Best Index Funds of 2026
The best index funds deliver broad market exposure at the lowest possible cost — so more of your return compounds over time instead of going to fund fees.
We evaluated eight widely available index funds on expense ratio, index tracked, assets under management, tracking error, minimum investment, and tax efficiency. No fund family sponsored this list.
How we ranked these index funds
Rankings prioritize expense ratio (the single most controllable return factor), index coverage breadth, and accessibility (minimum investment, availability across brokerages). We also weighted tracking error — how closely the fund mirrors its index — and tax efficiency (capital gains distribution history).
Funds are organized by primary strategy rather than strict rank, because the 'best' fund depends on which asset class you're targeting. We include U.S. total-market, S&P 500, international, and bond index options.
#1 Vanguard S&P 500 ETF (VOO)
Best for: Long-term buy-and-hold investors seeking core U.S. equity exposure
VOO tracks the S&P 500 Index — 500 of the largest U.S. companies by market cap. With a 0.03% expense ratio and over $550 billion in assets (as of early 2026), it is one of the largest and most liquid ETFs in the world.
VOO is available at any brokerage that trades ETFs. It distributes dividends quarterly and has an extremely low tracking error against the S&P 500.
Strengths
- 0.03% expense ratio — near the lowest available
- Massive AUM ($550B+) provides exceptional liquidity
- Tracks a well-understood benchmark used by professional investors
- Available at every major brokerage with no transaction fees
Limitations
- S&P 500 is U.S.-only — no international diversification
- Excludes small- and mid-cap stocks (roughly 20% of total U.S. market)
- Must buy whole shares unless brokerage offers fractional shares
Pricing: 0.03% expense ratio (~$0.30/year per $1,000 invested). No minimum investment (price of one share).
#2 Fidelity ZERO Total Market Index Fund (FZROX)
Best for: Fidelity account holders who want zero-cost total U.S. market exposure
FZROX charges literally 0.00% — no expense ratio at all. It tracks Fidelity's own total-market index covering large-, mid-, and small-cap U.S. stocks.
The catch: FZROX is exclusive to Fidelity accounts and cannot be transferred to another brokerage as-is (you'd need to sell, potentially triggering taxes). For Fidelity customers who plan to stay with Fidelity, it's hard to beat.
Strengths
- 0.00% expense ratio — lowest possible cost
- $0 minimum investment — buy $1 worth at a time
- Total-market coverage including small- and mid-cap stocks
- No transaction fees at Fidelity
Limitations
- Fidelity-exclusive — not transferable to other brokerages without selling
- Tracks a Fidelity proprietary index, not a widely followed benchmark
- Smaller AUM than VOO or VTI — though this rarely matters for index funds
Pricing: 0.00% expense ratio. No minimum investment. Only available in Fidelity accounts.
#3 Vanguard Total Stock Market ETF (VTI)
Best for: Investors wanting complete U.S. market coverage — large, mid, and small caps
VTI tracks the CRSP US Total Market Index, covering approximately 3,700 U.S. stocks. This includes the entire S&P 500 plus mid-cap and small-cap companies that VOO excludes — giving you more complete U.S. market exposure in one fund.
Historically, VTI and VOO have returned nearly identically over long periods because large caps dominate the market-cap weighting. VTI is appropriate for investors who want theoretical completeness.
Strengths
- ~3,700 holdings — broadest U.S. market coverage in one ETF
- 0.03% expense ratio — identical to VOO
- Available at any brokerage that trades ETFs
- More than $450 billion in AUM — extremely liquid
Limitations
- U.S.-only — same international limitation as VOO
- Return profile nearly identical to VOO over most long periods
- Whole-share purchase required unless brokerage supports fractional
Pricing: 0.03% expense ratio. No minimum (price of one share ~$290–$310 range, subject to market change).
#4 Fidelity 500 Index Fund (FXAIX)
Best for: S&P 500 investors who prefer mutual fund structure over ETF
FXAIX is the mutual fund equivalent of VOO — it tracks the S&P 500 Index with a 0.015% expense ratio, slightly lower than VOO. As a mutual fund, it can be purchased in dollar amounts (not share amounts), which makes it easier to invest round numbers and enables automatic dollar-cost averaging.
