Major U.S. indexes lack shine after a solid rebound in 2024. Investors are concerned about the surprising increase in January inflation. Market participants are now worried about whether the Fed will hike rates in its upcoming March 18-19, meeting to contain the situation. The labor market remains resilient.
Consumer Price Index (CPI) for January was 3%, up from 2.9% in December 2024. Inflation has climbed to its current level from a 3.5-year low of 2.4% in September 2024. Monthly CPI increased 0.5% vs 0.3% forecast. Producer Price Index (PPI) also jumped 3.5% year on year in January, following a 3.3% increase in December, giving more evidence of inflation picking up. Analysts expect inflation to go higher due to President Donald Trump's fiscal, trade and immigration policies. Mass deportations could cause labor shortages and raise wages and prices of goods.
The labor market remains stable. A report from the Labor Department indicates that initial claims for state unemployment benefits fell by 7,000 to 213,000 for the week ended Feb. 8. Nonfarm payrolls have increased by 143,000 in January, while the unemployment rate was at 4.0%.
In such a situation, mutual fund investing can help those who wish to diversify their portfolio among various asset classes but lack professional expertise in managing funds. Vanguard mutual funds like Vanguard Energy VGENX, Vanguard Selected Value VASVX, Vanguard Growth and Income Fund VQNPX, Vanguard Equity Income VEIPX and Vanguard Windsor Investor Shares VWNDX should be good choices since they provide low-cost, uncomplicated equity, fixed-income and multi-asset funds that can help investors meet their goals.
These funds have wide exposure in sectors like finance, industrial cyclical, technology, retail trade, non-durable, and health since they have given a positive return and are expected to perform well in the near future.
Why Invest in Vanguard Mutual Funds?
Vanguard, one of the world’s largest asset management corporations, was founded by John C. Bogle on May 1, 1975. Headquartered in Vally Forge, PN, the company had $10.1 trillion in assets under management globally till Sep. 30, 2024. Vanguard had more than 20,000 employees worldwide and offered 208 funds in the United States and 215 in foreign markets to 50 million investors as of the same date.
Vanguard is owned entirely by funds, a unique feature among mutual fund firms. According to the company, this structure allows management to focus more on shareholder interests. Among the most significant advantages, Vanguard claims to offer low-cost, no-load funds. This means that the fund doesn’t charge investors when fund shares are being bought or sold.
These funds boast a Zacks Mutual Fund Rank #1 (Strong Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000, and carry a low expense ratio of less than 1%. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Vanguard Energy fund invests most of its net assets in common stocks. VGENX advisors generally invest in companies principally engaged in the energy industry, such as exploration, production and transmission of energy or fuels, manufacturing and servicing of products required for energy research, energy conservation and pollution control.
G. Thomas Levering has been the lead manager of VGENX since Jan. 15, 2020. Most of the fund’s exposure was in companies like Exxon Mobil (9.5%), Shell PLC (8.8%) and Sempra (4.6%) as of Oct. 31, 2024.
VGENX’s three-year and five-year annualized returns are 12.2% and 8%, respectively. VGENX has an annual expense ratio of 0.44%.
To see how this fund performed compared to its category and other 1, 2 and 3 Ranked Mutual Funds, please click here.
Vanguard Growth and Income Fund invests most of its net assets in stocks that provide dividend income as well as the potential for capital appreciation. VQNPX advisors use quantitative approaches to select a broadly diversified group of stocks with investment characteristics like those of companies listed on the S&P 500 Index but are expected to provide a higher total return than that of the index.
Hal W. Reynolds has been the lead manager of VQNPX since Sept. 30, 2011. Most of the fund’s holdings were in companies like Microsoft (6.4%), NVIDIA (6.3%) and Apple (6%) as of Sept. 30, 2024.
VQNPX’s three-year and five-year annualized returns are 12% and 15.4%, respectively. VQNPX has an annual expense ratio of 0.34%.
Vanguard Selected Value fund invests most of its net assets in common stocks of mid-cap domestic companies, which, according to its advisors, are undervalued and often have an above-average dividend yield. VASVX advisors consider undervalued stocks to be those that are out of favor with investors and trading at below-average prices in relation to measures such as earnings and book value.
Richard Lawrence Greenberg has been the lead manager of VASVX since Feb. 25, 2005. Most of the fund’s exposure was in companies like AerCap (2.9%), Corebridge Financial (2%) and Gildan Activewear(1.9%) as of Oct. 31, 2024.
VASVX’s three-year and five-year annualized returns are almost 9.5% and 12.5%, respectively. VASVX has an annual expense ratio of 0.42%.
Vanguard Equity Income fund invests most of its net assets in common stocks of mid and large-capitalization companies that, according to its advisor, are relatively undervalued. VEIPX advisors choose to invest in stocks that consistently pay out above-average levels of dividends.
Sharon Hill has been the lead manager of VEIPX since Feb. 26, 2021. Most of the fund’s exposure is in companies like JPMorgan Chase (3.8%), Broadcom(3.5%), and Johnson & Johnson (2.8%) as of Sept. 30, 2024.
VEIPX had three-year and five-year annualized returns are almost 8.9% and 11.2%, respectively. VEIPX has an annual expense ratio of 0.27%.
Vanguard Windsor Investor Shares fund invests most of its net assets in common stocks of large and mid-cap domestic companies, which, according to its advisors, are undervalued. VWNDX advisors consider undervalued stocks as those that are out of favor with investors and are trading at prices below average in relation to measures such as earnings and book value.
Richard S. Pzena has been the lead manager of VWNDX since Aug. 2, 2012. Most of the fund’s exposure was in companies like Wells Fargo & Company (2.6%), Morgan Stanley (2%) and Pfizer (1.8%) as of Oct. 31, 2024.
VWNDX had three-year and five-year annualized returns of almost 9.2% and 13.2%, respectively. VWNDX has an annual expense ratio of 0.37%.
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