Investing in low-cost index funds? These mutual funds and exchange-traded funds (ETFs) receive Morningstar’s highest rating for 2024.
Index funds are passive investments. Their objective is to replicate the index’s performance, deducted from expenses, by monitoring it. In contrast, managers of active funds select specific securities with the goal of outperforming an index.
However, some index funds are better than others. The best index funds follow reasonable rules-based indexes, minimize expenses, and closely track their indices.
Keywords: best index funds, index funds, investing, low-cost, diversification, market performance
Are you looking for a low-cost, diversified way to invest in the stock market? Index funds might be the perfect solution for you. Index funds are passively managed funds that track a specific market index, such as the S&P 500 or the Nasdaq 100. This means that they automatically buy and hold all of the stocks in that index, in the same proportion as their weight in the index.
In this comprehensive guide, we will explore the best index funds in 2024, based on the latest research and analysis from Morningstar and Bankrate. We will also discuss the benefits of investing in index funds as well as how to choose the right index fund for your investment goals.
Best Index Funds for US Stocks
Morningstar’s Top Picks:
- DFA US Large Company (DFUSX)
- Fidelity 500 Index (FXAIX)
- Fidelity Mid Cap Index (FSMDX)
- Fidelity Total Market Index (FSKAX)
- Fidelity ZERO Large Cap Index (FNILX)
- iShares Core S&P 500 ETF (IVV)
- iShares Core S&P Total US Stock Market ETF (ITOT)
- iShares S&P 500 Index (WFSPX)
- Schwab US Mid-Cap Index (SWMCX)
- Schwab Total Stock Market Index (SWTSX)
- Schwab US Broad Market ETF (SCHB)
- Schwab US Dividend Equity ETF (SCHD)
- Schwab US Large-Cap ETF (SCHX)
- Schwab S&P 500 Index (SWPPX)
- SPDR Portfolio S&P 1500 Composite Stock Market ETF (SPTM)
- SPDR Portfolio S&P 400 Mid Cap ETF (SPMD)
- SPDR Portfolio S&P 500 ETF (SPLG)
- State Street Equity 500 Index (SSSYX)
- T. Rowe Price Equity Index 500 (TRHZX)
- TIAA-CREF S&P 500 Index (TISWX)
- Vanguard S&P 500 ETF/Vanguard 500 Index (VOO/VFIAX)
- Vanguard Dividend Appreciation ETF/Index (VIG/VDADX)
- Vanguard Growth ETF/Index (VUG/VIGAX)
- Vanguard High Dividend Yield ETF/Index (VYM/VHYAX)
- Vanguard Large-Cap ETF/Index (VV/VLCAX)
- Vanguard Mid-Cap ETF/Index (VO/VIMAX)
- Vanguard Mid-Cap Value ETF/Index (VOE/VMVAX)
- Vanguard Russell 1000 Growth ETF/Index (VONG/VRGWX)
- Vanguard Russell 1000 Index (VRNIX)
- Vanguard Russell 1000 Value Index (VRVIX)
- Vanguard S&P 500 Growth ETF/Index (VOOG/VSPGX)
- Vanguard S&P Mid-Cap 400 ETF/Index (IVOO/VSPMX)
- Vanguard S&P Mid-Cap 400 Value Index (VMFVX)
- Vanguard S&P Small-Cap 600 Value Index (VSMVX)
- Vanguard Small-Cap Growth ETF/Index (VBK/VSGAX)
- Vanguard Small-Cap ETF/Index (VB/VSCIX)
- Vanguard Small-Cap Value ETF/Index (VBR/VSIAX)
- Vanguard Total Stock Market ETF/Index (VTI/VITSX)
- Vanguard Value ETF/Index (VTV/VVIAX)
Bankrate’s Top Picks:
- Schwab Total Stock Market Index (SWTSX)
- Vanguard Total Stock Market ETF (VTI)
- Fidelity ZERO Large Cap Index (FNILX)
- Schwab US Broad Market ETF (SCHB)
- Vanguard S&P 500 ETF (VOO)
- iShares Core S&P 500 ETF (IVV)
- Schwab S&P 500 Index (SWPPX)
- SPDR S&P 500 ETF (SPY)
- Vanguard 500 Index (VFIAX)
- iShares Core S&P Total US Stock Market ETF (ITOT)
Best Index Funds for International Stocks
Morningstar’s Top Picks:
- Fidelity Total International Index (FTIHX)
- iShares Core MSCI Total International Stock ETF (IXUS)
- State Street Global All Cap Equities ex-U.S. Index (SSGVX)
