3 Gold-Rated Index Funds We Love Right Now

The index fund made its claim to fame for triggering a decades-long, industry-wide decline in investment-fund fees. The logic is pretty straightforward: You're paying a lot less for management when "management" is a largely algorithm-based system rather than a team of humans researching and picking stocks.

But if index funds were merely cheap, they wouldn't have much allure.

We love index funds because many of them are simply better than the competition. The S&P 500 might be ubiquitous because it's a fitting representation of the U.S. economy, but it also churns out better returns year in and year out than human managers can muster.

While most people equate index funds and exchange-traded funds (ETFs), they're not the same thing. You can get indexed mutual funds, and they can be every bit as inexpensive as equivalent ETF products. So if you're dealing with an account in which you have the option to own mutual funds (or if you're working with a 401(k) in which they're the only option), it's helpful to be aware of some of the best index mutual funds in the space.

Today, I'm going to highlight a trio of my favorite indexed mutual funds—two equity products and a bond fund—covering three distinct strategies.

Editor’s Note: The tabular data appearing in this article is up-to-date as of May 18, 2026.

Disclaimer: This article does not constitute individualized investment advice. Individual securities, funds, and/or other investments appear for your consideration and not as personalized investment recommendations. Act at your own discretion.

How I Selected These Funds

I start virtually every review of investment funds by booting up Morningstar Investor and running a quality screen I customize for each article.

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If you're newer to investing: There are plenty of great investment analysis sites out there, but nothing beats Morningstar for information about (and analysis of) mutual funds and ETFs. I use my Morningstar Investor subscription to screen for funds that meet certain quality, price and other criteria for my articles, though investors can also use it to track their portfolio, build watchlists, look at charts and more. (And if you're curious about Morningstar Investor, read to the end.)

Here's a look at the criteria I used to narrow my search:

1. Index funds with a Gold Morningstar Medalist rating. Morningstar has two ratings systems—the Star ratings and the Medalist ratings. The latter are a forward-looking analytical view of a fund. Per Morningstar:

"For actively managed funds, the top three ratings of Gold, Silver, and Bronze all indicate that our analysts expect the rated investment vehicle to produce positive alpha relative to its Morningstar Category index over the long term, meaning a period of at least five years. For passive strategies, the same ratings indicate that we expect the fund to deliver alpha relative to its Morningstar Category index that is above the lesser of the category median or zero over the long term."

A Medalist rating doesn't mean Morningstar is necessarily bullish on the underlying asset class or categorization. It's merely an expression of confidence in the fund compared to its peers.

2. No loads. In addition to annual expenses, some funds charge additional fees, including "loads." For instance, if you invested $10,000 in a mutual fund with a 5% front-end load, the mutual fund company would immediately take $500 out in fees. So, you'd already be starting behind the 8-ball, investing just $9,500 to start with. The funds here have no sales charges.

3. Reasonable investment minimums. The maximum investment minimum for inclusion is $3,000, which is the common investment minimum for Vanguard funds. But most of the remaining funds on this list have either no minimum requirement, or a minimum of just $1. Also, some fund providers explicitly lay out lower investment minimums for specific retirement plans, such as individual retirement accounts (IRAs).

4. Broad availability: Mutual funds commonly have several share classes, many of which are limited to certain types of accounts, like, say, only for 401(k)s or only for wealth management clients. All of the index funds listed here are Investor-class or similar shares that are generally considered to be widely available to retail investors.

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3 of My Favorite Index Funds

From the much more manageable resulting list, I've selected a group of index funds that provide a wide array of core and tactical strategies, ensuring there's at least one fund, if not many funds, for just about everyone.

Let's take a look at the list!

Editor's Note: This is a shorter, updated, and modified version of our full exploration of the market's top index funds. If you want to see all 10 current selections, check out our article, The 10 Best Index Funds You Can Buy.

Fidelity Mid Cap Index Fund

• Style: U.S. mid-cap stock
• Assets under management: $50.0 billion
• Dividend yield: 1.0%
• Expense ratio: 0.025%, or 25¢ per year for every $1,000 invested
• Minimum initial investment: None

Mid-cap stocks are a way to thread the needle between the relative size and stability of large-cap stocks and the high growth potential of small-cap stocks. Indeed, this ideal middle ground has earned mid-caps the nickname of "Goldilocks" stocks.

