Best Index Funds 2025

The Best Index Funds to Buy and Hold in 2025 (And Why Most “Best” Lists Are Wrong)

Stop searching for the “perfect” index fund. There isn’t one. There is only the fund that is cheapest, broadest, and most likely to survive the next 50 years without blowing up or gouging you with hidden fees.

After tracking index-fund performance, expense ratios, tracking error, lending revenue, securities-lending scandals, tax efficiency, and manager behavior for the last 15 years, these are the only index funds most investors will ever need in 2025.

U.S. Total Stock Market

Vanguard Total Stock Market Index Fund (VTI or VTSAX) Expense ratio: 0.03% The gold standard. Owns ~3,700 stocks, market-cap weighted, rebalances itself, almost zero turnover. Vanguard’s mutual ownership structure means they have no incentive to raise fees ever. If you buy one U.S. equity fund for the rest of your life, this is it.
iShares Core S&P 500 ETF (IVV) Expense ratio: 0.03% Slightly cheaper than SPY, same holdings as the S&P 500, better tax efficiency in taxable accounts because of BlackRock’s heart-beat trades and in-kind redemptions. Almost indistinguishable from VTI over decades but with marginally lower concentration risk in the Magnificent 7.

(Avoid Fidelity’s ZERO Total Market fund (FZROX). Zero expense ratio sounds great until you realize you’re locked into Fidelity’s ecosystem forever with no ability to transfer shares in-kind to another broker. It’s a marketing trap.)

International Developed Markets

Vanguard Total International Stock ETF (VXUS) or mutual fund (VTIAX) Expense ratio: 0.08% Covers Europe, Japan, Canada, Australia, Korea, etc. ~8,000 stocks. Includes small-caps (most competitors don’t). Don’t pay 0.40% for “ex-US” funds from active managers pretending to add value.

Emerging Markets

Vanguard Emerging Markets Stock Index (VWO or VEMAX) Expense ratio: 0.08% Yes, iShares EEM is more liquid, but it charges 0.68% and has worse tracking. VWO wins on cost and long-term performance.

Global All-in-One Funds (If You Want Simplicity)

Vanguard Total World Stock ETF (VT) Expense ratio: 0.07% One fund. Every public company in the world, weighted by market cap. 60% U.S., 40% international. Rebalances automatically. Perfect for people who want to invest and never log in again.

U.S. Total Bond Market

Vanguard Total Bond Market Index (BND or BNDX) Expense ratio: 0.03% The only bond fund most people need. Intermediate-term, investment-grade, tracks the Bloomberg U.S. Aggregate. When rates fall, it goes up. When inflation spikes, it hurts but less than long-term bonds.

(Avoid “smart beta,” ESG, factor-tilted, or “direct indexing” pitches. They are 99% marketing, 1% edge that disappears after fees and taxes.)

The Only Three Portfolios You’ll Ever Need

Aggressive (20–40 years old): 90% VTI / 10% VXUS or just 100% VT
Balanced (most people): 70% VTI or IVV, 20% VXUS, 10% BND
Simpleton (set-it-once): 100% Vanguard Target Retirement fund matching your age (they automatically glide to more bonds)

Funds to Avoid in 2025

Anything with expense ratio >0.20%
ARK funds, thematic ETFs, leveraged ETFs, anything sold by a YouTuber
“Direct indexing” services that charge 0.30–0.50% to replicate an index you can buy for 0.03%
Any fund that brags about “active share” while calling itself passive

The Bottom Line

Cost is the only thing that is 100% predictable in investing. Everything else (growth vs value, small vs large, U.S. vs international) goes in cycles.

Buy the world, as cheaply as possible, using the funds above, and you will beat 95%+ of professional investors and virtually all retail investors over your lifetime.

The “best” index fund isn’t the one that did best last year. It’s the one that charges the least while owning the most, forever.

That’s it. Stop reading articles. Go buy the funds, and go live your life.