5 Vanguard Mutual Funds to Tackle Inflation and Geopolitical Risks

The U.S. economy is facing significant pressure due to rising geopolitical tensions in the Middle East, as well as concerns about inflation and a slowing labor market. Market participants fear the risk of stagflation, a scenario characterized by sluggish economic growth, high unemployment and persistent inflation.

The labor market lost 92,000 jobs, resulting in an increase in the unemployment rate to 4.4%. Meanwhile, a conflict in Iran caused oil prices to surge from $55 to over $100 per barrel, fueling concerns about higher costs. Although consumer inflation remained steady at 2.4%, wholesale prices jumped unexpectedly. Consequently, the Federal Reserve kept interest rates between 3.50% and 3.75%, signaling that rate cuts are unlikely until inflation is fully under control.

Despite some resilience in retail and manufacturing, high energy prices and a stagnant job market continue to dampen the market outlook. Markets are volatile, with major indexes sliding, as investors react to escalating geopolitical risks and uneven corporate earnings.

In such a market situation, mutual fund investing can help those who wish to diversify their portfolio among various asset classes. Investors who lack professional expertise in managing funds can choose to invest in Vanguard mutual funds, such as Vanguard PRIMECAP Fund VPMCX, Vanguard U.S. Growth Fund VWUSX, Vanguard Growth and Income Fund VQNPX, Vanguard Specialized Portfolios Energy Fund VGENX and Vanguard Windsor II Fund VWNFX, as they provide low-cost, uncomplicated equity, fixed-income and multi-asset funds that can help investors meet their goals.

These funds have wide exposure in sectors such as finance, industrial cyclical, technology, retail trade, non-durable and healthcare since they have given a positive return and are expected to perform well in the near future.

Why Invest in Vanguard Mutual Funds?

Vanguard, one of the world’s largest asset management corporations, was founded by John C. Bogle on May 1, 1975. Headquartered in Valley Forge, PN, the company had $11 trillion in assets under management globally as of July 31, 2025. Vanguard had more than 20,000 employees worldwide as of Dec. 31, 2024, and offered 222 funds in the United States and 228 in foreign markets to millions of investors.

Vanguard is owned entirely by funds, a unique feature among mutual fund firms. According to the company, this structure allows management to focus more on shareholder interests. Among the most significant advantages, Vanguard claims to offer low-cost, no-load funds. This means that the fund doesn’t charge investors when fund shares are being bought or sold.

These funds boast a Zacks Mutual Fund Rank #1 (Strong Buy), have positive three-year and five-year annualized returns, minimum initial investments within $5000, and carry a low expense ratio of less than 1%. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Vanguard PRIMECAP Fund invests most of its net assets in companies that have above-average earnings growth potential that is not reflected in their current market prices. VPMCX advisors prefer to invest in large- and mid-cap stocks.

Joel P. Fried has been the lead manager of VPMCX since Dec. 31, 1988, and most of the fund’s exposure is in companies like Eli Lilly (7.8%), Micron Technology (5.5%) and Alphabet (4%) as of December 31, 2025.

VPMCX’s three-year and five-year annualized returns are 24.6% and 13.8%, respectively. VPMCX has an annual expense ratio of 0.37%.

To see how this fund performed compared to its category and other 1, 2 and 3 Ranked Mutual Funds, please click here.

Vanguard US Growth Fund invests most of its net assets in securities issued by large-cap U.S. companies. VWUSX advisors choose to invest in companies that have above-average earnings growth potential and rational stock prices compared with future earnings.

Blair A. Boyer has been the lead manager of VWUSX since Feb. 21, 2014. Most of the fund’s exposure was in companies like NVIDIA (11.2%), Microsoft (8.4%) and Apple (8.3%) as of Nov. 30, 2025.

VWUSX’s three-year and five-year annualized returns are 23.8% and 8.6%, respectively. VWUSX has an annual expense ratio of 0.35%.

Vanguard Growth and Income Fund invests most of its net assets in stocks that provide dividend income as well as the potential for capital appreciation. VQNPX advisors use quantitative approaches to select a broadly diversified group of stocks with investment characteristics, such as those of companies listed on the S&P 500 Index, but are expected to provide a higher total return than that of the index.

Hal W. Reynolds has been the lead manager of VQNPX since Sept. 30, 2011. Most of the fund’s holdings were in companies, such as NVIDIA (8.5%), Microsoft (5.8%) and Apple (5.4%) as of Dec. 31, 2025.

VQNPX’s three-year and five-year annualized returns are 21.8% and 14.5%, respectively. VQNPX has an annual expense ratio of 0.39%.

Vanguard Specialized Portfolios Energy Fund invests most of its net assets in common stocks. VGENX advisors generally invest in companies principally engaged in the energy industry, such as exploration, production, and transmission of energy or fuels, as well as the manufacturing and servicing of products required for energy research, energy conservation and pollution control.

G. Thomas Levering has been the lead manager of VGENX since Jan. 15, 2020. Most of the fund’s exposure was in companies like Shell PLC (9.3%), Exxon Mobil (8%) and Marathon Petroleum (4.7%) as of Oct. 31, 2025.

VGENX’s three-year and five-year annualized returns are 20.6% and 20.8%, respectively. VGENX has an annual expense ratio of 0.45%.

Vanguard Windsor II Fund invests most of its net assets in common stocks of large and mid-cap domestic companies, which, according to its advisors, are undervalued but often have above-average dividend yields. VWNFX advisors consider undervalued stocks as those that are out of favor with investors and are trading at prices below average in relation to measures such as earnings and book value.

John P. Mahedy has been the lead manager of VWNFX since Jan. 13, 2010. Most of the fund’s exposure was in companies like Microsoft (4.7%), Apple (2.9%) and Alphabet (2.7%) as of Oct. 31, 2025.

VWNFX had three-year and five-year annualized returns of 18.4% and 12.6%, respectively. VWNFX has an annual expense ratio of 0.33%.

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