How much does it cost to invest in an index fund?

Some index funds have minimum investments as high as $3,000, while others, like Fidelity and Schwab, have none. You'll pay management fees through the expense ratio. The fees are deducted from the amount you invest.

How do index funds perform during market downturns?

An index fund will perform very similarly to its benchmark index during a market downturn. If you invested in an S&P 500 index fund and the market dropped by 20%, you'd expect the fund to drop by slightly more than 20% after accounting for fees. However, many index funds track a specific niche of the stock market, and some of these segments perform better during downturns. For example, consumer staples, utilities, and healthcare tend to outperform during downturns. If you invested in an index fund that tracks one of these sectors, you could see gains (or less severe losses) when the overall market is tanking.

Should I diversify across multiple index funds?

Before buying multiple index funds for diversification, review each fund's underlying holdings. If you already own shares of the Schwab S&P 500 Index Fund, you wouldn't achieve additional diversification by investing in the Fidelity ZERO Large Cap Index Fund because the holdings are almost identical. But if you owned shares of one of these funds and you invested in an emerging market index fund, you'd get more diversification from exposure to international stocks.

Can I reinvest dividends from index funds?

Yes, most brokerages give you the option to automatically reinvest index fund dividends.

What is Warren Buffett's favorite index fund?

Warren Buffett has repeatedly endorsed low-cost S&P 500 index funds for most retail investors. The Vanguard S&P 500 ETF (NYSEMKT:VOO), which has an expense ratio of just 0.03%, is a likely contender for Buffett's favorite index fund. The Oracle of Omaha famously bet $1 million that a low-cost S&P 500 index fund would outperform a portfolio of expensive hedge funds over 10 years. Ted Seides of Protégé Partners accepted the bet; Buffett won by a large margin by betting on the VOO.

What is the best-performing index fund?

The best-performing index fund varies significantly by holding period. For example, the VanEck Semiconductor ETF (NASDAQ:SMH) has been a top performer in recent years, with five-year average annualized returns of nearly 38% as of May 2026. However, broad market funds, such as index funds that track the S&P 500 or total U.S. stock market, have produced steadier returns over time, with average annual returns of about 10%.

8 Best Index Funds to Buy in June 2026

Here are the eight best index funds to add to your portfolio for steady, low-cost growth.

By Robin Hartill, CFP – Updated Jun 15, 2026 at 5:36 PM EST | Fact-checked by Parker Hicks

Key Points

Index funds provide diversified, low-risk investments and generally low fees.
The Fidelity ZERO Large Cap Index Fund mirrors the S&P 500 with no fees and no minimum investment.
The Schwab S&P 500 Index Fund offers near-identical returns to S&P 500 with a very low expense ratio.

The best index funds diversify your investments and have low fees. Unlike investing in individual stocks or bonds, index funds spread your risk across hundreds of securities, meaning your returns aren't tied to the fate of any single company.

An infographic explaining several factors to consider when choosing an index fund to invest in. — Image source: The Motley Fool.

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Top index funds to consider

Our picks for the eight best cost-effective index funds for this year can help you accomplish a variety of investment goals. Many of the funds listed below soared in 2025 despite substantial volatility earlier in the year.

The early months of 2026 have also been turbulent, particularly due to rising oil prices sparked by the war in Iran. However, index investing is about building wealth for the long haul not short term gains or losses.

1. Fidelity ZERO Large Cap Index Fund

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NASDAQMUTFUND: FNILX

Fidelity Concord Street Trust - Fidelity Zero Large Cap Index Fund

Today's Change

(1.13%) $0.30

Current Price

$26.85

Key Data Points

Day's Range

$26.85 - $26.85

52wk Range

$26.85 - $26.85

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2. Schwab S&P 500 Index Fund

NASDAQMUTFUND: SWPPX

Schwab Capital Trust - Schwab S&P 500 Index Fund

Today's Change

(1.10%) $0.21

Current Price

$19.32

Key Data Points

Day's Range

$19.32 - $19.32

52wk Range

$19.32 - $19.32

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If you want to invest in an official S&P 500 index fund, the Schwab S&P 500 Index Fund (SWPP.X +1.10%) is about the cheapest you'll find. Its expense ratio is 0.02%, meaning you'll pay just $0.20 per $1,000 invested annually.

