Vanguard 500 Index InvestorVFINX

Morningstar Rating

Fund Research and Analysis

by Dan Culloton

Vanguard 500 is still a solid option.

The fund, though still among the largest in the fund industry, has been surpassed in popularity by other options that include more mid- and small-cap exposure, such as Vanguard Total Stock Market Index VTSMX. Its low expense ratio also has been undercut by exchange-traded funds and traditional open-end rivals, such as the Schwab S&P 500 SWPPX, which slashed its fees to 0. Read more

Kudos

Low costs.

Moderate volatility thanks to wide diversification.

Strong aftertax performance.

Solid long-term track record. Read more

Risks

Huge median market cap may cause the fund to lag in smaller-stock rallies.

Unlikely to ever shoot the lights out.

This fund is no longer the cheapest game in town. Read more

Strategy

The core of this fund's strategy is simple: It buys and holds the stocks that make up the S&P 500 Index. Manager Michael Buek attempts to add value on the margins by opportunistically buying futures contracts, among other techniques, and he actively tries to reduce trading costs. Read more

Management

Michael Buek has been lead manager of this fund since the spring of 2005. Buek worked closely with previous manager and current Vanguard chief investment officer Gus Sauter on this fund since 1991 and has been with Vanguard since 1987. Read more

Inside Scoop

This fund shows that sometimes you can beat 'em by joining 'em. Management doesn't try to outguess the market; rather, it buys and holds the stocks in the S&P 500. That strategy, along with low expenses, has given the fund one of the best long-term records. Read more

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