FXAIX is available at Fidelity with no transaction fee and no minimum investment, making it one of the most accessible S&P 500 options.
Strengths
- 0.015% expense ratio — slightly lower than VOO's 0.03%
- Mutual fund structure enables dollar-amount investing and auto-investing
- No minimum investment at Fidelity
- Historically tracks the S&P 500 with near-zero tracking error
Limitations
- Mutual fund — prices once daily at close (not intraday like an ETF)
- Most easily accessed at Fidelity; other brokerages may charge transaction fees
- S&P 500 only — same large-cap-only limitation as VOO
Pricing: 0.015% expense ratio. No minimum investment at Fidelity.
#6 Schwab U.S. Broad Market ETF (SCHB)
Best for: Schwab account holders wanting ultra-low-cost total-market coverage
SCHB is Schwab's answer to VTI — a total U.S. market ETF covering around 2,500 stocks (large through small cap) at a 0.03% expense ratio. For Schwab account holders, it's commission-free and provides the same broad coverage VTI offers.
SCHB is slightly less diversified than VTI (2,500 holdings vs. 3,700), but the difference in real-world return is negligible because smaller stocks represent a tiny fraction of market-cap weight.
Strengths
- 0.03% expense ratio — same as VTI
- Commission-free at Schwab with no minimum
- Total U.S. market coverage across all cap sizes
- More than $25 billion in AUM — liquid and stable
Limitations
- Fewer holdings than VTI (~2,500 vs. ~3,700) — slightly less small-cap exposure
- Not quite as widely available outside Schwab as Vanguard ETFs
Pricing: 0.03% expense ratio. No minimum (fractional shares available at Schwab). Commission-free at Schwab.
#7 Vanguard Total International Stock ETF (VXUS)
Best for: Investors adding international diversification to a U.S. index core
VXUS gives you exposure to approximately 8,500 stocks across developed and emerging markets outside the United States. This covers Europe, Japan, Canada, China, India, and dozens of other markets — providing genuine geographic diversification that no U.S.-only fund offers.
Many financial planners recommend a U.S./international split of 60/40 or 70/30. VXUS pairs naturally with VTI or VOO to build a complete global portfolio.
Strengths
- ~8,500 international holdings across developed and emerging markets
- 0.07% expense ratio — low for international coverage
- One-fund solution for ex-U.S. diversification
- Available commission-free at Vanguard and many other brokerages
Limitations
- 0.07% expense ratio is higher than U.S. index funds (though still low by any standard)
- Foreign tax withholding on dividends from some countries reduces net yield
- Has underperformed U.S. funds in many recent years — though diversification reduces concentration risk
Pricing: 0.07% expense ratio. No minimum (price of one share). Available commission-free at Vanguard and major brokerages.
#8 Vanguard Total Bond Market ETF (BND)
Best for: Conservative investors or those adding fixed-income balance to an equity portfolio
BND tracks the Bloomberg U.S. Aggregate Bond Index, giving you exposure to thousands of U.S. investment-grade bonds — Treasuries, corporate bonds, and mortgage-backed securities. It distributes monthly dividends and provides ballast during equity market downturns.
Bond index funds like BND don't have the same growth potential as equity index funds, but they reduce portfolio volatility and provide income — making them valuable for investors within 5–10 years of retirement or those with low risk tolerance.
Strengths
- 0.03% expense ratio — lowest-cost bond ETF class
- Thousands of bond holdings — excellent diversification
- Monthly dividend distributions
- More than $120 billion in AUM — very liquid
Limitations
- Rising interest rates cause bond fund prices to fall
- Lower long-term return potential than equity index funds
- Exposure to corporate credit risk alongside government bonds
Pricing: 0.03% expense ratio. No minimum (price of one share). Commission-free at most major brokerages.