Because the investment fee is so low, your returns are virtually identical to the performance of the S&P 500. There's no minimum investment amount, so you can start investing with as little as $1.

The fund had gains of about 18% in 2025 and 11% through May 2026, almost identical to that of the S&P 50

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3. Vanguard Growth ETF

NYSEMKT: VUG

Vanguard Growth ETF

Today's Change

(-1.46%) $-1.25

Current Price

$84.65

Key Data Points

Day's Range

$84.06 - $85.04

52wk Range

$69.63 - $90.60

Volume

3.1M

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If you want to assume more investment risk in the pursuit of higher rewards, the Vanguard Growth ETF (VUG -1.40%) is a solid choice. The fund tracks the CRSP US Large Cap Growth Index, which performs similarly to the S&P 500 Growth Index. The ETF invests in about 150 U.S. large-cap growth stocks. The fund is most heavily concentrated in tech stocks, which make up about two-thirds of its holdings.

The ETF has a minuscule 0.03% expense ratio.

Through the end of 2025, the fund's average annual return over five years (before taxes) was almost 15%, similar to the S&P 500's returns for the same period. The VUG's year-to-date gains were relatively flat through the end of April 2026, reflecting marketwide AI jitters. However, the fund's year-to-date returns for the first five months of the year have almost caught up to the S&P 500 after surged after AI stocks rallied in May 2026.

4. SPDR S&P Dividend ETF

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NYSEMKT: SDY

SPDR Series Trust - State Street SPDR S&P Dividend ETF

Today's Change

(0.54%) $0.81

Current Price

$150.13

Key Data Points

Day's Range

$148.91 - $150.24

52wk Range

$133.68 - $156.39

Volume

4.7K

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The SPDR S&P Dividend ETF (SDY +0.61%) is a top-performing index fund for income-oriented investors. The dividend-weighted fund's benchmark is the S&P High Yield Dividend Aristocrats® Index, which tracks about 150 stocks with the highest dividend yields in the S&P Composite 1500 Index. (Dividend Aristocrats® is a registered trademark of Standard & Poor's Financial Services LLC.)

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All the companies owned by the ETF have increased their dividend payments annually for at least 25 consecutive years.

Dividend-paying stocks tend to be less volatile compared to the overall stock market. So it's unsurprising that the SPDR S&P 500 Dividend ETF underperformed the S&P 500 in 2025, with total returns just above 8%. However, uncertainty has prompted a resurgence in safer, dividend-paying stocks -- which is why the SDY ETF initially outperformed the S&P 500 in 2026, then fell behind after May's AI stock boom.

The fund's 30-day SEC yield in June 2026 was 2.44% -- significantly higher than the S&P 500's 1%. The expense ratio is also somewhat higher at 0.35%.

Several real estate investment trusts (REITs) are represented in this fund. REITs typically pay high dividends because they're required to disburse at least 90% of their taxable income. The ETF is underweight to tech stocks, which generally don't pay generous dividends.

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Dividend Yield

A financial metric indicating annual dividend income relative to stock price, expressed as a percentage.

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5. Vanguard Real Estate ETF

NYSEMKT: VNQ

Vanguard Real Estate ETF

Today's Change

(1.49%) $1.44

Current Price

$98.03

Key Data Points

Day's Range

$96.76 - $98.08

52wk Range

$86.84 - $99.15

Volume

64K

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If you want to invest across the real estate market, the Vanguard Real Estate ETF (VNQ +1.49%) is a solid, low-cost option. With an expense ratio of 0.13%, it's also the largest real estate index fund by far, with total net assets of just under $70 billion.

Although its benchmark index includes a few real estate management and development companies, it is mostly composed of equity REITs that own and operate income-producing real estate.

Because it invests primarily in REITs, the ETF is also attractive to dividend investors. The fund's adjusted effective yield through May 2026 was about 2.7%. The Vanguard ETF may also appeal to investors concerned about inflation since real estate is traditionally seen as a hedge against rising prices elsewhere.

