When it comes to index funds, Vanguard has led the way from the very beginning. In 1976, it created the very first index fund, the Vanguard Total Stock Market Index Fund Investor Shares (VTSMX). Ten years later, the group introduced the Vanguard Total Bond Market Index Fund Investor Shares (VBMFX). Looking to innovate, Vanguard was the first to introduce an "index fund of index funds" with its LifeStrategy Funds. The funds are a series of broadly diversified, low-cost funds using the Total Index funds as the foundation for creating different portfolio allocations based on risk objectives. Four underlying funds comprise the LifeStrategy Growth Fund.
Vanguard Total Stock Market Index Fund Investor Shares (VTSMX)
The Vanguard Total Stock Market Index Fund Investor Shares had the top position with a 48.3% weight as of October 2018. It holds 3,680 stocks spread across $756.6 billion to track the performance of the MSCI U.S. Broad Market Index, which is composed of 99.5% of the total market capitalization of the U.S. stock markets. The fund leans toward large-cap stocks, but it includes weightings of all capitalizations based on the weightings of the underlying index. Its exposure to small- and mid-cap stocks has enabled it to outperform the Standard & Poor's (S&P) 500 Index in recent years. The fund has returned an average annual return of 9.9% since inception, and an average 11.96% over the past 10 years.
Vanguard Total International Stock Index Fund Investor Shares (VGTSX)
The Vanguard Total International Stock Index Fund Investor Shares had a heavy 32% weighting in the LifeStrategy Fund. It was launched in 1996 and had $359.6 billion in assets invested in 6.415 stocks tracking the MSCI ACWI ex-USA Investable Market Index. Most of its holdings are from developed markets, and 20.3% is from emerging markets, including Taiwan and South Korea. The fund is heavily weighted at the top with larger global companies, such as Royal Dutch Shell plc (RDS-A), Nestle SA (NSRGY) and Tencent Holdings. Over the last 10 years, the fund has returned an average annualized return of 5.12%, with an average 4.81% return since inception.
Vanguard Total Bond Market Index Fund Investor Shares (VBMFX)
The Vanguard Total Bond Market Index Fund Investor Shares had a 13.8% weighting as of October 2018. The fund has $199.7 billion in assets invested across 8,523 higher-quality investment-grade bonds. The portfolio allocates 63.4% to government and government-related bonds and the remainder in corporate bonds. The fund is designed to track the performance and yield of the Barclays U.S. Aggregate Float Adjusted Index. It returned an annual average of 3.59% over the previous 10 years, and 5.74% since inception in 1986.
Vanguard Total International Bond Index Fund Investor Shares (VTIBX)
The Vanguard Total International Bond Index Fund Investor Shares had a 5.9% weighting as of October 2018. The fund provides investors with a low-cost way to gain exposure to international bonds. The fund's $111.8 billion in assets were invested in 5,982 holdings to track the performance of the Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index. The fund is heavily weighted toward government and government-related bonds from developed countries, but it has some exposure to emerging markets. The fund, which was launched in 2013, has an average annual return of 3.28% since inception.