List of 2014 best Vanguard index mutual funds with top rating. Highest performing, recommended index funds for IRA/brokerage account investors in the last 10 years: VFINX, VTSMX, VDMIX, VBINX, VEIEX, VEXMX, VFWIX, VEURX

Vanguard 500 Index Fund Investor Shares (VFINX)

Objective: Vanguard 500 Index Fund seeks to track the performance of a benchmark index that measures the investment return of large-capitalization stocks.

Strategy: As the industry’s first index fund for individual investors, the 500 Index Fund is a low cost way to gain diversified exposure to the U.S. equity market. The fund invests in 500 of the largest U.S. companies, which span many different industries and account for about three-fourths of the U.S. stock market’s value. The key risk for the fund is the volatility that comes with its full exposure to the stock market. Because the 500 Index Fund is broadly diversified within the large-capitalization market, it may be considered a core equity holding in a portfolio.

Returns: The fund has returned 20.42% over the past year, 18.28% over the past three years, 6.91 % over the past five years, and 7.18% over the past decade.

Purchase info: Minimum initial investment is $3,000; an expense ratio is 0.17%.

Vanguard Total Stock Market Index Fund Investor Shares (VTSMX)

Objective: Vanguard Total Stock Market Index Fund seeks to track the performance of a benchmark index that measures the investment return of the overall stock market.

Strategy: Created in 1992, Vanguard Total Stock Market Index Fund is designed to provide investors with exposure to the entire U.S. equity market, including small-, mid-, and large-cap growth and value stocks. The fund’s key attributes are its low costs, broad diversification, and the potential for tax efficiency. Investors looking for a low-cost way to gain broad exposure to the U.S. stock market who are willing to accept the volatility that comes with stock market investing may wish to consider this fund as either a core equity holding or your only domestic stock fund.

Returns: The fund has returned 21.29% over the past year, 18.58% over the past three years, 7.35 % over the past five years, and 7.95% over the past decade.

Purchase info: Minimum initial investment is $3,000; an expense ratio is 0.17%.

Vanguard Developed Markets Index Fund Investor Shares (VDMIX)

Objective: Vanguard Developed Markets Index Fund seeks to track the performance of a benchmark index that measures the investment return of stocks issued by companies located in the major markets of Europe and the Pacific region.

Strategy: This index fund provides investors low-cost diversified exposure to developed foreign markets. The fund invests in companies located in Europe, Asia, and Australia, which make up about 75% of the non-U.S. equity market. Since its focus is on non-U.S. stocks, the fund can be more volatile than a domestic fund. In addition to stock market risk, the fund is also subject to currency risk and may have a higher degree of country risk than other international funds, since it tends to invest more heavily in stocks of certain countries.

Returns: The fund has returned 18.26% over the past year, 10.49% over the past three years, -0.46 % over the past five years, and 7.74% over the past decade.

Purchase info: Minimum initial investment is $3,000; an expense ratio is 0.2%.

Vanguard Balanced Index Fund Investor Shares (VBINX)

Objective: Vanguard Balanced Index Fund seeks —with 60% of its assets— to track the investment performance of a benchmark index that measures the investment return of the overall U.S. stock market. With 40% of its assets, the fund seeks to track the investment performance of a broad, market-weighted bond index.

Strategy: This index fund offers investors an easy, low-cost way to gain exposure to stocks and bonds. The fund invests roughly 60% in stocks and 40% in bonds by tracking two indexes that represent broad barometers for the U.S. equity and U.S. taxable bond markets. The fund’s broad diversification is important, because one or two holdings should not have a sizeable impact on the fund. Investors with a long-term time horizon who want growth and some income—and who are willing to accept stock and bond market volatility—may wish to consider this as a core holding in their portfolio.

Returns: The fund has returned 12.10% over the past year, 12.56% over the past three years, 6.94 % over the past five years, and 6.68% over the past decade.

Purchase info: Minimum initial investment is $3,000; an expense ratio is 0.24%.

Vanguard Emerging Markets Stock Index Fund Investor Shares (VEIEX)

Objective: Vanguard Emerging Markets Stock Index Fund seeks to track the performance of a benchmark index that measures the investment return of stocks issued by companies located in emerging market countries.

Strategy: This fund offers investors a low-cost way to gain equity exposure to emerging markets. The fund invests in stocks of companies located in emerging markets around the world, such as Brazil, Russia, India, Taiwan, and China. Stocks of companies in emerging markets tend to be more volatile than those in developed countries, which could imply the potential for greater long-term returns. Along with this potential, however, come risks such as currency and political risks.

Returns: The fund has returned 1.31% over the past year, 3.10% over the past three years, -0.82% over the past five years, and 13.22% over the past decade.

Purchase info: Minimum initial investment is $3,000; an expense ratio is 0.33%.

Vanguard Extended Market Index Fund Investor Shares (VEXMX)

Objective: Vanguard Extended Market Index Fund seeks to track the performance of a benchmark index that measures the investment return of small- and mid-capitalization stocks.

Strategy: The fund invests in about 3,000 stocks, which span many different industries and account for about one-fourth of the market-cap of the U.S. stock market. One of the fund’s risks is its full exposure to the mid- and small-cap markets, which tend to be more volatile than the large-cap market. The fund is considered a complement to Vanguard 500 Index Fund. Together they provide exposure to the entire U.S. equity market.

Returns: The fund has returned 25.79% over the past year, 19.51% over the past three years, 8.79% over the past five years, and 10.42% over the past decade.

Purchase info: Minimum initial investment is $3,000; an expense ratio is 0.28%.

Vanguard European Stock Index Fund Investor Shares (VEURX)

Objective: Vanguard European Stock Index Fund seeks to track the performance of a benchmark index that measures the investment return of stocks issued by companies located in the major markets of Europe.

Strategy: This index fund provides low-cost exposure to European equities. It holds more than 500 stocks from across the Europe, which makes up roughly half of the non-U.S. equities.

Returns: The fund has returned 19.25% over the past year, 11.15% over the past three years, -1.04% over the past five years, and 7.63% over the past decade.

Purchase info: Minimum initial investment is $3,000; an expense ratio is 0.26%.

Vanguard FTSE All-World ex-US Index Fund Investor Shares (VFWIX)

Objective: Vanguard FTSE All-World ex-US Index Fund seeks to track the performance of a benchmark index that measures the investment return of stocks of companies located in developed and emerging markets around the world.

Strategy: This index fund provides investors with low-cost exposure to stock markets located outside the United States. The fund seeks to track an index that consists of companies located in developed markets, including Europe, the Pacific, and Canada, and in emerging markets. In addition to stock market risk, the fund is also subject to currency risk and country risk. Because of its exposure to emerging markets, the fund can be more volatile than other international funds.

Returns: The fund has returned 13.30% over the past year, 8.24% over the past three years, and -0.65% over the past five years.

Purchase info: Minimum initial investment is $3,000; an expense ratio is 0.3%.

This article was updated on 4/19/2014.