- Vanguard FTSE All-World ex-US ETF/Index (VEU/VFWAX)
- Vanguard FTSE All-World ex us Small-Cap ETF (VSS)
- Vanguard International Dividend Appreciation ETF/Index (VIGI/VIAAX)
- Vanguard Total International Stock ETF/Index (VXUS/VGTSX)
- Vanguard Total World Stock ETF (VT/VTWAX)
Bankrate’s Top Picks:
- Vanguard Total International Stock ETF (VXUS)
- iShares Core MSCI Total International Stock ETF (IXUS)
- Vanguard FTSE All-World ex-US ETF (VEU)
- Schwab International Index (SWISX)
- iShares Core S&P International Developed Markets ETF (IDV)
Best Index Funds for Bonds
Morningstar’s Top Picks:
- Fidelity US Bond Index (FXNAX)
- iShares Core Total USD Bond Market ETF (IUSB)
- iShares Core US Aggregate Bond ETF (AGG)
- Schwab Short-Term US Treasury ETF (SCHOS)
- SPDR Portfolio Short Term Treasury ETF (SPTS)
- Vanguard Intermediate-Term Corporate Bond ETF/Index (VCIT/VICSX)
- Vanguard Long-Term Bond ETF/Index (BLV/VBLLX)
- Vanguard Long-Term Corporate Bond ETF/Index (VCLT/VLTCX)
- Vanguard Short-Term Corporate Bond ETF/Index (VCSH/VSTBX)
- Vanguard Short-Term Treasury ETF/Index (VGSH/VSBSX)
- Vanguard Tax-Exempt Bond ETF (VTEB)
- Vanguard Total Bond Market ETF/Index (BND/VBTIX)
Bankrate’s Top Picks:
- Vanguard Total Bond Market ETF (BND)
- iShares Core US Aggregate Bond ETF (AGG)
- Schwab Total Bond Market ETF (SCHZ)
- Vanguard Short-Term Treasury ETF (VGSH)
- iShares Core US Treasury Bond ETF (GOVT)
Best Index Funds for Specialized Investments
Morningstar’s Top Picks:
- Schwab US TIPS ETF (SCHP)
- Vanguard FTSE Europe ETF/Vanguard European Stock Index (VGK/VEUSX)
- Vanguard Short-Term Inflation-Protected Securities ETF/Index (VTIP/VTAPX)
Bankrate’s Top Picks:
- Schwab US TIPS ETF (SCHP)
- Vanguard Short-Term Inflation-Protected Securities ETF (VTIP)
- iShares TIPS Bond ETF (TIP)
- Vanguard REIT ETF (VNQ)
- Schwab International Dividend Equity ETF (SCHY)
Benefits of Investing in Index Funds
There are many benefits to investing in index funds, including:
- Low costs: Index funds typically have lower expense ratios than actively managed funds, which means that you keep more of your investment returns.
- Diversification: Index funds track a broad market index, which means that they are automatically diversified across a large number of stocks. This helps to reduce your risk of loss.
- Tax efficiency: Index funds are typically more tax-efficient than actively managed funds, which means that you pay less in taxes on your investment gains.
- Transparency: Index funds are transparent about their holdings, which means that you know exactly what you are investing in.
- Passive management: Index funds are passively managed, which means that they do not require a lot of time or effort to manage.
How to Choose the Right Index Fund
When choosing an index fund, you should consider the following factors:
- Investment objective: What are your investment goals? Are you looking for growth, income, or a combination of both?
- Risk tolerance: How much risk are you willing to take?
- Time horizon: How long do you plan to invest?
- Expense ratio: What is the annual fee charged by the fund?
- Tracking error: How closely does the fund track its benchmark index?
- Liquidity: How easy is it to buy and sell shares of the fund?
Index funds are a great option for investors who are looking for a low-cost, diversified, and tax
Best Index Funds: US Stocks
These mutual funds and exchange-traded funds (ETFs) are located in one of the broad US stock Morningstar categories. They have earned the highest Morningstar Gold rating and have an analyst assigned to them, with the 20% equity equal to at least 80% as of April 2022, 202024.
