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Funds

U.S. Index Funds

Topnotch passive funds for the core of your domestic portfolio.

List of investments
Name
Ticker
Category
Morningstar Analyst Rating
Small Blend
Large Blend
Large Value
Large Growth
Mid-Cap Blend
Large Value
Mid-Cap Growth
Mid-Cap Value
Large Value
Large Growth
Large Value
Large Growth
Large Value
Large Blend
Large Blend
Large Blend
Mid-Cap Growth
Large Value
Mid-Cap Value
Small Blend
Large Blend
Small Value
Small Growth
Large Blend
Large Growth
Small Blend
Large Value
Large Value
Large Growth
Large Blend
Large Blend
Small Blend
Large Value
Large Blend
Large Blend
Large Value
Large Growth
Large Value
Mid-Cap Blend
Large Blend
Large Value
Small Blend
Large Growth
Large Blend
Mid-Cap Growth
Mid-Cap Value
Mid-Cap Blend
Large Value
Large Value
Large Blend
Small Value
Large Blend
Large Blend
Large Value
Mid-Cap Blend
Mid-Cap Value
Large Blend
Small Value
Large Blend
Large Blend
Small Blend

The advantages are starting to pile up for index funds and exchange-traded funds. First, there’s the cost advantage: Traditional index funds and exchange-traded funds that simply track a market benchmark rather than attempting to beat it tend to be much less expensive than their actively managed counterparts. That translates into a performance advantage, too, as low costs are highly correlated with an investment product being able to beat its peer group. Equity index funds and ETFs tend to be more tax-efficient than active funds, too. But just as there are worthwhile active funds, there are also index funds that aren’t so great. Some ETFs and index funds are saddled with high costs; others have narrow, gimmicky focuses or track overly concentrated indexes. Morningstar’s U.S. Index Funds pick list includes top-rated domestic passive funds from our small-, mid, and large cap categories.

List Criteria

Index Funds

Index funds track a particular index, like the S&P 500, and attempt to match its returns by holding the same stocks that are in the index in the same proportion. Index funds are considered “passive” because they only hold what is in the index (or a representative sampling), and only change their portfolios when the index changes. Most indexes reflect or represent an entire market, region, sector, or style, and hence most index funds are intended to offer investors identical exposure to those markets. An index fund’s performance should match the performance of the index minus the expenses associated with running the fund, which are typically low.

Diversified U.S. Stock Funds

These U.S.-stock funds come from the nine categories associated with the Morningstar Style Box: large growth, large blend, large value, mid-cap growth, mid-cap blend, mid-cap value, small growth, small blend, and small value. Funds in these categories cover most of the U.S. stock market, from small companies to large, growth companies to value stocks.

Medalist Funds (Gold, Silver, or Bronze)

The Analyst Rating for Funds is based on our fund analysts’ conviction in a fund’s ability to outperform its peer group (funds in the same category) and benchmark on a risk-adjusted basis over the long term. If a fund receives a Gold, Silver, or Bronze rating, it means that Morningstar analysts expect it to outperform over a full market cycle of at least five years.

No-Load Funds

This list includes only no-load funds. “No load” refers to a mutual fund that does not charge a fee (known as a load) for buying or selling its shares; the investor typically buys no-load funds directly from a fund company or through a fund supermarket. Load funds, on the other hand, are sold by an advisor or broker and charge a percentage fee at purchase or sale of the shares, which is meant to be compensation for the planner’s investment-selection advice. (Note: Not all advisors sell load funds. Many are compensated via a flat fee or a percentage of all assets under management.) Whether a fund charges a load or not isn’t a reflection of its underlying quality. Many load funds are also Medalists, and some load funds are available without a load through 401(k) or other retirement plans. But we’re including only no-load funds here, since this list is designed to help investors who are primarily doing their own fund-picking.

Open to New Investment

All the funds on this list are open for new investment. Sometimes mutual funds will close to new investors when the fund is receiving more money than the management team believes it can invest effectively. Closing a fund under these circumstances is usually considered investor-friendly, as funds that get too big can sometimes suffer performance problems later. Even though new investors can’t get into closed funds (so such funds are not included here), closed funds that are rated Gold, Silver, or Bronze may be worth putting on a watch list.

Distinct Portfolios Only

Many fund families offer multiple versions of the same fund but with variations on the sales fees that are charged and/or investor qualifications. Screening for “distinct portfolios only” removes all but one of these options to avoid having several share classes of the same offering cluttering the list. Morningstar normally designates the oldest share class as the distinct portfolio. In some cases, this share class may be for institutions (such as company retirement funds) or otherwise have a high investment minimum. In those cases, investors may want to consider an “investor” share class of the same fund, though the fund expenses may be higher for those share classes.