Comparison: 8 index funds at a glance
| Option | Index Tracked | Expense Ratio | Coverage | Min Investment | Best At |
|---|---|---|---|---|---|
| VOO (Vanguard) | S&P 500 | 0.03% | 500 U.S. large-cap | 1 share | Vanguard / any broker |
| FZROX (Fidelity) | Fidelity Total Market | 0.00% | ~2,600 U.S. stocks | $1 | Fidelity only |
| VTI (Vanguard) | CRSP U.S. Total Market | 0.03% | ~3,700 U.S. stocks | 1 share | Vanguard / any broker |
| FXAIX (Fidelity) | S&P 500 | 0.015% | 500 U.S. large-cap | $1 | Fidelity — mutual fund |
| IVV (iShares) | S&P 500 | 0.03% | 500 U.S. large-cap | 1 share | BlackRock / any broker |
| SCHB (Schwab) | Dow Jones U.S. Broad Market | 0.03% | ~2,500 U.S. stocks | Fractional at Schwab | Schwab accounts |
| VXUS (Vanguard) | FTSE Global All Cap ex US | 0.07% | ~8,500 international stocks | 1 share | International diversification |
| BND (Vanguard) | Bloomberg U.S. Aggregate | 0.03% | 10,000+ U.S. bonds | 1 share | Fixed-income ballast |
Our verdict: which should you choose?
For most investors building a core U.S. equity position, VOO (Vanguard S&P 500) or VTI (Vanguard Total Market) are the default choices — both charge 0.03% and are available everywhere. Fidelity account holders can do even better with FZROX at 0.00%, though the Fidelity-only restriction matters if you ever move brokerages.
FXAIX is the better pick for investors who want S&P 500 exposure in mutual fund form (useful for automatic investing in dollar amounts). IVV and SCHB are essentially interchangeable with VOO and VTI for investors at their respective brokerage platforms.
For a globally diversified portfolio, pair VTI or VOO with VXUS at a 60/40 or 70/30 domestic/international split. Add BND as you approach retirement to reduce volatility. The most important decision is not which fund on this list you choose — it's choosing one and staying invested consistently.
What is an index fund and how does it work?
An index fund is a portfolio that tracks a market index — a predefined list of securities like the S&P 500 or the total U.S. stock market. Instead of a manager picking stocks, the fund simply holds every security in the index in proportion to its market weight.
This passive approach eliminates two costs: active management fees and the performance drag of human stock-picking decisions. Research consistently shows that most actively managed funds underperform their benchmark index over 10-year periods after fees — the S&P Indices Versus Active (SPIVA) scorecard tracks this annually.
Use our <a href="/compare/etf-vs-mutual-fund/">ETF vs. mutual fund comparison</a> to understand the structural difference between these two vehicles for holding index funds.
How much does a 0.10% difference in expense ratio actually cost?
Expense ratios sound small but compound dramatically over time. On a $100,000 investment growing at 7% annually for 30 years, the difference between a 0.03% expense ratio and a 0.50% expense ratio is approximately $43,000 in lost gains — before taxes.
The math gets starker at higher balances. At $500,000, that same 0.47-point gap costs around $215,000 over 30 years. This is why fee minimization is the single most impactful action an index investor can take.
For context: the average actively managed U.S. equity mutual fund charges 0.44% (Investment Company Institute, 2024). Even the pricier funds on this list (VXUS at 0.07%) are far below that average.
Should you invest in the S&P 500 or the total market?
The S&P 500 represents roughly 80% of total U.S. stock market capitalization. Adding mid- and small-cap stocks (as VTI or FZROX do) adds the remaining 20% — but because market-cap weighting means large companies dominate, the total-market funds and S&P 500 funds move almost identically.
Over the past 20 years, VTI and VOO have returned within 0.1–0.2 percentage points of each other annually. The argument for total-market is theoretical completeness and slight small-cap exposure. The argument for S&P 500 is simplicity and universal availability.
Both choices are sound. The decision matters far less than starting early and investing consistently. See our investment growth calculator to model returns at different rates.
