Which index funds give best returns?
SBI Nifty Index Fund
SBI Nifty Index Direct Plan-Growth is one of India's top 10 index funds. It is a mutual fund scheme categorised under the Large Cap Index category. Over the past year, SBI Nifty Index Direct Plan-Growth has delivered returns of 15.37 percent.
SBI Nifty Index Fund
SBI Nifty Index Direct Plan-Growth is one of India's top 10 index funds. It is a mutual fund scheme categorised under the Large Cap Index category. Over the past year, SBI Nifty Index Direct Plan-Growth has delivered returns of 15.37 percent.
- 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.
Exchange-traded fund (ticker symbol) | Dividend yield |
---|---|
Vanguard Real Estate ETF (VNQ) | 4.1% |
Alerian MLP ETF (AMLP) | 7.6% |
JPMorgan Equity Premium Income ETF (JEPI) | 7.9% |
iShares Preferred & Income Securities ETF (PFF) | 6.4% |
Despite how great of an investment option the S&P 500 is, one ETF has historically been a better investment: the Vanguard Growth ETF (NYSEMKT: VUG).
For beginners, the vast array of index funds options can be overwhelming. We recommend Vanguard S&P 500 ETF (VOO) (minimum investment: $1; expense Ratio: 0.03%); Invesco QQQ ETF (QQQ) (minimum investment: NA; expense Ratio: 0.2%); and SPDR Dow Jones Industrial Average ETF Trust (DIA).
Index fund | Minimum investment | Expense ratio |
---|---|---|
Vanguard 500 Index Fund - Admiral Shares (VFIAX) | $3,000. | 0.04%. |
Schwab S&P 500 Index Fund (SWPPX) | No minimum. | 0.02%. |
Fidelity 500 Index Fund (FXAIX) | No minimum. | 0.015%. |
Fidelity Zero Large Cap Index (FNILX) | No minimum. | 0.0%. |
Exchange-traded funds (ETFs) and index funds are similar in many ways but ETFs are considered to be more convenient to enter or exit. They can be traded more easily than index funds and traditional mutual funds, similar to how common stocks are traded on a stock exchange.
- High-yield savings accounts.
- Money market funds.
- Short-term certificates of deposit.
- Series I savings bonds.
- Treasury bills, notes, bonds and TIPS.
- Corporate bonds.
- Dividend-paying stocks.
- Preferred stocks.
Whether the market is down or up, as long as you're investing for the long-term in a well-diversified portfolio it's as good a time as any. If the market is down, it's essentially on sale, and you may be able to pick up an index fund for less money.
How to pick an index fund?
- Representative: The fund should provide the full range of opportunities available to its actively managed fund peers.
- Diversified: A wide array of holdings should be on offer.
- Investable: It should invest in liquid securities that are easy to track.
Symbol | Name | Dividend Yield |
---|---|---|
XRMI | Global X S&P 500 Risk Managed Income ETF | 12.41% |
YYY | Amplify High Income ETF | 12.33% |
SPYI | NEOS S&P 500 High Income ETF | 12.02% |
TUGN | STF Tactical Growth & Income ETF | 11.99% |
Most index funds pay dividends to their shareholders. Since the index fund tracks a specific index in the market (like the S&P 500), the index fund will also contain a proportionate amount of investments in stocks. For index funds that distribute dividends, many pay them out quarterly or annually.
But VOO offers great liquidity as well as a rock-bottom expense ratio. As a result, this elegant long-term ETF gives you a piece of leaders including Apple Inc. (AAPL), Microsoft Corp. (MSFT) and others in one single holding.
Fund (ticker) | 5-year annual returns | Expense ratio |
---|---|---|
Fidelity ZERO Large Cap Index (FNILX) | 14.6% | 0% |
Vanguard S&P 500 ETF (VOO) | 14.5% | 0.03% |
SPDR S&P 500 ETF Trust (SPY) | 14.5% | 0.095% |
iShares Core S&P 500 ETF (IVV) | 14.5% | 0.03% |
Vanguard S&P 500 ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VOO is an outstanding option for investors seeking exposure to the Style Box - Large Cap Blend segment of the market.
The benefits of index investing include low cost, requires little financial knowledge, convenience, and provides diversification. Disadvantages include the lack of downside protection, no choice in index composition, and it cannot beat the market (by definition).
Over the long term, index funds have generally outperformed other types of mutual funds. Other benefits of index funds include low fees, tax advantages (they generate less taxable income), and low risk (since they're highly diversified).
If you're new to investing, you can absolutely start off by buying index funds alone as you learn more about how to choose the right stocks. But as your knowledge grows, you may want to branch out and add different companies to your portfolio that you feel align well with your personal risk tolerance and goals.
- Vanguard S&P 500 ETF (VOO 1.0%) ...
- Vanguard High Dividend Yield ETF (VYM -0.2%) ...
- Vanguard Real Estate ETF (VNQ 0.05%) ...
- iShares Core S&P Total U.S. Stock Market ETF (ITOT 0.97%) ...
- Consumer Staples Select Sector SPDR Fund (XLP -0.21%)
How many index funds should I buy?
A three-fund portfolio is made up of three index funds or ETFs. Advisors typically suggest choosing a total U.S. stock market index fund, an international stock fund and broad market bond fund. The amount of money you allocate to each fund depends on your age, goals and risk tolerance.
Investing in multiple index funds can be a great way to build exposure and diversification in multiple emerging markets, and economies at once. Generally, it is considered less risky than putting all of your money into a single investment or asset class, but this also comes at some cost.
While indexes may be low cost and diversified, they prevent seizing opportunities elsewhere. Moreover, indexes do not provide protection from market corrections and crashes when an investor has a lot of exposure to stock index funds.
ETFs and index mutual funds tend to be generally more tax efficient than actively managed funds. And, in general, ETFs tend to be more tax efficient than index mutual funds. You want niche exposure. Specific ETFs focused on particular industries or commodities can give you exposure to market niches.
If you buy and sell frequently, ETFs are the clear winner when it comes to taxes. When shares of an ETF are sold, only the seller pays capital gains taxes. That's different from index mutual funds because you sell these shares to a fund manager.
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