
Bing Images / www.investors.com
Top 10 Best Index Funds
The most efficient, lowest-cost index funds that consistently outperform the majority of active managers, providing the backbone of smart portfolios for everyone from beginners to billionaires.
Top10Grid lets the community re-rank anything — this order is our editors' pick for now; use the buttons below to vote it up or down.
Current Rankings
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Vanguard Total Stock Market Index (VTSAX/VTI) is the single fund JL Collins calls the only investment you'll ever need, holding virtually every publicly traded U.S. company at an expense ratio of just 0.03%. This effectively costs you only $3 annually per $10,000 invested, making it the gold standard of index investing.
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Warren Buffett's recommended fund for 90% of investors, Vanguard S&P 500 Index (VFIAX/VOO) tracks the 500 largest U.S. companies with a rock-bottom 0.03% expense ratio. It has beaten most hedge funds over every 15-year period, delivering an average annual return of 10.2% over the past 50 years.
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Fidelity ZERO Total Market Index (FZROX) charges literally nothing in fees—a 0.00% expense ratio—making it mathematically impossible to beat on cost. This saves you $30 per $10,000 invested compared to the average index fund fee of 0.30%. It is cheaper than #1 VTSAX by 0.03% annually, though it is limited to Fidelity accounts, a trade-off that 85% of users find acceptable for the fee savings.
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Vanguard Total International Stock (VTIAX/VXUS) provides essential geographic diversification by covering over 7,800 stocks across developed and emerging markets outside the U.S. at a 0.07% expense ratio. This hedges against American market concentration risk, as 40% of global equity value is now non-U.S. It outperforms #2 VFIAX in reducing single-country risk, with a 15% allocation to emerging markets compared to VFIAX's 0% exposure.
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Schwab U.S. Broad Market ETF (SCHB) delivers cost-effective total market coverage, tracking over 2,500 U.S. stocks at a 0.03% expense ratio—65% cheaper than the typical active fund. With no minimums and commission-free trading, this fund outperforms Vanguard Total Bond Market Index in pure equity exposure, though both excel at low costs.
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Vanguard Total Bond Market Index (VBTLX/BND) anchors balanced portfolios with over 10,000 investment-grade bonds at 0.03%, matching SCHB's ultra-low fee while providing stability during downturns—its 2022 gain of +0.6% versus the S&P 500's -18% highlights its defensive role.
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iShares Core MSCI Emerging Markets (IEMG) offers BlackRock's low-cost gateway to high-growth economies like China, India, Brazil, and Taiwan at 0.09%, capturing the 60% share of global GDP growth these nations now drive. Its fee is 70% lower than the category benchmark, and it outperforms #7 Vanguard Real Estate Index in GDP-linked upside.
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Vanguard Real Estate Index (VGSLX/VNQ) provides comprehensive U.S. REIT exposure at 0.12%, historically yielding 4–5% dividends—50% higher than the S&P 500 average. It diversifies against equities better than Schwab Broad Market, with a 0.2 correlation to stocks and proven inflation hedging during 2021's 7% CPI surge.
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The Invesco QQQ Trust (QQQ) delivers unmatched growth potential by tracking the Nasdaq-100, concentrating exposure in mega-cap tech giants like Apple and Microsoft. For investors seeking a benchmark of innovation, QQQ offers a proven track record, though its lack of diversification makes it a riskier choice than broader options on this list.
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Vanguard Target Retirement Funds offer a frictionless investing experience by automatically rebalancing from stocks to bonds as your target year approaches, requiring zero ongoing effort. Backed by Vanguard's low-cost structure, these funds deliver steady, long-term growth without the need to monitor market swings.
Image credits
- Vanguard Total Stock Market Index (VTSAX/VTI): Bing Images / i.ytimg.com
- Vanguard S&P 500 Index (VFIAX/VOO): Bing Images / i.ytimg.com
- Fidelity ZERO Total Market Index (FZROX): Bing Images / i.ytimg.com
- Vanguard Total International Stock (VTIAX/VXUS): Bing Images / trendspider.com
- Schwab U.S. Broad Market ETF (SCHB): Bing Images / trendspider.com
- Vanguard Total Bond Market Index (VBTLX/BND): Bing Images / s3.tradingview.com
- iShares Core MSCI Emerging Markets (IEMG): S&P 500 / Wikipedia
- Vanguard Real Estate Index (VGSLX/VNQ): S&P 500 / Wikipedia
- Invesco QQQ Trust (QQQ): Draco QQQ / Wikimedia Commons (CC BY 3.0)
- Vanguard Target Retirement Funds: Fidelity Investments / Wikipedia
Frequently asked questions
What is an index fund?
An index fund is a type of mutual fund or ETF designed to track the performance of a specific market index, such as the S&P 500, by holding a portfolio that mirrors its composition.
What is the typical expense ratio for a good index fund?
A good index fund typically has an expense ratio below 0.10%—many from providers like Vanguard, Fidelity, and Schwab offer funds with fees as low as 0.03% to 0.07%.
Are index funds better than actively managed funds?
Index funds generally outperform actively managed funds over the long term due to lower fees and consistent market exposure, making them a preferred choice for most long-term investors.
Which index funds are best for beginners?
For beginners, broad-market index funds like the Vanguard Total Stock Market Index (VTI or VTSAX) or the S&P 500 index fund (VFIAX or IVV) are excellent choices due to low costs, diversification, and strong historical returns.
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