The fund mainly invests in large- and mid-cap stocks of developed markets; 22.8% of its assets are in Japan, followed by 12.63% in the United Kingdom and 8.44% in Canada. That’s why many investors, especially beginners, find index funds to be superior investments to individual stocks. Accessed May 7, 2020. That doesn’t mean index funds make money every year, but over long periods of time that’s been the average return. Fidelity International Index Fund (FSPSX), Pax MSCI EAFE ESG Leaders Index Fund (PXINX), Vanguard Developed Markets Index Fund Admiral Shares (VTMGX), MSCI All Country World Index (ACWI) Definition. We are an independent, advertising-supported comparison service. The major draw to index funds is that they are a hand-off money management option. Here’s an explanation for Index investing relies on … Investors like index funds because they offer immediate diversification. An index fund is a form of mutual fund. Our experts have been helping you master your money for over four decades. The fund provides large exposure to financial and industrial stocks, which have 15.72% and 14.19% allocations respectively. Yahoo Finance. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. So here are some of the best index funds for 2020. In many cases, they’re not even passive investing at all, but rather active thematic bets on a small basket of stocks. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. This passive approach means that index funds tend to have low expense ratios, keeping them cheap for investors getting into the market. But that’s not true, exactly: the first index fund actually was the Vanguard 500 Index Fund, launched in 1975. Discover Benzinga's picks for the best index funds you can buy for November 2020 based on 1 and 5 year returns, expense ratios and more. 1125 N. Charles St, Baltimore, MD 21201. After spending time at a retail brokerage, Vince Martin has covered the financial industry for close to a decade for InvestorPlace.com and other outlets. You can learn more about the standards we follow in producing accurate, unbiased content in our. Foreign stocks represent an attractive option for investors who wish to diversify their portfolios, with brokers ready to assist in these foreign investments. "Fidelity International Index Fund (FSPSX)." Schwab is especially noted for its focus on making investor-friendly products, as evidenced by this fund’s razor-thin expense ratio. Well-known holdings include Alibaba (NYSE:BABA), Nestle (OTCMKTS:NSRGY), and Samsung, with the top 10 holdings comprising about 10% of the fund. We maintain a firewall between our advertisers and our editorial team. Put simply, the S&P 500 is the most commonly-used benchmark for fund managers and institutional investors. Our editorial team does not receive direct compensation from our advertisers. "Index funds are still a good choice in 2020, but it's important to remember why you would choose index funds in the first place. Over time the index changes, as companies are added and deleted, and the fund manager mechanically replicates those changes in the fund. The EAFE Index is a stock index that serves as a performance benchmark for the major international equity markets. It’s perhaps easiest to start with the granddaddy of them all. But this compensation does not influence the information we publish, or the reviews that you see on this site. Because the fund avoids emerging market equities, its returns are subject to lower volatility. The Vanguard Developed Markets Index Fund tracks the performance of a benchmark index that measures the investment return of stocks issued by companies located in Canada and the major markets of Europe and the Pacific region. This index is the very definition of the market, and by owning a fund based on the index, you’ll get the market’s return. Copyright © 2020 InvestorPlace Media, LLC. While we adhere to strict The fund's portfolio is widely diversified; its top 10 holdings account for only about 12.55% of its assets. All rights reserved. This challenge increases substantially as you look to move beyond a single stock towards a multi-stock portfolio…, Index funds or Exchange Traded Funds (ETFs) can provide a simple and cost effective approach to address many of these problems. On the date of publication, Vince Martin did not have (either directly or indirectly) any positions in the securities mentioned in this article. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Many investors do (and probably should) want international exposure as well. Fidelity International Index Fund (FSPSX) Assets under management (AUM): $25.5 billion. Opinions expressed are solely those of the reviewer and have not been reviewed or approved by any advertiser. The fund does not charge load fees and comes with a minimum investment requirement of $1,000.. This index may be created by the fund manager itself or by another company such as an investment bank or a brokerage. That said, the Russell 2000 offers more diversification than most well-known indexes. The S&P 500 consists of 500 large American companies, though not necessarily the largest. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. Again, diversification is a prime consideration when considering the best index funds. Get insider access to our best financial tools and content. Some of the most well-known indexes include the S&P 500, the Dow Jones Industrial Average and the Nasdaq 100. Copyright © The S&P 500 index fund continues to be among the most popular index funds. The fund charges no load fees and requires its investors to contribute at least $3,000. . Here are four of the best international index funds. With $212 billion in assets (as of October 2020), this iShares fund is one of the largest ETFs and like other large funds, it tracks the S&P 500. As its name suggests, the Vanguard S&P 500 tracks the S&P 500 index. Annual turnover is the percentage rate at which a mutual fund or exchange-traded fund replaces its investment holdings on an annual basis. It had $573 billion in assets, as of September 2020, making it one of the largest funds on the market. And these four index funds are a wonderful place to start: SPDR S&P 500 ETF Trust (NYSEARCA: SPY ) But as index funds grew in popularity, the number of indices exploded. U.S. markets remain the gold standard, and U.S. stocks have substantially outperformed over the past decade. And in recent years, it hasn’t even been the best. Bankrate follows a strict editorial policy, so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. All rights reserved. 4 of the Best Index Funds to Buy to Start Off With, VEU distributed $0.5814 per share in December, Gold Prices: Yesterday’s Rally Put Our ‘Trade of the Decade’ on Sale, Investors Are Buying this Dip, and You Can Sell Puts on Logitech, Stock Market Live Updates Wednesday: The Dow Flips Into the Red to Close the Day, 7 Dow Jones Stocks to Buy for the Post-Election Surge, 7 High-Yield Dividend Companies to Invest in During the Pandemic, 9 Cyclical Stocks With Further Gains to Come, Safely Trading NIO Stock Ahead Of High-Expectation Earnings. "Schwab International Index Fund (SWISX)." Yahoo Finance. At this point, it can be daunting trying to find the best index funds to buy. European stocks have the largest allocation at 61%, while Japanese equities account for about 25% of the fund's assets. A mutual fund is a type of investment vehicle consisting of a portfolio of stocks, bonds, or other securities, which is overseen by a professional money manager. As of May 8, the largest market capitalization of any Russell 2000 constituent was just $4.4 billion. And if the goal is to have low fees, the SPY fits the bill: the gross expense ratio is less than a tenth of a percent. But it’s worth noting the index’s focus: small-cap stocks. "Vanguard Developed Markets Index Fund Admiral Shares (VTMGX)." Among the best are index funds based on the Standard & Poor’s 500 Index (S&P 500). Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens.