Russell Kinnell: Vanguard funds are great for long-term holdings because they're cheap, and Vanguard's sound stewardship keeps them moving in the right direction. I have chosen three very different funds of hers that I will be happy to own for the next 20 years.
3 Best Vanguard Funds for the Long Term
- Vanguard Dividend Growth Rate VDIGX
- Vanguard Total International Stock Index VTIAX
- Vanguard Wellesley Revenue VWIAX
Vanguard Dividend Growth has it all: great managers, smart strategy, and low costs. Long-time manager Donald Kilbride will step down on January 1, 2024, handing over the reins to Peter Fisher. Mr. Fisher has been involved in this effort for many years, including serving as head of global dividend strategy since 2016. Wellington, the sub-adviser, typically handles such transitions well because he plans well in advance and has a deep bench that can handle most strategies. I'm a fan of dividend increases in general. This is because it leads management to a growing company with a healthy balance sheet. That means the fund has good defensive properties. Add in a fee of just 30 basis points and this fund is actually cheaper than many index funds.
Next up is the actual index fund. The Vanguard Total International Stock Index Fund works similarly to the U.S. fund, except that it invests in foreign stocks. Foreign stocks have lagged behind U.S. stocks for some time, so some investors are reducing their weight overseas. But in reality, these things happen in cycles, so I think it makes sense for most people to have large allocations outside of the US. With a fee of just 11 basis points, you can get that exposure at a very low price.
Finally, I have a good conservative fund designed for modest returns, some income, and capital preservation. Vanguard Wellesley Income is a gold-rated fund managed by Wellington with fees of just 16 basis points. This is also a Wellington-run fund that recently changed managers. The fixed income sleeve was handed over to a new manager in 2021 and the equity sleeve was handed over to a new manager in 2022. However, we still believe in its management and like the fund's conservative asset mix of 35% stocks and 65% bonds. Reduce the pain of bear markets while maintaining reasonable yields.
For more from Russell Kinnell, see 3 Great Funds for the New Year.
The author owns no shares in any securities mentioned in this article.
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