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Of the 93 Vanguard funds analysed, only 9 achieved a 5 star Yodelar rating, equal to 9.7% of the range
- 44 Vanguard funds were rated either 1 or 2 stars, representing 47.3% of the funds reviewed
- Vanguard FTSE UK Equity Income Index returned 98.97% over five years, ranking 1st out of 63 funds in its sector
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Vanguard FTSE 100 Index and Vanguard Eurozone Stock Index also delivered returns well above their sector averages
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Some of Vanguard’s weakest performers were cautious or bond focused funds, showing why each holding must be judged against its sector and its role in a portfolio
Vanguard is one of the best known fund groups in the UK. Its funds are widely used by private investors, financial advisers and pension holders, largely because of their low charges and simple investment approach.
For many investors, Vanguard has become almost shorthand for low cost investing. But low cost does not automatically mean strong performance. The latest Yodelar analysis shows that performance across Vanguard’s fund range has varied significantly.
Some Vanguard funds have ranked among the best in their sectors, delivering returns well ahead of the average fund. Others have sat near the bottom of their peer group, despite carrying the same well known brand name.
That is an important point for investors. A fund should not be judged by provider name alone. What matters is how that individual fund has performed, how it compares with similar funds, and whether it still fits within the wider portfolio.
Vanguard Funds Performance Summary
Across the 93 Vanguard funds analysed, 9 achieved a 5 star Yodelar rating and 11 achieved a 4 star rating. Together, this means 20 funds, or 21.5% of the range, ranked among the stronger performers.
Download the full Vanguard fund performance report
5 Top Performing Vanguard Funds
The five funds below stood out because they delivered strong returns relative to their sectors and carried 5 star Yodelar ratings. They are not all designed for the same type of investor, so the figures should be viewed in the context of each fund’s sector and purpose.
Vanguard LifeStrategy 80% Equity A Shares Acc
Vanguard LifeStrategy 80% Equity is one of the best known funds in the Vanguard range. It invests across different regions and investment types, but with a strong focus on company shares.
The fund returned 23.60% over one year, ranking 31st out of 226 funds in the Investment Association (IA) Mixed Investment 40 to 85% Shares sector. Over three years it returned 44.70%, ranking 15th out of 206 funds. Over five years it returned 48.43%, ranking 20th out of 191 funds.
The sector average was 19.21% over one year, 33.77% over three years and 32.49% over five years. This means the fund outperformed the sector average across all three main periods.
Its performance has been particularly strong over three and five years, where it ranked comfortably inside the upper end of its sector. For investors who want a ready made portfolio with a higher exposure to company shares, this has been one of Vanguard’s stronger options.
Vanguard Target Retirement 2050 A Acc GBP
Vanguard Target Retirement 2050 is designed for investors with a longer time horizon. These funds adjust their mix of investments over time, depending on the target retirement year.
The fund returned 23.41% over one year, ranking 35th out of 226 funds in the IA Mixed Investment 40 to 85% Shares sector. Over three years it returned 44.68%, ranking 17th out of 206 funds. Over five years it returned 48.87%, ranking 16th out of 191 funds.
Those returns were ahead of the sector averages of 19.21%, 33.77% and 32.49%.
The performance profile is very close to Vanguard LifeStrategy 80% Equity, which is not surprising given both funds sit in the same sector and have meaningful exposure to company shares. The key point is that this fund has remained consistently strong against similar funds over one, three and five years.
Vanguard FTSE UK Equity Income Index A Acc GBP
This was one of the standout funds in the whole Vanguard review.
Vanguard FTSE UK Equity Income Index returned 34.44% over one year, ranking 1st out of 65 funds in the IA UK Equity Income sector. Over three years it returned 61.36%, ranking 4th out of 64 funds. Over five years it returned 98.97%, ranking 1st out of 63 funds.
The sector averages were 20.61% over one year, 37.29% over three years and 51.66% over five years.