"Since 1978, mid-cap stocks have outperformed small-caps over each of these rolling time periods: five, 10, 20, 30 and 40 years," says Oregon-based equity manager Jensen Investment Management. "They've even bested large-caps over the 30- and 40-year windows. These returns came with lower volatility than small-caps as well, making the evidence even more compelling.

"That means mid-caps haven't just delivered better performance—they've done it more consistently, with fewer drawdowns."

Fidelity Mid Cap Index Fund (FSMDX) is an exceedingly cost-efficient way to tap this area of the market.

What does it hold?

This Fidelity index fund tracks the Russell MidCap Index, which is made up of the 800 smallest stocks in the Russell 1000 (which is itself an index of the U.S. market's 1,000 largest stocks). As a result, you're getting exposure to about 800 mostly mid-cap stocks—the fund typically is 75% weighted in mids, with another 5% to 10% in smaller large caps, and another 10% to 15% in larger small caps.

Related: The 11 Best Fidelity Funds You Can Own

This isn't an aberration. In fact, it's very common for 20% to 30% of a mid-cap fund's holdings to bleed into small- and/or large-company territory, largely because different fund providers and indexes have different definitions for market-cap ranges. Where FSMDX stands out is that "the index selects larger stocks than most," Morningstar says. "Larger stocks are generally less volatile, so the portfolio could exhibit lower volatility than its peers."

Sector weights will naturally change over time as certain businesses come into and go out of favor, but right now, industrials are tops at 19%, followed by technology (15%), financials (14%), consumer discretionary (12%), and health care (10%). And thanks to both the market cap-weighting of the Russell MidCap Index and the high number of holdings, single-stock risk is minimal; currently, every stock is weighted at less than 1%.

A sound methodology for Wall Street's mid-sized companies, dirt-cheap fee, and strong historical performance all make FSMDX one of the best index funds you can buy.

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Vanguard High Dividend Yield Index Fund Admiral Shares

• Style: U.S. large-cap dividend stock
• Assets under management: $94.6 billion
• Dividend yield: 2.2%
• Expense ratio: 0.08%, or 80¢ per year for every $1,000 invested
• Minimum initial investment: $3,000

Investors who want a higher level of income than what the S&P 500 provides, but still want to enjoy stocks' growth potential, can do so for a song by purchasing the Vanguard High Dividend Yield Index Fund Admiral Shares (VHYAX).

The name says it all. This Vanguard index mutual fund is constructed to deliver a high dividend yield.

What does it hold?

Vanguard High Dividend Yield Index Fund Admiral Shares tracks an index of stocks that pay higher-than-average dividends. The result is a fairly conservative, largely blue-chip portfolio of nearly 610 stocks, weighted by market cap.

"Vanguard High Dividend Yield strikes a nice balance between higher-yielding stocks and distressed yield traps," says Morningstar Analyst Bryan Armour. "Sweeping half the dividend-paying universe into its portfolio diversifies stock-specific risks and limits the influence of distressed firms. Market-cap weighting also emphasizes larger, more stable firms that should have the capacity to continue making dividend payments."

Related: 10 Best Dividend Mutual Funds to Boost Your Income

VHYAX provides decent exposure to sectors defined by their defensive nature and higher-than-average dividends, such as healthcare (12%) and consumer staples (8%). However, its biggest sector allocation is to financials, which currently command just over 20% of assets. 

Top holdings are a who's who of mega-cap dividend payers, including Broadcom (AVGO), JPMorgan Chase (JPM), and Cisco Systems (CSCO). The fund also includes Dividend Aristocrats and Dividend Kings (long-time dividend growers) such as Johnson & Johnson (JNJ) and Exxon Mobil (XOM).

Just understand that if you invest in Vanguard High Dividend Yield Index, you won't be invested in the real estate sector. That's because the fund's underlying index explicitly excludes real estate investment trusts (REITs). 

Why exclude REITs, which are among the market's highest-yielding sectors? One possible explanation is that most common stocks, such as those held in this Vanguard fund, pay qualified dividends, which enjoy favorable tax treatment at the long-term capital gains tax rate. Most REIT dividends, however, are non-qualified and are taxed as ordinary income at federal income tax rates. By excluding REITs, VHYAX can pay out 100% qualified dividend income, helping shareholders avoid a potential tax headache.

