Learn about the benefits of fixed-income funds, bond funds, and bond ETFs, and see if they're right for you.
What are fixed income or bond funds?

Benefits of bond funds
Get higher income potential
Bond mutual funds and bond ETFs give your portfolio the opportunity to earn income that can compound over time to build wealth and help you pay for expenses.
Add stability to your portfolio
When included in a well-balanced portfolio, bond funds can help diversify your investments and generate income.
Help reduce your investment risk
Fixed income mutual funds and ETFs can contain hundreds—sometimes thousands—of bonds in a single fund. You get more diversification than owning just a handful of individual bonds.
How to choose a bond fund
There are a few questions to ask yourself when considering bond funds for your portfolio:
Am I investing outside of an IRA or other retirement account?
If you're in one of the highest tax brackets and investing outside of your retirement account, you may be able to reduce your tax exposure with a tax-exempt bond fund.
Find out if tax-exempt mutual funds are right for you
Cut your federal tax bill with a national tax-exempt fund. Get added state-tax savings if you live in:
- California
- Massachusetts
- New Jersey
- New York
- Ohio
- Pennsylvania
See a list of Vanguard tax-exempt bond funds
Do I want domestic or international bonds?
Investing in both U.S. and international bond funds can add another level of diversification to an already well-balanced portfolio.
Get a list of Vanguard U.S. bond funds
Get a list of Vanguard international bond funds
How much risk am I comfortable with?
Knowing the general traits used to identify the different bonds within a bond fund can help you select funds that are compatible with your overall tolerance for risk.
- Average maturity. Bond funds come with short-, intermediate-, or long-term maturities. The longer the maturity, the more sensitive the fund is to changes in interest rates.
- Credit quality. Bonds that are backed by the government or one of its agencies have the best "creditworthiness" and a lower chance of default than most corporate bonds. Corporate bonds with high credit quality are considered investment-grade bonds, and those below investment grade are considered high-yield ("junk") bonds.
Do I specifically want to keep pace with inflation?
Inflation-protected bond ETFs invest in government bonds and are routinely adjusted for inflation.
Get broad exposure to the bond markets
You can use just a few funds to complete the bond portion of your portfolio. Each of these ETFs and index funds gives you access to a wide variety of bonds in a single, diversified fund.
- View the Vanguard Total Bond Market ETF, which holds more than 10,000 domestic investment-grade bonds.
- View the Vanguard Total International Bond ETF, which holds around 7,000 bonds from both developed and emerging non-U.S. markets.
- View the Vanguard Total Bond Market Index Fund, which holds more than 10,000 domestic investment-grade bonds.
- View the Vanguard Total International Bond Index Fund, which holds around 7,000 non-U.S. bonds.