What are equity or stock funds?
Give your money a higher potential to grow over the long term
Stock mutual funds and ETFs aim to provide long-term growth—unlike bond funds, which focus on income. In exchange for more growth potential, however, you're likely to experience more ups and downs in the value of your investment.
Reduce your investment risk
A stock fund could give you access to hundreds—sometimes thousands—of stocks, which spreads out risk more than owning individual stocks.
How to choose a stock fund
Here are a few questions to ask yourself when considering Vanguard stock funds for your portfolio:
How do stock mutual funds differ from one another?
When looking for a stock fund, consider these 2 characteristics:
- Investing style. In general, stock funds invest in value stocks, growth stocks, or a blend of the 2.
- Capitalization. Stock funds also choose investments based on the size, or capitalization, of a company. Companies are considered either small-, mid-, or large-cap.
How much risk am I comfortable with?
Different types of stocks will expose you to different types and levels of risk. Knowing the general terms used to describe specific stock characteristics can help you assess how comfortable you are with the risks involved with investing.
For example, you can choose stock funds and ETFs based on the average size, or capitalization, of the companies they invest in. In general, smaller companies' stocks can be riskier than larger companies' stocks, but smaller companies can reward that risk with more potential for growth.
Would I prefer index or active funds?
A combination of index and active strategies can help you meet your goals. Many people start with a core portfolio of index funds and then add actively managed funds for certain market segments.
A mutual fund that focuses on stocks from companies that are typically found in low-growth or mature industries, often produce higher and more regular dividend income, and sell at discounted prices.
A mutual fund that focuses on stocks from companies that are expected to experience higher-than-average profitable growth because of their strong earnings and revenue potential.
Growth stocks typically produce lower dividend yields because they prefer to reinvest those earnings into research and development to help grow these companies and increase their profitability.
A determination of a company's value, calculated by multiplying the total number of company stock shares outstanding by the price per share.
Vanguard's market capitalization classifications
Small-cap stocks. The stocks of companies whose market value is less than $2.1 billion.
Mid-cap stocks. The stocks of companies whose market value is $2.1 billion to $15.6 billion.
Large-cap stocks. The stocks of companies whose market value is more than $15.6 billion.
Index mutual funds & ETFs
You have a chance to keep pace with market returns because index funds try to mirror certain market segments. But not all index funds are created equal.
Actively managed mutual funds
Or you can try to beat market returns with investments hand-picked by professional money managers. You may be surprised by our active funds' performance.
Discover our active funds' quiet success story
Want to see a side-by-side comparison of the 2 types of funds?
Do I want domestic or international stocks?
Investing in both U.S. and international stock funds can add another level of diversification to an already well-balanced portfolio.
Get a list of:
Vanguard U.S. stock mutual funds
Vanguard international stock mutual funds
Should I focus on a specific industry?
You can choose a fund that invests solely in a specific sector of the market, like health care, technology, or telecommunications.
But remember, these funds have a very narrow focus and expose you to more risk. Sector and specialty funds should only be used to supplement an already diversified portfolio.
Get broad exposure to the stock markets
You can use just a few funds to complete the stock portion of your portfolio. Each of these investments gives you access to a wide variety of stocks in a single, diversified fund.
- Vanguard Total Stock Market Index Fund holds more than 4,000 domestic stocks.
- Vanguard Total International Stock Index Fund holds more than 7,500 non-U.S. stocks.
- Vanguard Total Stock Market ETF holds more than 4,000 non-U.S. stocks.
- Vanguard Total International Stock ETF holds more than 7,500 non-U.S. stocks.
Get details on:
Vanguard Total Stock Market Index Fund (VTSAX)
Vanguard Total International Stock Index Fund (VTIAX)
Vanguard Total Stock Market ETF (VTI)
Ready to invest in a stock mutual fund?
Ready to invest in a stock mutual fund?
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 full details. 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.
All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss.
Funds that concentrate on a relatively narrow market sector face the risk of higher share-price volatility. 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.
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.