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6. Vanguard Russell 2000 ETF

NASDAQ: VTWO

Vanguard Russell 2000 ETF

Today's Change

(-0.38%) $-0.46

Current Price

$120.00

Key Data Points

Day's Range

$118.18 - $120.29

52wk Range

$85.64 - $121.00

Volume

16.6K

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The Vanguard Russell 2000 ETF (VTWO -0.38%), which tracks the Russell 2000, is a good place to start for investors looking to capitalize on the potential upside of investing in small-cap companies. The fund invests in about 2,000 small- and mid-cap companies with assets under management hovering around $17.5 billion.

At 0.06%, its expense ratio is relatively low, especially for a fund offering exposure to the companies with the most growth potential.

Like its benchmark index, the Vanguard Russell 2000 ETF had total returns of about 13% in 2025. Through May 2026, the fund had year-to-date returns of around 12%, reflecting the outperformance of small-cap stocks in the first few months of the year.

7. ROBO Global Robotics and Automation Index ETF

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NYSEMKT: ROBO

Exchange Traded Concepts Trust - Robo Global Robotics And Automation Index ETF

Today's Change

(-3.73%) $-3.23

Current Price

$83.42

Key Data Points

Day's Range

$82.87 - $83.80

52wk Range

$57.29 - $90.51

Volume

202.5K

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Thematic investors wanting to capitalize on a long-term secular trend should check out the ROBO Global Robotics and Automation Index ETF (ROBO -3.73%). The index fund's benchmark is the Robo Global Robotics and Automation Index, which tracks 77 robotics, automation, and artificial intelligence (AI) companies. It has roughly $2 billion in total net assets and a 0.95% expense ratio, higher than any fund on this list.

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Artificial Intelligence

Artificial intelligence is the use of machines to mimic human intelligence.

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The ETF offers investors a way to capture the growth of several booming trends. Robotics offers huge cost savings to companies; the industry is forecast to have a compound annual growth rate of 14% through 2030. Interest in artificial intelligence (AI) stocks has surged since late 2022, when ChatGPT launched. However, the ETF has still underperformed the stock market since then, posting a three-year average annualized return of less than 15% through the end of 2025, compared to about 21% for the S&P 500 over the same period. The fund was up nearly 13% in the first four months of 2026, reflecting investors' bullishness on automation and AI.

8. Schwab Emerging Markets Equity ETF

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NYSEMKT: SCHE

Schwab Strategic Trust - Schwab Emerging Markets Equity ETF

Today's Change

(-2.66%) $-0.99

Current Price

$36.25

Key Data Points

Day's Range

$35.90 - $36.35

52wk Range

$29.62 - $37.40

Volume

2.5M

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If you want to diversify your portfolio through exposure to high-growth emerging markets but don't want your risk concentrated in a single economy or region, the Schwab Emerging Markets Equity ETF (SCHE -2.63%) may be a good fit. It tracks the FTSE Emerging Index, a collection of large- and mid-cap stocks in more than 20 developing countries.

The fund has more than 2,200 holdings, with the largest concentrations in China, India, Taiwan, Brazil, and South Africa. Its expense ratio is only 0.06%.

The stocks of companies in emerging markets have historically underperformed compared to U.S. stocks. In the past five years as of May 2026, the Schwab emerging market fund had annualized returns of about 5%. Meanwhile, the S&P 500 racked up annualized returns of about 14% during the same five-year period.

Still, given that about 85% of the world's population lives in developing countries, investors with a long-term focus and who are comfortable with volatility may want to consider this fund.

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How index funds work

An index fund is a mutual fund or exchange-traded fund (ETF) that tracks the performance of a market index, such as the S&P 500 or the Russell 2000. Unlike actively managed funds, which have management teams that select investments and aim to beat the market, index funds are passively managed; rather than trying to outperform the market, they aim to replicate the benchmark index's performance.

If you invest in an index fund with a low tracking error (meaning the fund doesn't deviate much from its benchmark), your returns will be very similar to the performance of the underlying index, minus fees. For example, say you invested in an S&P 500 index fund in a year when the S&P 500 returned 10%, and the fund has a 0.1% expense ratio. You'd expect a return of approximately 9.9% for the year.

