Index Funds
Index funds are the foundation of a successful long-term investing strategy. They offer broad market exposure, ultra-low costs, and have consistently outperformed the majority of actively managed funds over time.
Top Index Funds by Assets Under Management
These are the largest and most popular index funds, ranked by total assets under management. Low expense ratios mean more of your money stays invested and compounding over time.
| Ticker | Fund Name | Tracks | AUM | Expense Ratio | Div Yield | Holdings | Type | Provider | Min Investment | Since |
|---|---|---|---|---|---|---|---|---|---|---|
| VOO | Vanguard S&P 500 ETF | S&P 500 | $1.15T | 0.03% | 1.25% | 503 | ETF | Vanguard | $1 (1 share) | 2010 |
| VTI | Vanguard Total Stock Market ETF | CRSP US Total Market | $450B | 0.03% | 1.28% | 3,645 | ETF | Vanguard | $1 (1 share) | 2001 |
| SPY | SPDR S&P 500 ETF Trust | S&P 500 | $590B | 0.0945% | 1.20% | 503 | ETF | State Street | $1 (1 share) | 1993 |
| IVV | iShares Core S&P 500 ETF | S&P 500 | $560B | 0.03% | 1.24% | 503 | ETF | BlackRock | $1 (1 share) | 2000 |
| VXUS | Vanguard Total Intl Stock ETF | FTSE Global All Cap ex US | $430B | 0.07% | 3.10% | 8,679 | ETF | Vanguard | $1 (1 share) | 2011 |
| QQQ | Invesco QQQ Trust | Nasdaq-100 | $310B | 0.20% | 0.55% | 101 | ETF | Invesco | $1 (1 share) | 1999 |
| SCHD | Schwab US Dividend Equity ETF | Dow Jones US Dividend 100 | $65B | 0.06% | 3.40% | 103 | ETF | Schwab | $1 (1 share) | 2011 |
| FXAIX | Fidelity 500 Index Fund | S&P 500 | $530B | 0.015% | 1.22% | 506 | Mutual Fund | Fidelity | $0 | 1988 |
| VTSAX | Vanguard Total Stock Mkt Idx Adm | CRSP US Total Market | $370B | 0.04% | 1.28% | 3,645 | Mutual Fund | Vanguard | $3,000 | 2000 |
| BND | Vanguard Total Bond Market ETF | Bloomberg US Aggregate | $118B | 0.03% | 4.50% | 11,339 | ETF | Vanguard | $1 (1 share) | 2007 |
| VGT | Vanguard Information Technology ETF | MSCI US IMI Info Tech 25/50 | $85B | 0.10% | 0.60% | 316 | ETF | Vanguard | $1 (1 share) | 2004 |
| VFIAX | Vanguard 500 Index Fund Admiral | S&P 500 | $440B | 0.04% | 1.25% | 503 | Mutual Fund | Vanguard | $3,000 | 2000 |
Choosing the Right Fund
Lowest cost S&P 500: FXAIX (0.015%) or VOO/IVV (0.03%) give you broad large-cap exposure for nearly free.
Total market exposure: VTI or VTSAX capture small, mid, and large caps in one fund for maximum diversification.
International diversification: VXUS covers developed and emerging markets outside the US to reduce home country bias.
Dividend income: SCHD focuses on high-quality dividend payers with a 3.4% yield, ideal for income-focused investors.
Bond allocation: BND provides broad US bond exposure for stability, especially as you approach retirement.
Tech-heavy growth: QQQ and VGT are great for growth-oriented investors who want more technology sector exposure.
The Three-Fund Portfolio
Popularized by Bogleheads (followers of Vanguard founder Jack Bogle), the three-fund portfolio is the gold standard of simplicity and diversification. It captures the entire world stock market and the US bond market in just three funds, keeping costs near zero and rebalancing easy.
US Total Stock Market
Covers all US stocks (large, mid, and small cap). This is your growth engine and typically makes up 40-70% of the portfolio depending on your risk tolerance and age.
International Stock Market
Covers developed and emerging markets outside the US. Provides geographic diversification and typically makes up 20-40% of the portfolio.
US Total Bond Market
Provides stability and income. A common rule of thumb is to hold your age in bonds (e.g., 30 years old = 30% bonds), though aggressive investors may hold less.
Three-Fund Portfolio by Brokerage
| Brokerage | US Stocks | Intl Stocks | US Bonds | Blended ER |
|---|---|---|---|---|
| Vanguard ETF | VTI | VXUS | BND | 0.04% |
| Vanguard Mutual Fund | VTSAX | VTIAX | VBTLX | 0.05% |
| Fidelity (Zero Fee) | FZROX | FZILX | FXNAX | 0.01% |
| Schwab | SWTSX | SWISX | SWAGX | 0.04% |
Why Three Funds?
Simplicity: only three holdings to manage, making rebalancing trivial. You just adjust percentages once or twice a year.
Total diversification: you own virtually every publicly traded stock and bond in the world, reducing single-company and single-country risk.
Rock-bottom costs: blended expense ratios as low as 0.01% (Fidelity) to 0.05%, meaning you keep nearly all of your returns.
Tax efficiency: broad index funds generate fewer taxable events than actively managed funds, especially in taxable brokerage accounts.
No fund manager risk: you are not betting on any single manager's ability to beat the market. You are the market.
Easy to adjust risk: as you age, you simply increase the bond allocation and decrease stocks. No complex reallocation needed.