Best Index Funds 2024 | Choose the best one for you

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“Which index fund should you choose for 2024? Discover the top 5 picks in this guide to the best low cost index funds 2024!”

What is an Index Fund?

An index fund is a type of mutual fund or exchange-traded fund (ETF) that tracks the performance of a particular market index, such as the S&P 500, Russell 2000, or Wilshire 5000 Total Market Index. What these funds do is let you buy into a good mix—or “basket“—of different stocks or bonds that stand for a part of the stock market or a slice of the economy. Index funds can work in different ways to copy what a certain market index does. Some will put money into every single security that’s part of the index, while others might pick a few. Typically, they consider the company’s size, known as market capitalization, to determine the proportion of each security in the index. Passive trading is what most index funds do. They try to get the best long-term profits by not buying or selling as much as possible. They have benefits like lower costs and more options, but there are risks like making mistakes in the tracking of the index they’re trying to follow or not doing as well as the index they’re measuring against. Before picking an index fund for their account, investors should think about the costs, risks, and investing goals very carefully.

Best Index Funds 2024

Investing in index funds has completely changed the face of the investing industry by providing investors with a method of market exposure that is both cost-effective and diversified. In 2024, the best index funds continue to attract attention for their performance, low costs, and long-term growth potential. Let’s take a closer look at the information given by the sources for a few of the best index funds.

1. Shelton Nasdaq-100 Index Investor (NASDX)

NASDX is a large growth fund that invests in the biggest domestic and international non-financial companies listed on the Nasdaq-100 Index. Launched in early 2000, this fund requires a minimum initial investment of $1,000.

NASDAX
Expense Ratio
0.52%
Morningstar Rating
5/5 stars
Total Assets
$1.7B
TTM Yield
0.39%
Total Five-Year Return
21.18%

2.Victory Nasdaq-100 Index Fund (USNQX)

USNQX is a large growth fund that aims to match the performance of the stocks comprising the Nasdaq-100 Index. Founded in late 2000, this fund requires a minimum investment of $3,000.

USNQX
Expense Ratio
0.45%
Morningstar Rating
5/5 stars
Total Assets
$5.7B
TTM Yield
0.56%
Total Five-Year Return
21.00%

3.VALIC Company Nasdaq-100 Index Fund (VCNIX)

VCNIX is a large growth fund focused on long-term capital growth by investing in stocks included in the Nasdaq-100 Index. Established in late 2000, this fund requires a minimum investment of $3.0B.

VCNIX
Expense Ratio
0.44%
Morningstar Rating
5/5 stars
Total Assets
$898.4M
TTM Yield
0.23%
Total Five-Year Return
20.85%

4.Fidelity U.S. Sustainability Index Fund (FITLX)

FITLX tracks the MSCI USA ESG Index, representing the performance of large- to mid-cap U.S. companies that have strong environmental, social, and governance (ESG) performance in comparison to their counterparts in the industry. Launched in early 2017, there are no minimums to invest in this fund.

FITLX
Expense Ratio
0.18%
Morningstar Rating
5/5 stars
Total Assets
Not specified
TTM Yield
1.12%
Total Five-Year Return
15.45%

5.Fidelity 500 Index Fund (FXAIX)

FXAIX is a diversified domestic large-cap equity fund that closely tracks the returns and characteristics of the S&P 500 Index. Established in early 1988, there are no minimums to invest in this fund.

FXAIX
Expense Ratio
0.015%
Morningstar Rating
5/5 stars
Total Assets
$471.9B
TTM Yield
1.45%
Total Five-Year Return
14.93%

Investors may choose from a variety of choices in these index funds to suit their respective investing objectives, levels of comfort with risk, and personal preferences. By gaining an awareness of the specifics of each fund, investors will be able to make smart selections that will allow them to construct a diversified and robust investment portfolio in the year 2024.

Methodology and Selection Criteria

To compile this list of the best low cost index funds 2024, data from reputable sources like Morningstar and financial publications were utilized. To make sure buyers were having a wide range of choices, funds were chosen based on their track records, cost ratios, and Morningstar scores.