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How to choose an index fund

Consider these key factors when picking an index fund to invest in:

Target market segment: Some index funds confer portfolio exposure to the entire U.S. stock market by tracking indexes such as the S&P 500. Others track narrower indexes focused on specific stock market sectors, industries, countries, or company sizes.
Your investment goals: Some stock market indexes and, by extension, some index funds track companies with specific characteristics, such as high growth potential, a history of reliable dividend payments, or adherence to environmental, social, and governance (ESG) standards.
Expense ratio: An index fund's expense ratio -- the percentage of your investment paid annually as a management fee to the fund's manager -- can vary significantly. A good expense ratio for a total stock market index fund is about 0.1% or less; a small number of index funds have 0% expense ratios. More specialized index funds tend to have higher expense ratios.
Minimum required investment: Some mutual funds require an initial investment of $1,000 or more. ETF index funds are accessible for the cost of a single share. Many brokers also offer ETFs as fractional shares, allowing you to invest for as little as $1.
Benchmark tracking performance: The degree to which an index fund tracks its underlying index can vary. The performances of the best index funds are very closely correlated with their benchmark indexes.

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Benefits and risks of investing in index funds

Index funds are often the backbone of a retirement portfolio for good reason: They're an effortless, beginner-friendly way to invest. However, there are a few pros and cons to be aware of first.

Benefits of investing in index funds:

Low fees: Perhaps the biggest benefit of investing in a passively managed index fund is the low cost because you're not paying fund managers to handpick investments. Many funds have expense ratios of 0.1% or less.
Diversification: Because an index fund invests in many different companies, you get far more diversification than you can typically get by building a portfolio on your own, particularly if the fund tracks a major index like the S&P 500.
Good tool for long-term investing: Shares of individual companies can rise and fall dramatically based on rumors, speculation, or a single earnings call. Though the overall stock market isn't immune to investor sentiment, its highs and lows are less pronounced than those of individual stocks.

Risks of investing in index funds:

You can't beat the market: Some investors hesitate to invest in index funds because they don't beat the market -- index funds aim to replicate an index's performance, so at best, your results will be on par with the underlying index's results, minus fees.
Not all indexes are the same: Funds that track the entire stock market or a large segment of it, like the S&P 500, have been solid winners over time, but some indexes are incredibly niche and far more vulnerable to market hype.

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8 Best Index Funds to Buy in June 2026

Here are the eight best index funds to add to your portfolio for steady, low-cost growth.

Key Points

Top index funds to consider

1. Fidelity ZERO Large Cap Index Fund

Key Data Points

2. Schwab S&P 500 Index Fund

Key Data Points

3. Vanguard Growth ETF

Key Data Points

4. SPDR S&P Dividend ETF

Key Data Points

5. Vanguard Real Estate ETF

Key Data Points

6. Vanguard Russell 2000 ETF

Key Data Points

7. ROBO Global Robotics and Automation Index ETF

Key Data Points

8. Schwab Emerging Markets Equity ETF

Key Data Points

How index funds work

How to choose an index fund

Benefits and risks of investing in index funds

Related investing topics

Best Dividend Index Funds to Buy in 2026

What to Invest In Right Now, June 2026

Selling Stock: Are There Tax Penalties on Capital Gains?

Should I Buy Stock Now or Wait?

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Top index funds to consider

1. Fidelity ZERO Large Cap Index Fund

Key Data Points

Key Data Points

Key Data Points

Key Data Points

Key Data Points

Key Data Points

Key Data Points

8. Schwab Emerging Markets Equity ETF

Key Data Points

How index funds work

How to choose an index fund

Benefits and risks of investing in index funds

Best Dividend Index Funds to Buy in 2026

What to Invest In Right Now, June 2026

Selling Stock: Are There Tax Penalties on Capital Gains?

Should I Buy Stock Now or Wait?

How much does it cost to invest in an index fund?

How do index funds perform during market downturns?

Should I diversify across multiple index funds?

Can I reinvest dividends from index funds?

What is Warren Buffett's favorite index fund?

What is the best-performing index fund?

Index fund fees

The bottom line on index funds for long-term investors

Related investing topics

FAQ

4. SPDR S&P Dividend ETF

7. ROBO Global Robotics and Automation Index ETF