Vanguard, one of the world's largest fund families by assets under management, has earned the trust of millions of investors for several good reasons. First of all, Vanguard exchange-traded funds (ETFs) often have the lowest expense ratios in the industry, which has helped many of their funds outperform their peers.

Second, the fund's ETFs are usually well-diversified within a specific theme, have low turnover ratios that reduce costs, and the firm offers funds covering a broad range of markets, sectors, and asset classes. Lastly, Vanguard has a well-deserved reputation as a leader in index investing.

A piggybank next to wooden blocks that spell ETF.

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As we enter 2024, some analysts predict that the market will favor value over growth stocks, due to the uncertainty about interest rates, global tensions, and earnings growth. While these predictions are not set in stone, there are some signs that value stocks may have an edge this year.

With this background in mind, I think the following two Vanguard funds, which focus on value investing in different segments of the market, stand out as top buys right now.

Small-cap value

Vanguard Small Cap Value Index Fund (VBR -0.60%): This fund tracks the CRSP US Small Cap Value Index, which consists of small-cap companies that exhibit low price-to-earnings or price-to-book ratios. The fund has an expense ratio of 0.07%, which is dramatically lower than the average of 1.18% for similar funds. The VBR also offers a respectable yield of 2.12%.

Established in 2004, the VBR has delivered total returns (pre-tax and assuming dividends were reinvested) of 426.7%, which lagged the benchmark S&P 500 by 87.4% over these 20 years. That's not altogether surprising, given the superb performance of several U.S. large-cap companies in the past two decades.

The fund currently has 835 holdings, with a heavy tilt toward industrials, financials, and consumer discretionary stocks. The VBR's stock holdings are also well diversified, with its largest holding, Builders FirstSource, accounting for only 0.69% of the portfolio as of this writing. Lastly, the fund has a turnover rate of 13.1% over the prior 12 months, which is on the low side for its small-cap value peer group.

High yield dividends

Vanguard High Dividend Yield Index Fund (VYM 0.90%): This fund aims to replicate the FTSE High Dividend Yield Index, which tracks the performance of companies with above-average dividends. The fund has an expense ratio of 0.06%, which is remarkably lower than the average of 0.90% for similar funds. The VYM also pays a solid 3.12% yield.

The fund was launched in 2006 and has delivered total returns of 280.1% since then, trailing the S&P 500 by 108% over the same period. This underperformance is expected, as the fund prioritizes income generation over capital growth. Still, the VYM's total returns since inception are extremely impressive. After all, high-yield dividend stocks, on balance, tend to steadily lose value over time.

The VYM has holdings in 450 stocks, with a heavy emphasis on financials, healthcare, industrials, and energy. These four economic sectors are known for their generous dividend checks.

Like most other Vanguard funds, the VYM is highly diversified, with its largest holding, JPMorgan Chase, only making up 3.48% of its portfolio at the time of this writing. It also has an exceptionally low turnover rate of 8.6%.