Stock mutual funds | Vanguard
Stock mutual funds aim to provide long-term growth, unlike bond funds, which focus on income. In exchange for more growth, however, you’re likely to experience more ups and downs in the value of your investment.
A stock fund could give you access to hundreds—sometimes thousands—of stocks, which spreads out risk more than owning individual stocks.
You can use just a few funds to complete the stock portion of your portfolio. Each of these index funds gives you access to a wide variety of stocks in a single, diversified fund.
- Vanguard Total Stock Market Index Fund holds more than 3,000 domestic stocks.
- Vanguard Total International Stock Index Fund holds more than 7,000 non-U.S. stocks.
Here are a few questions to ask yourself while you’re considering the right Vanguard stock fund for your portfolio:
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.
Investing in both U.S. and international stock funds can add another level of diversification to an already well-balanced portfolio.
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.
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.
Want to see a side-by-side comparison of the 2 types of funds?
Consider ETFs (exchange-traded funds) and mutual funds that take a company’s environmental, social, and governance (ESG) track record into consideration.
We offer a lineup of ESG investments that can help you achieve your financial goals and match your dollars with what matters to you.
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.
Have questions? Contact us
Usually refers to common stock, which is an investment that represents part ownership in a corporation. Each share of stock is a proportional stake in the corporation’s assets and profits.
Value stock fund
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.
Growth stock fund
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.
An unmanaged group of securities whose overall performance is used as a standard to measure investment performance.
A type of fund that tries to track the performance of a particular market index (sometimes referred to as a “benchmark”) by buying and holding all or a representative sample of the securities in the index, in the same proportion as their weightings in the index.
The sum total of all your investments.
ETF (exchange-traded fund)
A type of investment with characteristics of both mutual funds and individual stocks. ETFs are professionally managed and typically diversified, like mutual funds, but they can be bought and sold at any point during the trading day.
A determination of a company’s value, calculated by multiplying the total number of company stock shares outstanding by the price per share. Also called capitalization.
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.
footnote*For the 10-year period ended June 30, 2020, 92 of 107 Vanguard stock funds outperformed their Lipper peer-group averages. Results will vary for other time periods. Only mutual funds with a minimum 10-year history were included in the comparison. Source: Lipper, a Thomson Reuters Company. The competitive performance data shown represent past performance, which is not a guarantee of future results. View fund performance
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.