Index funds are one of the most popular investment tools among new and seasoned investors today. Their attractiveness is largely due to portfolio diversification exposure with relatively lower costs. What essentially index funds do is reproduce market indexes, such as the S&P 500. Therefore, what they would hold is a pool of stocks to closely resemble the nature of the composition the specific index upholds. Index funds form the best long-term investment option for those who intend to expand their wealth through a systematic and cost-efficient process. Here are some of the best index funds, their core features, and what has made them good choices among investors.
Fidelity ZERO Large Cap Index (FNILX)
Fidelity has many "ZERO" index funds, including no expense ratio. However, one of the best is FNILX. It is much like an S&P 500 index fund but really replicates the Fidelity U.S. Large Cap Index. No expense ratio at all makes FNILX a great option for novice investors or maximizing return via cost minimization.
Key Benefits
• No Expense Ratio (0.00%)
• Broad U.S. large-cap exposure
• It is best suited for a new or lower-capital investor.
Fidelity's no-commission policy stands out as unique in an effort to reduce cost if one seeks large-cap U.S. exposure but only wants exposure to this group.
Schwab U.S. Broad Market ETF (SCHB)
With SCHB holding more than 2,500 stocks, it was an overall diversified mix of big, middle, as well as smaller capitalization firms in several sectors. It's one of the cheaper funds available, as the expense ratio is at 0.03%.
Key Benefits
• It offers further beyond the large-cap style from its investors and comes to give more exposure than 500 ETFs from one cost
• All at the low cost- $8.8 bn; expense ratio: 0.04%.
I Shares Core S&P 500 ETF (IVV)
Tracks S&P 500 but makes an investment in large-cap U.S. stocks-another index by iShares Core S&P 500 ETF. It is managed by the Blackrock fund manager. There is huge liquidity for high flexibility investors, where easy buying and selling may be required. There exists an expense ratio of 0.03%.
Key Benefits
• Huge liquidity
• 0.03% expense ratio
• Blackrock has grabbed a large stake in Blackrock.
The offer goes to an investor that demands liquidity and stability of S&P 500 tracker as provided by a solid underwriter of the manager.
Vanguard Total Stock Market Index Fund (VTSAX)
Thereby, you can totally count on this investment fund as long as you're diversifying in company size and also sectors. Of course, its expense ratio at 0.04% does not compromise in sticking with the Vanguard cost-efficient strategy.
Key Benefits
• Exposures to the total U.S. stock market
• Minimum expense ratio at 0.04%
• Extremely suitable for long-term investors that would want to have a portfolio diversified in stocks.
It gives the VTSAX an exceptionally huge number of stocks in the United States market. Therefore, it is well-suited for investors having a long term horizon towards seeking full coverage of the market.
Vanguard Growth Index Fund (VIGAX)
This would make available the large-cap growth stocks of the US, as well as leading technology companies and other innovators where growth is realized for investors seeking growth-driven businesses. A growth-driven approach can be used to control VIGAX's expense ratio of 0.05%.
Key Benefits
• Large cap-growth
• Texpense Ratio: 0.05%
• The growth should be visible and quite palpable to such an investor in the future as they are comfortable about handling higher volatility.
Vanguard Dividend Appreciation Index Fund (VDADX)
VDADX may be aptly utilized if one believes that even on this near-term high volality, the future remains favorable for growths relative to the overall market for much extended periods. This strategy must be chosen because those types of investors anticipate much positive growth over such vast duration and are fine taking even the volatility up on an immediate basis. For income-driven investors, the Vanguard Dividend Appreciation Index Fund seeks investments in companies with dividend growth over time. The theme of quality dividend growth attracts investors who want both income and growth.
Key Benefits:
• Investment in dividend growth companies
• 0.06% expense ratio
• Suitable for investors looking for income generation.
VDADX will appeal to people whose income is dividend-in nature and who wish investment in growth stocks.
Conclusion
The right index fund is one which will depend on your investing objectives, tolerance for risk, and your investment time horizon. The best option in the general equity market can be VFIAX or IVV, while all large-cap stocks in the United States will be able to be bought using VTSAX or SCHB. If you want growth, go for VIGAX. If you're an income-seeker, then VDADX should do the trick. Both will provide you with low fees, diversification, and a long-term wealth-building track record.
