Vanguard is in Valley Forge, Pennsylvania, but they have offices around the world including Belgium and Japan.
Individual investors opening an account with the Vanguard family of funds has access to an impressive selection of mutual funds, exchange traded funds, or ETFs, stocks, bonds, and even non-Vanguard funds. With Vanguard you can expect full service planning including 529 plans to help you save for college expenses and retirement plans including IRAs. Vanguard currently claims to offer over 140 domestic mutual funds and an additional 40 funds investing in the international markets.
Vanguard Fee Structure and Returns
Generally, Vanguard mutual funds are well known for their low fee structure. Mutual fund rating sources such as Morningstar note that Vanguard's operating expense are considered very low relative to the industry. The majority of Vanguard funds, over 55%, are invested in domestic stocks. Over the past five years, the average fund return is 13.52% (November 2007).
The minimum investment an individual can make in any Vanguard mutual fund is $3,000 and nearly all of their entire family of funds consists of no-load funds (98.6%). This large offering of no-load mutual funds are tempting to the investor that understands the long-term impact that mutual fund fees can have on their total return and growth of their investment.
Top Rated Vanguard Mutual Funds
The cornerstone of the Vanguard mutual fund family is the Vanguard 500 Index fund. With total assets over $129 billion, the Vanguard 500 Index is at times the largest mutual fund in the world - sharing this honor with Fidelity's Magellan Fund. The Wellington Fund is another well known Vanguard mutual fund and Wellington holds the honor of being the first mutual fund established at Vanguard.
Finally, taking a look at the Morningstar ratings of Vanguard's mutual funds, the top rated funds in 2007 include:
- Vanguard Precious Metals and Mining (VGPMX) - with nearly $5 billion in holdings, this mutual fund invests primarily in North American and Asian mining stocks. Top holdings include Lonmin, Impala Platinum Holdings, and Eramet. The fund currently holds 93% of its assets in mining stocks and boasts a modest expense ratio of 0.55%. This no load mutual fund is currently closed to new investors. The average return over the last five years is 36.08%. (November 2007)
- Vanguard High-Yield Tax-Exempt (VWAHX) - with nearly $6 billion in assets, this mutual fund invests primarily in tax exempt bonds. Top holdings include Lee Memorial Health System Florida Hospital (5.25%), St John Baptist Parish (5.125%), and New Jersey State Transit (5.50%). This no-load mutual fund has an expense ratio of 0.17% and requires a minimum investment of $3,000. The average return over the last five years is 4.85%. (November 2007)
- Vanguard Capital Opportunity (VHCOX) - with nearly $11 billion in assets, this mutual fund invests in mid-cap growth stocks. Top holdings include Research in Motion, Ltd, NVIDIA Corporation, and Monsanto Company. This no-load mutual fund is also closed to new investors and has an expense ratio of 0.49%. The average return over the last five years was 18.58%. (November 2007)
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