The best index funds diversify your portfolio and minimise expenses to help you build wealth. Investment in index funds is safer than investing in individual stocks or bonds because they own hundreds of financial products. This blog looks at the best index funds for spring 2025.
Index Funds Explained
Index funds aim to replicate the index. They benefit long-term investors because they lock in stock market or segment returns. Due to index fund expense ratios, which are yearly management expenses, index funds rarely outperform the index. Index funds beat active funds over time because they are passively managed.
Fidelity ZERO Large Cap Index Fund
Fidelity ZERO Large Cap Index Fund monitors an index of over 500 U.S. large-cap stocks and performs like an S&P 500 index fund. It avoids significant licensing payments to S&P Global (SPGI 3.07%), the index’s parent firm, because it is not an official S&P 500 index fund. The fund follows the Fidelity U.S. Large Cap Index. The fund’s name, “ZERO”, indicates a 0% cost ratio. There’s no minimum investment, making the fund ideal for beginners. The fund closely matches the S&P 500. As of mid-March 2025, the fund was down about 4%, matching the S&P 500 index’s year-to-date drop.
Schwab S&P 500 Index Fund
A cheap official S&P 500 index fund is the Schwab S&P 500 Index Fund. Your $1,000 investment will cost $0.20 per year due to its 0.02% expense ratio. Your returns match the S&P 500 due to the minimal investment charge. Start investing with $1—there’s no minimum. The fund lost about 18% in 2022, matching the S&P 500’s losses. Like its benchmark index, the fund gained 25% in 2024 but fell about 4% in early 2025.
Vanguard Growth
With the Vanguard Growth ETF (VUG 2.81%), you can take more investment risk for higher returns. The fund tracks the S&P 500 Growth Index-like CRSP US Large Cap Growth Index. ETF invests in 180 U.S. large-cap growth equities. Sectors where the fund is primarily concentrated:
- Tech stocks (57%).
- Consumer discretionary (19%)
- Industrial stocks (9%).
Both consumer staples and utility companies are under 1% of the fund’s value. ETF expenses are 0.04%. The fund’s five-year average annual return (before taxes) was approximately 19% as of early spring 2025, compared to 17% for the S&P 500. As tech stocks fell in early 2025, the Vanguard Growth ETF fell roughly 8%, twice the S&P 500.
Vanguard Russell 2000 ETF
Investors seeking small-cap company gain could choose the Vanguard Russell 2000 ETF (VTWO 2.38%), which tracks the Russell 2000. The fund invests in 1,970 small- and mid-cap companies worth $3.2 billion on average. As of early March 2025, the index fund’s largest concentrations were industrials (19%), financials (18.9%), and healthcare (16.6%). Its 0.1% cost ratio is minimal for a fund that invests in growth firms. Like its benchmark index, the Vanguard Russell 2000 ETF fell more than 3% in early 2025.
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