How to Rank Vanguard Mutual Funds

Vanguard is a large company or 'family' of mutual funds that pioneered with index funds. Index funds are funds that cover a wide range of securities in an attempt to match the overall market's performance. Index funds are passively managed and generally have low costs and low fees. They are also relatively secure, in that they only try to match the market index. The Vanguard 500 Index Fund is one of the largest funds in the world. You can rank Vanguard mutual funds using your own method or you can visit a Web site like Morningstar or others that rank mutual funds according to performance.

Instructions

Difficulty: Moderately Easy

Things You’ll Need:

• Basic understanding of investment terms
• Online access
• Pen or pencil and paper

Rank Vanguard Mutual Funds

1. Make a list of factors important to your investing, for example, high returns, low risk or active or passive management.
2. Visit the Vanguard Web site. It contains a great deal of information for new investors, including low-cost investing, 401(k) rollovers, mutual funds and advice.
3. Take charge of your investing and click on the tab called 'Research Funds and Stocks'.
4. Select the option which best meets your research needs: 'Choose a simpler strategy', 'Narrow your fund choices' or 'browse funds by objective'. You can also search from here by fund name, asset class or index funds only.
5. Make a list of mutual funds that meet your needs. Try to keep the list fairly narrow to make your ratings research easier. Be sure to write down the name and ticker abbreviation of the funds that interest you.
6. Visit the Morningstar Web site and click on the 'Funds' tab in the top center of the page. Alternatively, use the search feature in the top left corner of the page to find your funds.
7. Scroll to the bottom of the 'Funds' page to find the Vanguard family of funds.
8. Select the link to the Vanguard family, find the funds you are interested in and check out their star ratings.
9. Choose the mutual fund (or funds) that best fit your needs and have the highest ratings.

Tips & Warnings

• Morningstar uses a 5-star rating system based on fund performance. Five stars is the highest rating; 1 star is the lowest.
• For new investors, large families of mutual funds like Vanguard may be easier to deal with and cause less overall stress, since the company handles everything for their investors.
• Large mutual fund families often have extra costs associated with them because of the additional assistance and services they provide.
• Index funds intend only to match the market index, so returns may be lower than those of mutual funds which strive to beat the market.