The Best Index Funds | Morningstar

Index funds are passive investments. They track an index with the aim of replicating that index’s performance minus expenses. Active funds, meanwhile, are led by managers who choose particular securities to outperform an index.

However, some index funds are better than others. The best index funds closely track their indexes, minimize costs, and follow sensible rules-based indexes.

Why Are Index Funds Such a Popular Investing Option?

The first index fund, Vanguard S&P 500 ETF, debuted in 1976. Since then, funds that index the US stock market have exploded in popularity. And index funds that focus on international stocks and bonds are becoming more popular, too.

Why? Many argue that buying and holding the broad market (whatever that market may be) generates better results than trying to beat that same market through actively selecting securities. Indeed, Morningstar research has confirmed that, in many investment categories, index funds have outperformed active funds over time.

Best Index Funds to Buy

A good place to start your search for top index exchange-traded funds and mutual funds is with the Morningstar Medalist Rating. Funds that earn our highest rating—Gold—are those that we think are most likely to outperform over a full market cycle.

Here’s a list of the best low-cost index mutual funds and ETFs, which is broken down by the three main asset classes represented in many investors’ portfolios: US stocks, international stocks, and bonds. We’re also including a list of what we’re calling “specialized” index funds, which features top-rated low-cost index funds from investment categories that appear less frequently in the portfolios of most investors.

Best Index Funds: US Stocks

These mutual funds and ETFs all land in one of the broad US stock Morningstar Categories, earn the top Morningstar Medalist Rating of Gold, and have an Analyst Assigned % equaling at least 80% as of April 4, 2025.

1. DFA US Large Company DFUSX
2. Fidelity 500 Index FXAIX
3. Fidelity Mid Cap Index FSMDX
4. Fidelity Total Market Index FSKAX
5. iShares Core S&P 500 ETF/Index IVV BSPGX
6. iShares Core S&P Total US Stock Market ETF ITOT
7. Schwab US Mid-Cap Index SWMCX
8. Schwab Total Stock Market Index SWTSX
9. Schwab US Broad Market ETF SCHB
10. Schwab US Dividend Equity ETF SCHD
11. Schwab US Large-Cap ETF SCHX
12. Schwab S&P 500 Index SWPPX
13. SPDR Portfolio S&P 1500 Composite Stock Market ETF SPTM
14. SPDR Portfolio S&P 400 Mid Cap ETF SPMD
15. SPDR Portfolio S&P 500 ETF/Index SPLG
16. SPDR Portfolio S&P 600 Sm Cap ETF SPSM
17. State Street Equity 500 Index SSSYX
18. T. Rowe Price Equity Index 500 TRHZX
19. Vanguard S&P 500 ETF/Vanguard 500 Index VOO VFIAX
20. Vanguard Dividend Appreciation ETF/Index VIG VDADX
21. Vanguard Growth ETF/Index VUG VIGAX
22. Vanguard High Dividend Yield ETF/Index VYM VHYAX
23. Vanguard Total Stock Market ETF/Index VTI VITNX
24. Vanguard Large-Cap ETF/Index VV VLCAX
25. Vanguard Mid-Cap ETF/Index VO VIMAX
26. Vanguard Mid-Cap Value ETF/Index VOE VMVAX
27. Vanguard Russell 1000 Growth ETF/Index VONG VRGWX
28. Vanguard Russell 1000 Index VRNIX
29. Vanguard Russell 1000 Value Index/ETF VONV VRVIX
30. Vanguard S&P 500 Growth ETF/Index VOOG VSPGX
31. Vanguard S&P 500 Value ETF/Index VOOV VSPVX
32. Vanguard S&P Mid-Cap 400 ETF/Index IVOO VSPMX
33. Vanguard S&P Mid-Cap 400 Growth VMFGX
34. Vanguard S&P Mid-Cap 400 Value Index VMFVX
35. Vanguard S&P Small-Cap 600 Value Index VSMVX
36. Vanguard Small-Cap Growth ETF/Index VBK VSGAX
37. Vanguard Small-Cap ETF/Index VB VSCIX
38. Vanguard Small-Cap Value ETF/Index VBR VSIAX
39. Vanguard Value ETF/Index VTV VVIAX

Although this is a list of the best broad-based low-cost index funds investing in US stocks, there is some variety here. Several funds in the group track the S&P 500 and therefore provide access to large-cap stocks representing about 80% of the US stock market. Other index funds on the list follow much broader market indexes that include more stocks, some of which are smaller-cap names. Meanwhile, other funds on the list are more narrowly focused, tracking indexes based on market capitalization (mid- or small-cap stocks) or investment style (growth stocks or value stocks).

To fully understand a fund’s strategy, be sure to read its Morningstar Fund Analyst Report.

Best International Stock Index Funds

These mutual funds and ETFs all land in one of the broad international stock categories, earn the top Morningstar Medalist Rating of Gold, and have an analyst-assigned % equaling at least 80% as of April 4, 2025.