That is a very strong record. The five year return was almost double the sector average, while the one year and five year rankings placed it first in its sector.
This fund follows a UK equity income index, which means it holds a broad range of UK companies selected around income characteristics. Its ongoing charge is 0.14%, which is low compared with many actively managed funds. In this case, a simple, low cost approach has delivered very strong relative performance.
Vanguard FTSE 100 Index Unit Trust Acc GBP
Vanguard FTSE 100 Index is another strong example of a low cost fund delivering competitive returns. It tracks the FTSE 100, giving investors exposure to many of the largest companies listed in the UK.
The fund returned 26.74% over one year, ranking 22nd out of 200 funds in the IA UK All Companies sector. Over three years it returned 46.04%, ranking 25th out of 191 funds. Over five years it returned 77.37%, ranking 9th out of 184 funds.
The sector averages were 18.45% over one year, 31.07% over three years and 35.82% over five years.
The five year result is particularly strong. A return of 77.37% placed it well ahead of the sector average and inside the top 10 of 184 funds. With an ongoing charge of just 0.06%, this fund shows how a very low cost approach can still deliver strong results when the market it tracks performs well.
Vanguard Eurozone Stock Index
Vanguard Eurozone Stock Index invests in companies across countries that use the euro, excluding the UK. It is another low cost index fund, with an ongoing charge of 0.12%.
The fund returned 22.14% over one year, ranking 32nd out of 139 funds in the IA Europe Excluding UK sector. Over three years it returned 45.96%, ranking 22nd out of 135 funds. Over five years it returned 62.42%, ranking 28th out of 129 funds.
The sector averages were 17.40% over one year, 34.14% over three years and 46.62% over five years.
It did not top the sector, but it remained well ahead of the sector average across all three main periods. That consistency helped it earn a 5 star Yodelar rating.
5 Weakest Performing Vanguard Funds
The funds below were among the lowest rated Vanguard funds in the review. It is important to keep context in mind. Some are more cautious funds, while others focus on bonds, which have faced a difficult period. Even so, their sector rankings show they lagged many similar funds.
Vanguard Target Retirement 2020 A Acc GBP
Vanguard Target Retirement 2020 sits in the IA Mixed Investment 40 to 85% Shares sector, but because it is linked to an earlier retirement year, it is not designed to behave like a high growth fund.
It returned 11.75% over one year, ranking 208th out of 226 funds. Over three years it returned 25.44%, ranking 169th out of 206 funds. Over five years it returned 23.40%, ranking 150th out of 191 funds.
The sector averages were 19.21%, 33.77% and 32.49%.
This means the fund was below the sector average across all three main periods. Its purpose may be different from more growth focused funds in the same sector, but the relative rankings were still weak.
Vanguard LifeStrategy 40% Equity A Shares Acc
Vanguard LifeStrategy 40% Equity is a more cautious option than LifeStrategy 80%. It holds a lower weighting to company shares and a higher weighting to bonds.
The fund returned 12.45% over one year, ranking 131st out of 195 funds in the IA Mixed Investment 20 to 60% Shares sector. Over three years it returned 24.13%, ranking 115th out of 180 funds. Over five years it returned 15.93%, ranking 130th out of 166 funds.
The sector averages were 14.00% over one year, 25.91% over three years and 21.75% over five years.
Lower returns can be expected from a more cautious fund when higher risk markets perform strongly. However, this fund also trailed its sector averages, which is why it appeared among the weaker Vanguard funds in this review.
Vanguard Japan Government Bond Index Inst
Vanguard Japan Government Bond Index was one of the weakest funds in the full analysis.
The fund returned minus 17.84% over one year, ranking 84th out of 85 funds in the IA Specialist Bond sector. Over three years it returned minus 34.72%, ranking 78th out of 79 funds. Over five years it returned minus 43.95%, ranking 74th out of 75 funds.
The sector averages were 5.74% over one year, 13.12% over three years and 8.68% over five years.
