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What's a mutual fund?
A mutual fund is a collection of investors' money that fund managers use to invest in stocks, bonds, and other securities.
Lower costs
Our average expense ratio across our mutual funds and ETFs is 84% lower than the industry average.1
Learn more about our cost advantage
Less risk through more diversification
One mutual fund can invest in hundreds—sometimes thousands—of individual securities at once. So if any one security does poorly, the others are there to help offset that risk.
Professional management
You don’t have to keep track of every security your mutual fund owns. The fund is managed by experts who take care of that for you.
Convenience
You can buy and sell mutual fund shares online and set up automatic investments and withdrawals.
- See your accounts at a glance
- A detailed look at your portfolio
- A snapshot of your retirement savings
- One page for your trading needs
- See your accounts at a glance
- A detailed look at your portfolio
- A snapshot of your retirement savings
- One page for your trading needs
Vanguard mutual fund options
Index funds
Enjoy the benefits of diversification, tax efficiency, and low costs with index mutual funds.
Actively managed funds
Our diligent selection of talent, paired with our consistent investment approach and client-first focus, sets our actively managed funds apart.
Target retirement funds
You make just one decision and the fund's managers do all the rebalancing for you.
ESG funds
Invest in what matters to you. Our ESG (environmental, social, governance) funds allow you to invest in funds that align with your personal preferences.
Choose from more than just Vanguard funds
Your choice, your way. Your brokerage account gives you access to a wide variety of mutual funds from hundreds of companies.
At a glance: ETFs vs. mutual funds
ETFs (exchange-traded funds) and mutual funds are similar in many ways, but there are a few key differences that set them apart.
Features |
ETFs |
Mutual funds |
|
|---|---|---|---|
| The strategy of investing in multiple asset classes and among many securities in an attempt to lower overall investment risk. |  |
|
|
| These investment products hold hundreds to thousands of stocks, bonds, and more. | |
|
|
| Commission-free online at Vanguard Brokerage | |
|
|
| Professional management | |
|
|
| You have the option to use your dividends to automatically buy more fractional shares of the fund. | |
|
|
| Buying and selling investment products throughout the same trading day like a stock. | |
|
|
| A "set it and forget it" option. You can set up an automatic transaction into the fund from your bank. You can choose the dollar amount you want to invest as well as the date and frequency that you'd like the transactions to occur. |
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| Investment minimums | $1 for Vanguard ETFs®; at share price for all other ETFs |
Can range from $1,000 to $50,000 depending on the fund |
|
| Some investment products generate less taxable income. | Generally more |
Generally less |
|
| Management style | Most ETFs are index funds, meaning they're not actively managed by a portfolio manager. |
Vanguard has both index mutual funds and actively managed funds. |
Features |
ETFs |
Mutual funds |
|---|---|---|
| The strategy of investing in multiple asset classes and among many securities in an attempt to lower overall investment risk. | |
|
| These investment products hold hundreds to thousands of stocks, bonds, and more. | |
|
Commission-free online at Vanguard Brokerage |
|
|
Professional management |
|
|
| You have the option to use your dividends to automatically buy more fractional shares of the fund. | |
|
| Buying and selling investment products throughout the same trading day like a stock. | |
|
| A "set it and forget it" option. You can set up an automatic transaction into the fund from your bank. You can choose the dollar amount you want to invest as well as the date and frequency that you'd like the transactions to occur. | |
|
Investment minimums |
$1 for Vanguard ETFs®; at share price for all other ETFs |
Can range from $1,000 to $50,000 depending on the fund |
| Some investment products generate less taxable income. | Generally more |
Generally less |
Management style |
Vanguard has both index and active ETFs. |
Vanguard has both index mutual funds and actively managed funds. |
Helpful resources
Expense ratios: What they are and why they matter
Diversification: There's no crystal ball
Frequently asked questions
Start with your savings goals to get an idea of how aggressive you want your investments to be based on your risk tolerance and how long you'd like your money to be invested. Then determine the best asset allocation for your goals, and select a mutual fund to help build your diversified portfolio. Once you identify your investment time horizon and your portfolio's allocation, you might also want to consider whether you want an index fund or an actively managed fund.
Index funds, also known as passively managed funds, are built to follow a market benchmark like the S&P 500 Index or Dow Jones Industrial Average. Active funds are managed by fund managers who handpick the fund's investments in an attempt to beat the market.
You'll often see the phrase "mutual funds trade at NAV" or the word "NAV" when you research mutual funds. NAV stands for net asset value—it's the price per share that you buy the mutual fund for. The NAV is calculated at the end of the trading day.