1. Fidelity Total International Index FTIHX
2. Franklin FTSE Japan/Japan Hedged ETF FLJP FLJH
3. IShares Core MSCI Total International Stock ETF IXUS
4. iShares MSCI EAFE Growth ETF EFG
5. State Street Global All Cap Equities ex-US Index SSGVX
6. Vanguard FTSE All-World ex-US ETF/Index VEU VFWAX
7. Vanguard FTSE All-World ex US Small-Cap ETF VSS
8. Vanguard International Dividend Appreciation ETF/Index VIGI VIAAX
9. Vanguard Total International Stock ETF/Index VXUS VGTSX
10. Vanguard Total World Stock ETF VT VTWAX

Here, too, we have another list of the best broad-based low-cost index funds—in this case, focused on international stocks—where there is some variety. Some funds here track global indexes that include US stocks; others follow global indexes that exclude US stocks. Consult the investment’s Analyst Report for more details.

Best Bond Index Funds

These mutual funds and ETFs all land in one of the broad bond categories, earn the top Morningstar Medalist Rating of Gold, and have an Analyst Assigned % equaling at least 80% as of April 4, 2025.

1. Fidelity US Bond Index FXNAX
2. IShares Core Total USD Bond Market ETF IUSB
3. IShares Core US Aggregate Bond ETF AGG
4. Nuveen Bond Index TBIWX
5. Schwab Short-Term US Treasury ETF SCHO
6. Schwab US Aggregate Bond ETF SCHZ
7. SPDR Portfolio Aggregate Bond ETF SPAB
8. SPDR Portfolio Short Term Treasury ETF SPTS
9. State Street Aggregate Bond SSAFX
10. Vanguard Intermediate-Term Corporate Bond ETF/Index VCIT VICSX
11. Vanguard Long-Term Corporate Bond ETF/Index VCLT VLTCX
12. Vanguard Short-Term Corporate Bond ETF/Index VCSH VSCSX
13. Vanguard Short-Term Treasury ETF/Index VGSH VSBSX
14. Vanguard Tax-Exempt Bond ETF VTEB
15. Vanguard Total Bond Market ETF/Index BND VBTIX

Several of the best broad-based index funds on this list land in one of the intermediate-term bond categories. As such, they’d make great choices to anchor the bond portion of an investor’s portfolio, assuming the goals for the money are six or more years away. Those saving for a shorter-term goal in the next three to five years might consider short-term bond funds instead. Investors with longer time horizons might consider a longer-term bond fund—but they should also be prepared for the enhanced volatility that comes with investing in long-term bonds.

Top Low-Cost Index Funds: Specialized

These mutual funds and ETFs all land in one of the specialized stock or bond categories, earn the top Morningstar Medalist Rating of Gold, and have an Analyst Assigned % equaling at least 80% as of April 4, 2025.

1. iShares Short-Term TIPS Bond Index BKIPX
2. Schwab US TIPS ETF SCHP
3. T. Rowe Price US Limited Dtn TIPS TLDZX
4. Vanguard FTSE Europe ETF/Vanguard European Stock Index VGK VEUSX
5. Vanguard Short-Term Inflation-Protected Securities ETF/Index VTIP VTAPX

The top-rated mutual funds and ETFs on this list are good choices for investors looking to fill more niche roles in their portfolios. For instance, retirees often hold a fund that’s meant to blunt the impact of inflation on their portfolios; several funds on this list are designed to do just that.

The Benefits of Investing in Index Funds

Any historical performance advantage aside, there are several benefits to investing in index funds.

• Index funds are usually lower in cost than similar actively managed funds.
• Index funds perform like the market they’re tracking; as such, there aren’t many surprises in performance.
• Index funds don’t face “key-person risk,” which means that manager changes aren’t a big deal, since there’s no active security selection involved.
• Index funds are often more tax-friendly than similar active funds.

Should You Invest in an Index Mutual Fund or ETF?

Investors can access passive strategies through two different investment products: mutual funds and exchange-traded funds.

One product isn’t better than the other; choosing the right wrapper depends on personal preferences. Investors who value trading flexibility or may have few dollars to invest might prefer an ETF, while those accessing index funds via a company-sponsored retirement plan are more than likely buying mutual funds.

Read Cage Match: Traditional Index Funds vs. ETFs to learn more about the differences between mutual funds and ETFs.

How to Find the Best Index Funds?

Focusing on funds that earn a Gold rating may be too limiting for some investors. Those who’d like to consider funds beyond our top rating can review a full list of US stock index funds and ETFs and bond index funds and ETFs that earn ratings of Bronze, Silver, and Gold.

Investors can also review complete lists of all index mutual funds or all index ETFs. These lists include funds that don’t currently earn Medalist Ratings.