These figures show a very large gap between the fund and the wider sector. Bond funds can move in value, and some areas of the bond market can fall sharply when conditions are difficult. This fund’s returns and rankings show that investors holding it have had a particularly challenging period.
Vanguard LifeStrategy 20% Equity A Gross Acc
Vanguard LifeStrategy 20% Equity is one of the more cautious funds in the LifeStrategy range. It has a much lower exposure to company shares than the higher growth versions of the range.
The fund returned 7.65% over one year, ranking 59th out of 74 funds in the IA Mixed Investment 0 to 35% Shares sector. Over three years it returned 16.32%, ranking 53rd out of 69 funds. Over five years it returned 3.93%, ranking 59th out of 65 funds.
The sector averages were 9.55%, 19.76% and 12.84%.
The five year return is the main concern. While cautious funds are not designed to deliver the highest growth, this fund still fell well below its sector average and ranked near the lower end of its peer group.
Vanguard UK Long Duration Gilt Index A Gross Acc GBP
Vanguard UK Long Duration Gilt Index has had a difficult period. The fund focuses on long dated UK government bonds, an area that has seen sharp price falls over the period reviewed.
The fund returned minus 2.59% over one year, ranking 29th out of 30 funds in the IA UK Gilts sector. Over three years it returned minus 10.77%, ranking 30th out of 30 funds. Over five years it returned minus 44.98%, ranking 27th out of 27 funds.
The sector averages were 0.72% over one year, 2.52% over three years and minus 18.36% over five years.
This is a clear example of why lower risk does not mean no risk. UK government bonds are often viewed as defensive investments, but long dated bond funds can still fall heavily. In this case, the fund was not only negative over five years, it also ranked last in its sector over that period.
What Investors Should Take From The Vanguard Review
The Vanguard name is widely trusted, and in many cases that trust has been supported by strong performance and low costs. The top performing funds in this review show that Vanguard can deliver excellent results, particularly where its low cost index approach has aligned with strong markets.
But the weaker funds show the other side of the story. Not every Vanguard fund has performed well. Some have lagged similar funds, and some have produced large losses over the periods reviewed.
The key lesson is simple. Brand, cost and popularity are not enough. Investors need to know exactly what they hold, how each fund has performed against its sector, and whether each fund still plays a useful role in the portfolio.
Why A Yodelar Portfolio Analysis Can Help
Many investors hold Vanguard funds inside ISAs, pensions and investment accounts. Some may hold a single LifeStrategy fund. Others may hold several Vanguard index funds alongside funds from other providers.
A Yodelar portfolio analysis can help show whether those funds are working well together. It reviews each fund against its sector, highlights stronger and weaker holdings, and shows where a portfolio may be too dependent on one area of the market.
This is particularly important with Vanguard funds because many appear simple on the surface, but can still behave very differently. A LifeStrategy fund, a Target Retirement fund, a UK equity income fund and a gilt fund all carry the Vanguard name, but they are not doing the same job.
For investors who want to understand whether their Vanguard holdings are helping or holding back their wider portfolio, a portfolio analysis can provide a clear, evidence based starting point.
Conclusion
Vanguard remains one of the most recognised fund providers in the UK, and many of its funds continue to offer a simple, low cost way to invest. But this review shows why investors should not assume every Vanguard fund is equally strong.
The strongest funds in the analysis, including Vanguard FTSE UK Equity Income Index, Vanguard FTSE 100 Index, Vanguard Eurozone Stock Index, Vanguard LifeStrategy 80% Equity and Vanguard Target Retirement 2050, all delivered returns ahead of their sector averages.
At the same time, funds such as Vanguard Japan Government Bond Index, Vanguard UK Long Duration Gilt Index and the more cautious LifeStrategy options showed much weaker results.
For investors, the message is clear. Vanguard can be a useful part of a portfolio, but the specific funds selected matter. The starting point should always be to understand what you hold, how each fund compares with similar options, and whether the overall portfolio is still built in a way that supports your goals.
