3 Top Vanguard Mutual Funds to Accumulate for Gains in 2025

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Major U.S. indices continued their northbound journey after a solid rebound in 2024. However, uncertainties remain over Donald Trump’s economic policies, the Federal Reserve’s interest rate cut in 2025 and labor market conditions.

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Especially at a time when the Fed expects inflation to remain under check, Trump’s popular policies like the reduction of corporate tax, deregulation and imposition of tariffs on foreign products are expected to boost economic growth but can also spike inflation rates. Currently, the Fed fund rate is in the range of 4.25-4.5%. The Fed is anticipated to implement two 25 basis points rate cuts in 2025 instead of four indicated in September.

According to the Institute of Supply Management reports, the manufacturing Purchasing Managers’ Index (PMI) contracted for the ninth consecutive month in December to 49.3 against the consensus estimate of 48. However, services PMI came in at 54.1 for December, beating the consensus estimate of 53.4. Any reading below 50 indicates a contraction of manufacturing activities. U.S. job openings unexpectedly increased by 259,000 to 8.098 million in November, but a softening in hiring by 125,000 pointed to a slowing labor market. The Job Openings and Labor Turnover Survey (JOLTS) report indicates that there were 1.13 job openings for every unemployed person in November, up from 1.12 in October.

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 and Vanguard Growth and Income Fund VQNPX 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.

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 Sept. 30, 2024. Vanguard had more than 20,000 employees worldwide and offered 212 funds in the United States and 216 in foreign markets to about 50 million investors as of Dec. 31, 2023.

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.

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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 that are principally engaged in the energy industry like 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 (9.6%), Shell PLC (9.6%) and Phillips 66 (4.4%) as of July 31, 2024.

VGENX’s three-year and five-year annualized returns are 18.7% and 8.3%, 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 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 (3%), Gildan Activewear (1.8%) and Fidelity National Financial (1.8%) as of July 31, 2024.

VASVX’s three-year and five-year annualized returns are almost 12.8% and 13.3%, respectively. VASVX has an annual expense ratio of 0.43%.

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.

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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 (6.7%), NVIDIA (6.6%) and Amazon.com (5.2%) as of June 30, 2024.

VQNPX’s three-year and five-year annualized returns are 11.6% and 15.8%, respectively. VQNPX has an annual expense ratio of 0.34%.

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