Review the 2014 list of best Vanguard stock mutual funds with top ratings. Highest performing, recommended stock funds for IRA/brokerage account investors in the last 10 years: VASVX, VSEQX, VEXAX, VCVLX, VHCOX, VDEQX, VEXPX

Best Vanguard Stock Funds 2014

Stock funds invest in securities that represent part-ownership in companies. Their goal is to provide investment growth.

Who should invest

Investors who want high potential for investment growth and are willing to accept significant ups and downs in the value of their investment.

What to keep in mind

• More appropriate for long-term goals where your money’s growth is essential.
• Value typically rises and falls more sharply than that of funds holding bonds.

Vanguard Selected Value Fund (VASVX)

Strategy

This fund focuses on mid-sized companies. The fund’s two advisors buy stocks they view as being significantly undervalued and out of favor with investors. Because of the size and characteristics of the stocks the fund holds, performance can vary significantly from that of the broad stock market. The fund is typically concentrated in a small number of stocks and, therefore, can be subject to significant volatility. Investors in this fund should have a long-term horizon and may consider the fund complementary to an already diversified portfolio. Performance

The fund has returned 35.76% over the past year, 18.73% over the past three years, 12.27% over the past five years, and 11.08% over the past decade.

Purchase info: minimum initial investment is $3,000; an expense ratio is 0.38%.

Vanguard Strategic Equity Fund (VSEQX)

Strategy

This actively managed fund purchases mid- and small-capitalization stocks that the advisor believes have above-average growth potential. The advisor relies on a computer-driven stock selection process in an attempt to build a portfolio with risk characteristics similar to those of the fund’s comparative index, while seeking to provide better returns. Because it focuses on medium-sized and smaller companies, the fund’s performance may be more volatile than that of the broad U.S. stock market. This fund may be considered complementary to a long-term portfolio with large-cap exposure. Performance

The fund has returned 36.45% over the past year, 21.21% over the past three years, 9.28% over the past five years, and 9.43% over the past decade.

Purchase info: minimum initial investment is $3,000; an expense ratio is 0.29%.

Vanguard Extended Market Index Fund Admiral Shares (VEXAX)

Strategy

This fund offers investors a low-cost way to gain broad exposure to U.S. mid- and small-capitalization stocks in one fund. 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. Performance

The fund has returned 35.59% over the past year, 19.64% over the past three years, 10.53% over the past five years, and 10.82% over the past decade.

Purchase info: minimum initial investment is $10,000; an expense ratio is 0.14%.

Vanguard Capital Value Fund (VCVLX)

Strategy

This aggressive value fund takes an opportunistic approach to firms of all sizes. The fund’s manager focuses on stocks of companies he believes are misunderstood and currently underappreciated by the market. The flexibility to invest in various market segments makes it somewhat unique compared to Vanguard stock funds that invest in only one segment of the market. The manager’s approach resulted in higher turnover, and wide swings in performance may occur from year to year. Performance

The fund has returned 45.71% over the past year, 18.04% over the past three years, 13.56% over the past five years, and 9.04% over the past decade.

Purchase info: minimum initial investment is $3,000; an expense ratio is 0.47%.

Vanguard Capital Opportunity Fund Investor Shares (VHCOX)

Strategy

This aggressive growth fund invests in companies of various sizes that the managers believe will grow in time, but may be volatile in the short-term. The fund managers have a long-term perspective and ignore short-term market “noise.” This investment approach, coupled with a focus in certain market sectors, including information technology and health care, helps differentiate the fund from its benchmark and peer funds. Capital Opportunity Fund may be considered complementary to an already diversified portfolio with a long-term time horizon. Performance

The fund has returned 40.76% over the past year, 18.40% over the past three years, 9.39% over the past five years, and 11.38% over the past decade.

Purchase info: minimum initial investment is $3,000; an expense ratio is 0.48%.

Vanguard Diversified Equity Fund (VDEQX)

Strategy

This fund invests in eight underlying Vanguard stock funds, providing investors with broad exposure to the U.S. equity market. Each underlying fund is actively managed and has a distinct investment approach. Together, the funds cover the style and capitalization spectrum by investing in growth and value, as well as small-, mid-, and large-cap companies. While this mosaic of investment approaches provides diversification benefits, it is not without risk. A primary risk stems from the fund’s full exposure to the stock market. Investors who consider this fund should have a longer time horizon, since this fund could be volatile in the short term. Performance

The fund has returned 29.29% over the past year, 18.19% over the past three years, and 8.80% over the past five years.

Purchase info: minimum initial investment is $3,000; an expense ratio is 0.40%.

Vanguard Explorer Fund Investor Shares (VEXPX)

Strategy

This fund seeks to identify small U.S. companies with growth potential. Because it focuses on smaller companies, the fund tends to be more unpredictable than stock funds that focus on larger companies. However, the fund’s use of multiple advisors with diverse strategies, and its broad exposure to almost 600 stocks, can help reduce—but not eliminate—risk that may come from investing in this often-volatile segment of the market. This fund may be considered complementary to a well-diversified, long-term portfolio. Performance

The fund has returned 38.23% over the past year, 20.35% over the past three years, 10.41% over the past five years, and 9.50% over the past decade.