According to Market Watch, index funds beat managed funds 90% of the time. But since you’re reading this post, you’re probably already aware. You already know index funds are where it’s at. It’s this strategy actually that’ll make me a multi-millionaire without much effort. So for this post, we are examining the best performing index funds you should be buying. After creating a portfolio of the best performing index funds, all that’ll be left is to sit back and relax – just don’t forget to pay those pesky dividend taxes.

The following list includes the best performing index funds based on their track record. Now of course, history does not predict future success. I think of past performance as reputation building. Funds that have done well have a good reputation. Those with a good reputation have a greater chance of performing well in the future.

I will start with Vanguard funds. Vanguard prides itself for inventing index funds and has long experience in running them. Besides, Vanguard’s funds are usually cheapest in the market. It makes no sense to buy index funds, paying too many expenses. I LOVE Vanguard (you probably do as well):

The Best Performing Index Funds: Vanguard Fidelity and Others:

Vanguard Total Stock Market Index (VTSMX)

The fund invests in large, medium and small cap domestic stocks (blended) and follows the Spliced Total Stock Market Index.

Fund inception year: 1992

5-year annualized return: 13.98%

10-year annualized return: 7.63%

Expense ratio: 0.17%

Portfolio: Financial sector, technology sector

ETF available: Yes (Vanguard Total Stock Market ETF (VTI))

Vanguard 500 Index Fund (VFINX)

The fund invests in large cap domestic stocks (blended) and follows S&P 500 index.

Fund inception year: 1976

5-year annualized return: 14.23%

10-year annualized return: 7.36%

Expense ratio: 0.17%

Portfolio: Information technology, financial sector

ETF available: Yes (Vanguard S&P 500 ETF (VOO))

Vanguard Small-Cap Value Index (VISVX)

The fund invests in small cap domestic value stocks and follows the Spliced Total Stock Market Index.

Fund inception year: 1998

5-year annualized return: 13.00%

10-year annualized return: 7.65%

Expense ratio: 0.23%

Portfolio: Financial sector, industrial sector

ETF available: Yes (Vanguard Small-Cap Value ETF (VBR))

If you’re already heavily invested in the funds above, or they don’t compliment what you already have, here are the other respectable Vanguard index funds you can choose from:

  • 500 Index Fund Admiral Shares (VFIAX)
  • European Stock Index Fund Admiral Shares (VEUSX)
  • Growth Index Fund Admiral Shares (VIGAX)
  • Small-Cap Index Fund Admiral Shares (VSMAX)
  • Large-Cap Index Fund Admiral Shares (VLCAX)
  • Total Stock Market Index Fund Admiral Shares (VTSAX)
  • Mid-Cap Index Fund Admiral Shares (VIMAX)
  • FTSE Social Index Fund Investor Shares (VFTSX)
  • Developed Markets Index Fund Admiral Shares (VTMGX)
  • Extended Market Index Fund Admiral Shares (VEXAX)
  • High Dividend Yield Index Fund Investor Shares (VHDYX)
  • Total World Stock Index Fund Investor Shares (VTWSX)
  • Tax-Managed Small-Cap Fund Admiral Shares (VTMSX)
  • Long-Term Corporate Bond Index Fund Admiral Shares (VLTCX)

Here’s what Fidelity has to offer. My second choice after Vanguard is Fidelity. And I’ve done A LOT of research on the best brokerage firms:

Fidelity Nasdaq Composite Index Fund (FNCMX)

The fund invests in large cap domestic growth stocks and follows NASDAQ Composite index.

Fund inception year: 2003

5-year annualized return: 16.58%

10-year annualized return: 9.56%

Expense ratio: 0.29%

Portfolio: Information technology, consumer discretionary

ETF available: Yes (Nasdaq Composite Index Tracking Stock (ONEQ))

Spartan 500 Index Fund – Fidelity Advantage Class (FUSVX)

The fund invests in large and medium cap domestic stocks (blended) and follows S&P 500 index.

Fund inception year: 1988

5-year annualized return: 14.35%

10-year annualized return: 7.45%

Expense ratio: 0.05%

Portfolio: Information technology, financial sector

ETF available: Yes (SPDR S&P 500 (SPY))

Spartan 500 Index Fund – Investor Class (FUSEX)

The fund invests in mainly large cap domestic stocks (blended) and follows S&P 500 index.

Fund inception year: 1988

5-year annualized return: 14.30%

10-year annualized return: 7.41%

Expense ratio: 0.095%

Portfolio: Information technology, financial sector

ETF available: Yes (SPDR S&P 500 (SPY))

Morningstar recommended index funds (regardless of recent performance)

  • Federated Mid Cap Index Fund Institutional Shares (FMCRX)
  • Hennessy Gas Utility Fund Investor Class (GASFX)
  • USAA NASDAQ-100 Index Fund (USNQX)
  • Praxis Growth Index Fund Class I (MMDEX)
  • Dreyfus Small Cap Stock Index Fund (DISSX)
  • Columbia Small Cap Index Fund Class A (NMSAX)
  • Northern Stock Index Fund (NOSIX)
  • Fidelity Four-in-One Index Fund (FFNOX)
  • Schwab® S&P 500 Index Fund (SWPPX)
  • Wells Fargo Index Fund – Class Admin (WFIOX)
  • Spartan Total Market Index Fund – Advantage Class (FTVX)
  • Rowe Price Total Equity Market Index Fund (POMIX)
  • JPMorgan Equity Index Fund Select Class (HLEIX)

Getting a portfolio of the best performing index funds pretty much guarantees you’ll be happy with your portfolio, year after year. Index funds (and index ETFs) offer low fees, consistent returns and nearly always beat those expensive managed funds. Happy choosing!