Anyways, while it's difficult to call a yield that's currently just above 2% "high," Vanguard High Dividend Yield certainly pays more than you'd get from normal large-cap stock funds—and about twice what the S&P 500 delivers right now.

VHYAX is also offered in ETF form: the Vanguard High Dividend Yield ETF (VYM, 0.04% expense ratio), which currently trades around $155 per share.

Related: 7 Best AI ETFs for the Artificial Intelligence Era

Fidelity Short-Term Treasury Bond Index Fund

• Style: Short-term government bond
• Assets under management: $3.6 billion
• SEC yield: 3.9%*
• Expense ratio: 0.03%, or 30¢ per year for every $1,000 invested
• Minimum initial investment: None

Most investors will want some exposure to bonds—debt issued by governments, companies, and other entities that pay interest to bondholders. But how much exposure you want will largely depend on your age.

Bonds tend to be much less volatile than stocks, for better or worse; it limits downside, yes, but it also limits upside. Instead, most of the return from bonds comes from the steady stream of interest income they produce. They're not great for generating wealth, which is your prime concern when you're younger, but they're outstanding for protecting wealth, which becomes increasingly pivotal as you age.

Related: 7 Best Fidelity Funds to Hold in an HSA

However, making an educated purchase of a single bond is tougher than you might expect. Data and research on individual issues is much thinner than it is for publicly traded stocks, plus, some bonds have minimum investments in the tens of thousands of dollars. So, your best bet is to buy a bond fund, which can provide you with access to hundreds if not thousands of bonds. Your most economical bet is to do so through bond funds.

You can find some of the safest plays in the bond world in Fidelity Short-Term Treasury Bond Index Fund (FUMBX).

What does it hold?

Fidelity Short-Term Treasury Bond Index Fund invests in a tight grouping of about 120 Treasury bond issues that are considered low-risk for a pair of reasons: their short maturities, and their issuer (the U.S. Treasury).

Maturity is a major factor in determining bond risk. As a general rule, the longer the bond, the greater the risk that the bond might not be repaid. Interest rates matter, too. When rates go higher, new bonds pay more, which tempt people to sell their old bonds for the new, higher-paying bonds. But the temptation is much greater when you're dealing with longer-term bonds with lots of payments remaining—and not so great for short-term bonds with one or just a couple payments left.

The maturities of FUMBX's holdings span a few months to five years, which is longer-term than some similar Treasury funds that limit their maturities to three years. But it still results in a portfolio average maturity of under three years, which is plenty short. 

And it's tough to ask for a better issuer. U.S. Treasury bonds are backed by the full faith and credit of the U.S. government, and as a result, they're among the highest-rated bonds on the planet. While there's no 100% guarantee they'll be repaid, there's a far higher likelihood of repayment than the vast majority of issuers out there.

The net result is a low duration, which is a measure of interest-rate risk. Currently, FUMBX's duration of 2.5 years implies that a 1-percentage-point increase in market interest rates would lead to a 2.5% short-term decline in the fund, and vice versa. Not much downside, but not much upside either. But that's OK as long as you know what you're buying. If all you want is portfolio protection that can still generate some yield (almost 4% currently), FUMBX is one of the best index funds you can buy.

* SEC yield reflects the interest earned across the most recent 30-day period. This is a standard measure for funds holding bonds and preferred stocks.

Related: Best Target-Date Funds: Fidelity vs. Schwab vs. T. Rowe vs. Vanguard

Learn More About These and Other Funds With Morningstar Investor

If you're buying a fund you plan on holding for years (if not forever), you want to know you're making the right selection. And Morningstar Investor can help you do that.

Morningstar Investor provides a wealth of information and comparable data points about mutual funds and ETFs—fees, risk, portfolio composition, performance, distributions, and more. Morningstar experts also provide detailed explanations and analysis of many of the funds the site covers.

With Morningstar Investor, you'll enjoy a wealth of features, including Morningstar Portfolio X-Ray®, stock and fund watchlists, news and commentary, screeners, and more. And you can try it before you buy it. Right now, Morningstar Investor is offering a free seven-day trial and a discount on your first year's subscription when you use our exclusive link.