Overview of the Vanguard 500 Index Fund
According to Vanguard’s website, the investment strategy of the Vanguard 500 Index mutual fund is to use a passive management or index “investment approach designed to track the performance of the Standard & Poor’s 500 Index, a widely recognized benchmark of U.S. stock market performance that is dominated by the stocks of large U.S. companies. The fund attempts to replicate the target index by investing all, or substantially all, of its assets in the stocks that make up the index, holding each stock in approximately the same proportion as its weighting in the index.”
This Vanguard index fund is a no load mutual fund. It can be purchased directly from Vanguard without the added sales fees of a financial advisor or investment counselor. This fund also does not charge an annual 12b-1 fee.
Annual portfolio turnover is only about 5%. Turnover is a reasonable proxy for the transactions costs that a fund incurs, and lower turnover means lower trading costs. Admiral shares account for about $37 billion of the total of about $123 billion is assets in the Vanguard 500 Index Fund. This Vanguard fund is THE giant S&P 500 index fund among other smaller index fund giants. Founded in 1976, this fund is also the longest surviving S&P 500 index fund in the industry.
The dominant issue in choosing among passively managed index mutual funds benchmarked against the S&P 500 is cost.
Securities industry management and trading fees are all over the map from reasonably low to shockingly high. Vanguard Admiral Shares are not for the individual investor with limited funds, because this share class requires an initial investment of $100,000 to get a rock-bottom annual expense ratio of .09%. For those who are starting their investment program or those who currently have more modest means, shares in the Vanguard 500 Index Fund (VFINX) are an alternative. VFINX shares have a low annual expense ratio of .18% and a minimum initial deposit requirement of $3,000 in a taxable account.
Alternatively, an investor might choose one of the other low cost, no load index funds listed in the section below. Nevertheless, you should not be daunted by the $100,000 investment requirement. With a regular monthly investment program, over time your assets could grow until you qualify for the lower expense ratio of VFIAX Admiral Shares. Furthermore, if you already have assets in Vanguard accounts that you have held for at least 10 years, then $50,000 is the minimum conversion limit into VFIAX shares.
You can find the Vanguard Group fund family website at www.vanguard.com. Vanguard’s customer service telephone number is 1-800-662-2739.
10 of the lowest cost S&P 500 Index Funds that individual investors can buy directly.
To buy index funds, click on any of the 10 low cost, no load S&P 500 index funds below to find additional information about them. The article “Top 10 S&P 500 Index Funds” explains how this list was developed. The five letter term in parentheses is the fund’s trading symbol.
- California Investment S&P 500 Index Fund (SPFIX)
- Fidelity Spartan 500 Index Fund (FSMKX)
- Schwab S & P 500 Index Fund (SWPPX)
- SSga S&P 500 Index Fund (SVSPX)
- T Rowe Price Equity Index Fund 500 (PREIX)
- United Association S&P500 Index Fund (UAIIX)
- USAA S&P 500 Index Fund – Member (USSPX)
- Vanguard 500 Index Fund – Admiral (VFIAX)
- Vanguard 500 Index Fund (VFINX)
- Vantagepoint 500 Index Fund – Stock II (VPSKX)
You should be able to go directly to most of these 10 funds to buy them. Either call them or download the investment forms from their websites. When you shop for any investment, always pay attention to the details. Understand whether there are other restrictions, costs, and purchase conditions associated with buying any index mutual fund.
Your decision on whether to purchase or to sell any investment is yours and yours alone. READ OUR WEBSITE DISCLAIMER HERE: No Load Index Funds
