Investing doesn’t have to be hard. Banks and financial advisors will tell you to let them handle the investing with their ‘expert’ opinions. But the truth is, investing is only as difficult as you make it. Investing in index funds allows you to invest in thousands of companies at once, keeping costs low while capturing the long-term growth of the global stock market.
Personally, I’m a huge fan of index funds, and they are the tool I’m using to build long-term wealth. The best index funds to own in 2026 are all low-cost, diversified funds that will provide solid returns while reducing risk.
I have a strong bias towards Vanguard because they are one of the lowest-fee providers available. Fees eat into your gains over time, and can be a significant factor in limiting your ability to build wealth.
What makes a good index fund to own in 2026?
When choosing an index fund, there are a few key factors to consider:
- Low fees – ongoing charges should ideally be below 0.25%.
- Diversification – funds that track large global indices reduce risk.
- Reliable provider – large providers such as Vanguard tend to offer low costs and stable fund structures.
- Accumulating vs distributing – accumulating funds reinvest dividends automatically (good for ISAs and pensions where you don’t have to pay tax on dividends), while distributing funds do not (good for general investment accounts where you must pay tax).
Disclaimer. Nothing below is investment advice, it is purely written for entertainment purposes. Ensure you have done diligent research and feel confident before making investment decisions.
1. Vanguard FTSE All-World UCITS ETF (VWRL/VWRP)
VWRP is the accumulating version, VWRL the distributing version of the fund. It is a passive fund which tracks the FTSE All-World Index, and is comprised of approximately 3,650 stocks of large and mid-sized companies in developed and emerging markets. 10-year annualised return: 11.9%. Ongoing charges: 0.19%.
2. Vanguard S&P 500 UCITS ETF (VUSA/VUAG)
VUAG is the accumulating version, VUSA the distributing version of the fund. It is a passive fund which tracks the Standard and Poor’s 500 Index (S&P 500), comprised of the 500 largest companies in the USA. 5-year annualised return: 15.5%. Ongoing charges: 0.07%.
3. Vanguard US Equity Index Fund (VUSEIDA)
A passive fund tracking the S&P Total Market Index, which tracks the total value of the entire US stock market. It is comprised of 3,512 large, mid, small and micro-sized stocks. 10-year annualised return: 15.62%. Ongoing charges: 0.1%.
4. Vanguard ESG North America All Cap UCITS ETF (V3NB)
A passive fund which takes 1,424 environmental, social and governance (ESG)-screened stocks in North America (US+Canada) and tracks the FTSE North America All Cap Choice Index. The fund has only been around since 2022, but has averaged 23.6% annual returns since then. Ongoing charges: 0.12%.
5. Vanguard FTSE Developed Europe UCITS ETF (VEUA)
A passive fund which tracks the FTSE Developed Europe Index, comprised of 526 large and mid-sized stocks in developed European markets. 5-year annualised returns: 12.2%. Ongoing charges: 0.1%.
6. Vanguard FTSE UK All Share Index Unit Trust (VUKASSA)
A passive fund which tracks the performance of the FTSE All-Share Index (which represents all 542 stocks listed on the London Stock Exchange). 5-year annualised returns: 6.6%. Ongoing charges: 0.06%. If you want a UK bias in your portfolio, this is the fund to go for – just note that it has underperformed vs world average over the past 10 years.
7. Vanguard ESG Emerging Markets All Cap UCITS ETF (V3MB)
A passive fund which takes 3,803 environmental, social and governance (ESG)-screened stocks in emerging markets around the world, and tracks the FTSE Emerging All Cap Choice Index. The fund has only been around since 2022, but has averaged a 15.0% return since then. Ongoing charges: 0.19%. If you want a more adventurous bias towards these new (and potentially volatile) markets, this is the fund to go for.
8. FTSE Developed World UCITS ETF (VHVG)
A passive fund which tracks the performance of the FTSE Developed Index, comprised of 2,005 large and mid-sized companies in developed markets around the world. 5-year annualised returns: 13.4%. Ongoing charges: 0.12%.
There are many additional funds provided through other platforms that I’d like to recommend, such as the iShares MSCI ACWI UCITS ETC (SSAC) and the iShares Core MSCI World UCITS ETF (SWDA). However, because they are not provided by Vanguard, you have to pay higher account fees. Vanguard’s fees are 0.15% and capped at £375 per year. So, immediately there is an advantage by investing with Vanguard.
Vanguard’s Four Key Principles for successful investing
To get the most out of these funds, you must have a long-term investing mindset and maintain discipline during periods of market turbulence. Let the investments run and the gains will follow. Remember Vanguard’s four key principles for successful investing:
- Set clear goals. Clear goals help you to stay focussed, particularly when markets are in turmoil.
- Stay balanced. Make sure you’re comfortable with your investment risk, and make sure your portfolio is diversified.
- Keep costs low. You’re doing this by choosing to invest with Vanguard.
- Maintain discipline. Markets regularly fall. It’s part of what investing is about, and is perfectly normal. In our experience, maintaining discipline, sticking to the plan and rebalancing, works.
Conclusion
Investing in index funds is one of the simplest and most effective ways to grow wealth over the long-term. By choosing low-cost, diversified funds – particularly from providers like Vanguard – you can reduce fees, spread your risk, and take advantage of the compounding growth of global markets. Staying disciplined, maintaining a long-term perspective, and avoiding the temptation to pick individual stocks are just as important as the funds you choose.
The best index funds to own in 2026 focus on broad exposure, low costs, and consistent performance. For UK investors, simple globally diversified funds remain one of the most reliable ways to build long-term wealth. Whether you’re just starting out or looking to streamline your portfolio, keeping your investments simple and efficient allows you to spend less time worrying and more time building wealth. Remember: the key to successful investing isn’t clever timing or picking winners – it’s consistent, patient, and low-cost investing in a globally diversified index fund. Your future self will thank you.
FAQ
An index fund is an investment fund designed to track the performance of a specific market index, such as the S&P 500 or the FTSE All-World Index. Instead of trying to pick winning stocks, the fund simply buys and holds all (or most) of the companies in the index. This approach keeps costs low and provides broad diversification, making index funds one of the simplest and most effective ways to invest long term.
Index funds are not risk-free. However, they are generally considered safer than investing in individual stocks because they spread your investment across hundreds or even thousands of companies. This diversification reduces the risk that the poor performance of a single company will significantly harm your portfolio.
Index funds are one of the best starting points for beginner investors. They are simple, low-cost, and provide instant diversification across many companies and industries. Rather than trying to pick individual stocks or time the market, you can invest consistently in a broad index fund and allow long-term market growth and compounding to work in your favour.
Picking individual stocks can be tempting, but it carries much higher risk than investing in broad index funds. Most investors underperform the market over time because they struggle to consistently choose winners. Index funds automatically diversify across hundreds or thousands of companies, reducing the risk of a single poor performer damaging your portfolio, and allowing long-term market growth to work in your favour.
For beginners looking to start investing, a globally diversified, low-cost fund like the Vanguard FTSE All-World UCITS ETF (VWRL/VWRP) is a great choice. It spreads your investment across thousands of companies worldwide, keeps fees low, and provides exposure to long-term market growth. Starting with a single broad index fund makes investing simple and helps you stay disciplined.
Do you agree with this list, and which fund(s) will you be investing into this year?
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