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One of the most common questions people have asked me is what are the best Vanguard Funds available in the UK?
It is not a surprise to me that people ask me this question because choosing the right funds when you want to get started with Vanguard can be overwhelming and confusing.
Vanguard is not the best when it comes to the number of funds available to choose from. However, this is an advantage from my own point of view. This is because it is not that complicated to choose a fund on the Vanguard platform in the UK when compared to a lot of other investment platforms in the UK.
I must say at this point that I am not a financial adviser and please do not take this information in this post as financial advice. Please also do your own research after reading this post.
Base on my experience of investing with Vanguard in the UK, below are my top 3 funds. I will also give you the reasons why these are my top 4.
After reading this article, you might find this article useful.
- How to open a Vanguard Brokerage Account
U.S. Equity Index Fund – Accumulation
This is one of the passive funds Vanguard offers to UK investors. It is very similar to the Vanguard Total Stock Market Index Fund in the US. The Fund is a passive fund.
Investing in this fund means that I am in full trust of the historical performance of the Standard and Poor’s Total Market Index in the US.
The fund invests in large, mid, small and micro-sized company shares in the US.
Investing in stock and share generally means that you support the advancement and innovations of the US economy. It is a way of owning part of the US economy.
The fee for this fund is really very low and it is one of the reasons why I love this fund.
You can see more information about this fund on the Vanguard UK website.
S&P 500 UCITS ETF (VUSA)
This fund is an Exchange Traded Fund (ETF) and is available for UK investors on the Vanguard UK platform.
It is a fund that tracks the S&P 500 which is a US index. The S&P 500 from its name contain 500 of the biggest companies in the US.
Investing in this simply means that I trust these 500 companies to continue to innovate and provide valuable products and services into the market place.
As well, this also means putting your trust in the US economy which is still the best economy in the world as at the time of writing this post.
You can see more information about this fund on the Vanguard UK website.
LifeStrategy® 80% Equity Fund – Accumulation
This fund is usually regarded as a fund of funds because it holds various funds in it. The Vanguard LifeStrategy is one of my most favourites of Vanguard Funds available in the UK.
The portfolio comprises of approximately 80% shares and 20% bonds and other similar fixed-income investments.
The 80% equity means that shares make up 80% of the fund and the rest 20% bond.
The state of life or age of the investor is usually the determinant factor in which of the LifeStrategy funds to choose. Vanguard has other LifeStrategy funds as follows
- 20% Equity
- 40% Equity
- 60% Equity
- 100% Equity
The percent (%) equity always signifies the percentage of the funds that are shares.
For an investor who is close to retirement or has retired, it might be better off to invest in 20% equity. This will mean that 80% of the fund is bond.
Bonds are more regarded as less risky than shares.
Personally, because of my stage in life, I invested in the LifeStrategy 80% Equity.
You can see more information about this fund on the Vanguard UK website.
FTSE All-World High Dividend Yield UCITS ETF (VHYL)
The main reason why I like this fund is that it is a global fund.
The world generally is moving forward in the right direction of innovation, technology and advancement. Investing in this fund is putting your trust in the future growth of the human race.
According to Vanguard as stated on their website, “this fund invests in large and mid-sized company stocks – real estate trusts not inclusive- in developed and emerging markets that pay dividends generally higher than the average.”
The unique benefit of investing in this stock is the fact that it is a dividend fund. The fund invests in stocks of companies that pay dividends that are usually above the average.
You can see more information about this fund on the Vanguard UK website.
Final Thought
It is very easy to get overwhelmed when choosing funds to invest in on the Vanguard platform when you are a beginner. It is important to keep things simple by choosing passive funds which track the major stock market indices.
My favourite Vanguard Funds mainly track indices that are outside the UK. This does not mean that FTSE funds are not as good as starter funds.
Some of the FTSE funds are also very good funds you can choose from. You can check out FTSE and other funds on the Vanguard website by clicking here.