Pros and Cons of Index Funds

Based on their risk tolerance, investing preferences, and financial objectives, investors may make informed choices by balancing  these pros and cons.

Pros:

  1. Affordability: Index funds are passively managed, leading to lower management fees compared to actively managed funds like the Fidelity 500 Index Fund with an expense ratio of 0.015%.
  2. Diversification: By investing in numerous stocks, index funds offer immediate access to a broad collection of securities, reducing the impact of poor performance from a single stock.
  3. Long-Term Performance: Index funds are great for retirement savings and other long-term investments since their returns are usually steady and easy to estimate.
  4. No Fund Manager Bias: Index funds eliminate the risk of fund manager bias since they replicate the composition of a chosen index, ensuring a transparent and unbiased investment approach.
  5. Lower Fund Management Costs: Actively managed funds incur higher costs due to stock selection and trading, while index funds have lower expenses as they track predetermined indices.

Cons:

  1. Less Flexibility: Index funds lack the flexibility to quickly respond to market fluctuations, making them susceptible to downturns and economic changes.
  2. Moderate Annual Returns: The large size and diversification of index funds can dilute the potential for significant annual returns, impacting short-term growth opportunities.
  3. Limited Trading Times: Index funds have limited trading times and minimum investment requirements, which may make it harder for investors to change their minds as much as actively managed funds do.
  4. Concentration Risk: Some index funds may have a concentration risk towards specific sectors or industries, affecting the overall risk exposure of the fund.
  5. Potential for Wider Bid-Ask Spreads: During market volatility, index funds may experience wider bid-ask spreads, impacting trading costs and liquidity compared to ETFs.

Is now a good time to buy index funds?

A long-term approach that neglects short-term swings in favor of tracking the market’s performance over time is to invest in index funds. While attempting to time the market can be challenging and often counterproductive, the consistent growth potential of index funds makes them a solid choice for investors looking to build wealth steadily. Staying involved in well-diversified index funds and following a strict buying plan can help investors handle market instability and benefit from the market’s long-term growth, no matter what the market conditions are right now. For buyers with a long-term view and the goal of building wealth, this means that there is never a bad time to think about investing in index funds.

What are the alternatives to index funds?

The alternatives to S&P 500 index funds include various options that provide investors with diversified exposure to different market segments. Some alternatives mentioned in the sources are:

  • Fidelity Spartan Total Market Index: This fund tracks the Wilshire 5000 Index, offering a comprehensive view of the domestic equity market with a low expense ratio of 0.10%.
  • Vanguard Balanced Index (VBINX): This fund combines equity and bond segments, transitioning from the Wilshire 5000 to the MSCI U.S. Broad Market Index for stocks and the Lehman Aggregate Index for bonds.
  • Vanguard Total Stock Market ETF (VT): A global equity exchange-traded fund that gives investors access to the whole world stock market. It offers diversity across countries and industries for long-term investment. ​
  • Extended US Market Funds (e.g., Vanguard VTI): These funds focus on the extended US market, providing diversification nationally and exposure to parts of the market that might experience growth.
  • Global Equity ETFs: ETFs like Vanguard VT allocate a significant portion of holdings to international non-US markets, reducing potential losses if the US market underperforms.

Conclusion

To wrap it up, the best index funds in 2024 will offer investors a wide variety of options that people can pick based on what they want out of their investment and how much they’re willing to risk. It’s important to look at data such as how much it costs to be a part of the fund, how well it’s done in the past, and the least amount of money you can start with. Whether seeking exposure to specific indices or sustainable investing opportunities, index funds are still a good choice for people who want to slowly build their wealth over the long term.

Disclaimer: The content provided on this blog is for informational purposes only and should not be considered financial or investment advice. Always conduct your own research and consult with a qualified financial advisor before making any investment decisions. Any profiles of public figures featured on this blog are for educational and illustrative purposes. Their inclusion does not imply an endorsement or recommendation. Readers should independently verify information and conduct their own due diligence before forming opinions or making decisions based on such profiles.

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Checkout the video for “What is Index Funds.”

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