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Understanding investment types

Get details on specific categories of funds

Learn about different types of mutual funds and how they can work together in your portfolio.
3 minute read

Money market funds

Use money market funds to limit your money's exposure to market risk while you save for emergencies, an upcoming big purchase, or another short-term need.

Learn more about Vanguard money market funds

Bond funds

Choose bond funds if you're looking for income and want to moderate the risks involved with the stock portion of your portfolio.

These funds generally offer higher yields than money market funds and less volatility than stock funds.

Learn more about Vanguard bond funds

Balanced funds

Look to balanced funds for a mix of income and growth potential in a single fund.

These funds have varying degrees of risk based on the percentages of stocks and bonds in the portfolio. Some maintain a steady asset allocation; others gradually become more conservative over time.

Learn more about Vanguard balanced funds

Stock funds

Consider stock funds if you want to increase your chances of growing your money over longer periods of time.

These funds expose you to more risk than typical bond funds. But you can limit some of that risk when you pair stock funds with bond funds as part of a diversified portfolio.

Learn more about Vanguard stock funds

International funds

Get exposure to investment opportunities in developed and emerging countries.

International funds can provide additional diversification in a well-balanced portfolio.

Learn more about Vanguard international funds

Sector & specialty funds

Focus on a specific industry, like precious metals, real estate, health care, or energy.

But remember, these funds have a very narrow focus—exposing you to more risk—and should only be used to supplement an already diversified portfolio.

Learn more about Vanguard sector & specialty funds


Are you part of the growing community of investors who want to invest in funds that consider environmental, social, and governance factors? We offer a lineup of ESG investments that can help you achieve your financial goals and match your dollars with what matters to you.

Explore ESG investing with Vanguard

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For more information about Vanguard mutual funds and ETFs, visit Vanguard mutual fund prospectuses or Vanguard ETF prospectuses to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.

You must buy and sell Vanguard ETF Shares through Vanguard Brokerage Services (we offer them commission-free) or through another broker (which may charge commissions). See the Vanguard Brokerage Services commission and fee schedules for limits. Vanguard ETF Shares are not redeemable directly with the issuing fund other than in very large aggregations worth millions of dollars. ETFs are subject to market volatility. When buying or selling an ETF, you will pay or receive the current market price, which may be more or less than net asset value.

Please remember that all investments involve some risk. Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. Diversification does not ensure a profit or protect against a loss.

Bond funds are subject to the risk that an issuer will fail to make payments on time and that bond prices will decline because of rising interest rates or negative perceptions of an issuer's ability to make payments.

Investments in stocks issued by non-U.S. companies are subject to risks including country/regional risk, which is the chance that political upheaval, financial troubles, or natural disasters will adversely affect the value of securities issued by companies in foreign countries or regions; and currency risk, which is the chance that the value of a foreign investment, measured in U.S. dollars, will decrease because of unfavorable changes in currency exchange rates. These risks are especially high in emerging markets.

ESG funds are subject to ESG investment risk, which is the chance that the stocks or bonds screened by the index provider for ESG criteria generally will underperform the market as a whole or, in the aggregate, will trail returns of other funds screened for ESG criteria. The index provider’s assessment of a company, based on the company’s level of involvement in a particular industry or the index provider’s own ESG criteria, may differ from that of other funds or of the advisor’s or an investor’s assessment of such company. As a result, the companies deemed eligible by the index provider may not reflect the beliefs and values of any particular investor and may not exhibit positive or favorable ESG characteristics. The evaluation of companies for ESG screening or integration is dependent on the timely and accurate reporting of ESG data by the companies. Successful application of the screens will depend on the index provider’s proper identification and analysis of ESG data.