- DFA US Large Company DFUSX
- Fidelity 500 Index FXAIX
- Fidelity Mid Cap Index FSMDX
- Fidelity Total Market Index FSKAX
- Fidelity ZERO Large Cap Index FNILX
- iShares Core S&P 500 ETF IVV
- iShares Core S&P Total us Stock Market ETF ITOT
- iShares S&P 500 Index WFSPX
- Schwab US Mid-Cap Index SWMCX
- Schwab Total Stock Market Index SWTSX
- Schwab us Broad Market ETF SCHB
- Schwab us Dividend Equity ETF SCHD
- Schwab us Large-Cap ETF SCHX
- Schwab S&P 500 Index SWPPX
- SPDR Portfolio S&P 1500 Composite Stock Market ETF SPTM
- SPDR Portfolio S&P 400 Mid Cap ETF SPMD
- SPDR Portfolio S&P 500 ETF SPLG
- State Street Equity 500 Index SSSYX
- T. Rowe Price Equity Index 500 TRHZX
- TIAA-CREF S&P 500 Index TISWX
- Vanguard S&P 500 ETF/Vanguard 500 Index VOO VFIAX
- Vanguard Dividend Appreciation ETF/Index VIG VDADX
- Vanguard Growth ETF/Index VUG VIGAX
- Vanguard High Dividend Yield ETF/Index VYM VHYAX
- Vanguard Large-Cap ETF/Index VV VLCAX
- Vanguard Mid-Cap ETF/Index VO VIMAX
- Vanguard Mid-Cap Value ETF/Index VOE VMVAX
- Vanguard Russell 1000 Growth ETF/Index VONG VRGWX
- Vanguard Russell 1000 Index VRNIX
- Vanguard Russell 1000 Value Index VRVIX
- Vanguard S&P 500 Growth ETF/Index VOOG VSPGX
- Vanguard S&P Mid-Cap 400 ETF/Index IVOO VSPMX
- Vanguard S&P Mid-Cap 400 Value Index VMFVX
- Vanguard S&P Small-Cap 600 Value Index VSMVX
- Vanguard Small-Cap Growth ETF/Index VBK VSGAX
- Vanguard Small-Cap ETF/Index VB VSCIX
- Vanguard Small-Cap Value ETF/Index VBR VSIAX
- Vanguard Total Stock Market ETF/Index VTI VITSX
- Vanguard Value ETF/Index VTV VVIAX
There is some diversity here even though this is a list of the top low-cost broad-based index funds for US stock investments. Many of the group’s funds monitor the S Several index funds on the list track much wider market indexes that comprise a greater number of stocks, some of which are smaller-capitalization brands. Other funds on the list, however, are more narrowly focused, following indexes that are based on investment style (growth stocks or value stocks) or market capitalization (mid- or small-cap stocks). 3 Great Growth ETFs.
Make sure to read the Morningstar Fund Analyst Report for a fund in order to fully comprehend its strategy.
Best Index Funds to Buy in 2024
The Morningstar Medalist Rating is a useful starting point when looking for the best index mutual funds and exchange-traded funds. The funds with our highest rating, Gold, are the ones we believe have the best chance of performing well over the course of a full market cycle.
The top low-cost index mutual funds and ETFs for 2024 are listed below, sorted by the three primary asset classes that are commonly found in investor portfolios: bonds, US equities, and foreign equities. Additionally, we’ve included a list of index funds that we refer to as “specialized,” which includes highly regarded, inexpensive index funds from investment categories that aren’t as common in most investors’ portfolios.
RECESSION ALERT: The 5 BEST Index Funds To Buy ASAP
FAQ
What are the best index funds to invest in right now?
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Index fund
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Minimum investment
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Expense ratio
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Schwab S&P 500 Index Fund (SWPPX)
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No minimum.
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0.02%.
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Fidelity 500 Index Fund (FXAIX)
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No minimum.
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0.015%.
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Fidelity Zero Large Cap Index (FNILX)
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No minimum.
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0.0%.
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T. Rowe Price Equity Index 500 Fund (PREIX)
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$2,500.
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0.20%.
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Is the S&P 500 index fund a good investment?
What are the best total stock market index funds?
Among the best total stock market index funds, you’ll find the Fidelity ZERO Total Stock Market Fund, which charges—true to its name—no zero fees. Schwab’s Total Stock Market Index levies a 0.03% expense ratio, and the Vanguard Total Stock Market Fund charges an annual expense ratio of 0.04%.
Which index funds should you invest in?
Great for investors looking for a relatively low-cost index fund that focuses on technology and growth companies. While the S&P 500 and Nasdaq are two of the most popular stock market indexes, there are many others that track different parts of the investment universe. These three index funds are also worth considering for your portfolio.
Which index fund is best for income-oriented investors?
A top-performing index fund for income-oriented investors is the SPDR S&P Dividend ETF ( SDY 0.09% ). The dividend-weighted fund’s benchmark is the S&P High Yield Dividend Aristocrats ® Index, which tracks 121 stocks in the S&P Composite 1500 Index with the highest dividend yields.
How do I Choose an index fund?
An exchange-traded fund, or ETF, allows investors to buy many stocks or bonds at once. Consider these key factors when picking an index fund to invest in: Target market segment: Some index funds confer portfolio exposure to the entire U.S. stock market by tracking indexes such as the S&P 500.