Key differences side by side — Holdings: S&P 500 funds (VOO, FXAIX) hold ~500 large-cap U.S. companies representing ~80% of market cap; total-market funds (VTI, FZROX) hold 3,500–4,000 stocks including mid- and small-caps. Historical return gap: 0.1–0.2 percentage points annually over 20 years — statistically indistinguishable for most investors. Cost: Both available at 0.00–0.04% expense ratio at major brokerages. Availability: S&P 500 funds exist at every brokerage; zero-cost total-market options like FZROX are Fidelity-exclusive.
Verdict: Either is a sound core holding. Choose an S&P 500 fund (VOO, FXAIX, SWPPX) for maximum simplicity and universal brokerage availability. Choose a total-market fund (VTI, FZROX) for slightly broader diversification or to access the 0.00% Fidelity funds. The gap in outcomes is small enough that consistency of contributions and tax efficiency matter far more than which index you pick.
Do index funds pay dividends?
Most stock index funds — including VOO, VTI, FXAIX, and VXUS — pay quarterly dividends. The dividend yield reflects the aggregate yield of the underlying stocks, typically 1.3–1.6% for S&P 500 funds as of 2026.
Bond index funds like BND pay monthly dividends, with yields that vary based on the interest rate environment. In taxable accounts, dividends are generally taxable in the year received, so index funds held in tax-advantaged accounts (IRAs, 401(k)s) benefit from tax deferral.
FZROX and similar zero-cost Fidelity funds do distribute dividends — their zero expense ratio comes from a proprietary index, not from eliminating income distributions.
Frequently asked questions
What is the best index fund for beginners?
For most beginners, either VOO (Vanguard S&P 500 ETF) or FXAIX (Fidelity 500 Index Fund) is the best starting point. Both track the S&P 500 at near-zero cost, are beginner-accessible at any major brokerage, and require no ongoing management decisions. If you're at Fidelity, FZROX gives you slightly broader coverage at 0.00% — but VOO or FXAIX are equally excellent choices anywhere else.
Can you lose money in an index fund?
Yes — index funds can and do lose value. When the overall market declines, your index fund declines with it. The S&P 500 has fallen more than 30% in some years (2008, 2020). The key distinction from actively managed funds is that index funds have historically recovered and gone on to new highs — but this is based on past performance, not a guarantee. Diversification across U.S. stocks, international stocks, and bonds helps reduce the severity of drawdowns.
What is the difference between an index ETF and an index mutual fund?
Both track the same index and charge similar fees — the structural difference is how you buy them. ETFs trade on exchanges like stocks throughout the day at market prices; you buy and sell shares. Mutual funds price once daily at close and can be purchased in dollar amounts. For most long-term investors, this difference is minor. ETFs are more flexible for tax-loss harvesting and don't require same-brokerage access. Our <a href="/compare/etf-vs-mutual-fund/">ETF vs. mutual fund comparison</a> covers the trade-offs in detail.
How many index funds do I need?
Many investors build a complete portfolio with just two or three funds: a U.S. total-market or S&P 500 fund, an international fund, and optionally a bond fund. This covers essentially every major investable asset class at minimal cost. Adding more funds beyond this doesn't necessarily improve diversification if they overlap (e.g., holding VOO and VTI together). Simplicity — a few low-cost index funds held consistently — is often the highest-performing strategy over long periods.
Are index funds better than actively managed funds?
By the numbers, yes — for most investors over most time periods. The S&P SPIVA report consistently shows that 80–90% of actively managed U.S. equity funds underperform their index benchmark over 10-year periods, net of fees. The primary reason is cost: active funds charge 0.4–1.0%+ per year, which creates a return hurdle the manager must clear every year just to tie the index. Index funds don't face that hurdle. Exceptions exist — some active strategies outperform in specific asset classes — but identifying those managers in advance is extremely difficult.
Free calculators to help you decide
Sources
We prioritize primary sources for rules, formulas, rates, limits, and definitions. See our calculator methodology and editorial policy.