Five Fund Categories That Can Add Range to a Portfolio

A portfolio built from several kinds of assets can behave differently from one that depends on U.S. stocks alone. The five fund categories discussed here span company shares, bonds and alternatives, with costs ranging from 0.03% to 0.3% a year. Their recent results also show why a fund’s past performance and low fees don’t remove the need to consider risk, time horizon and the role each holding would play.

The framework echoes the approach of the late Jack Bogle, Vanguard’s founder, who championed low-cost index funds and cautioned against trying to time the market by selling during a crash and buying as prices rise. The funds below are examples cited by financial professionals, rather than a ready-made allocation for every household.

U.S. stocks: dividends and value exposure

Richard M. Rosso, director of financial planning at RIA Advisors, points to the Vanguard Equity-Income Fund Admiral Shares (VEIRX). It holds large U.S. companies, with an emphasis on undervalued stocks and substantial dividends, according to Rosso. That mix may appeal to investors who want stock exposure without the sharp swings that can make retirement income planning more difficult.

The fund recorded double-digit returns in six of the years from 2016 through 2025, and lost money in 2018. Its annual expense was 0.17%. Those figures describe its history, not a promise about future performance; stock prices and dividends can change, and a fund focused on a particular style may behave differently from the broader market.

U.S. bonds: a stabilizing role, with price risk

Bonds can help balance a portfolio because their returns may move differently from stocks. Sam Stovall, chief investment strategist at CFRA, describes fixed income as a long-term ballast. His choice is the iShares Core U.S. Aggregate Bond ETF (AGG), whose holdings were 99.99% investment grade in the source report.

That credit profile doesn’t mean the fund’s price can’t fall. Through mid-September, its return was down almost 1%, amid a rise in inflation and a decline in bond prices. The annual expense ratio was 0.03%. Bonds may steady a mix of holdings, but their values can respond to changing prices and interest rates, so they aren’t a cash substitute.

Emerging markets: broader exposure and bigger swings

Todd Rosenbluth, head of research at VettaFi, highlights the Vanguard FTSE Emerging Markets Index ETF (VWO). The fund includes companies such as Taiwan Semiconductor Manufacturing (TSM), Alibaba Group Holding (BABA) and Tencent Holdings (TCEHY). Its holdings are weighted by market capitalization, giving investors exposure across a broad set of companies.

Over the three years through mid-September, the fund returned an annualized 17.4%. Its expenses were 0.06%. Strong recent performance can make a category look appealing, but returns can vary substantially over time. Emerging-market stocks add geographic variety, while exposing a portfolio to risks that differ from those of U.S. shares.

Commodities: a different cycle, with volatility

Some alternative investments follow cycles that differ from those of stocks. Rosenbluth suggests the ABRDN Bloomberg All Commodity Longer Dated Strategy K-1 Free ETF (BCD), which provides exposure to energy, precious metals and agricultural products. Its annual expense ratio was 0.3%.

The fund’s returns can swing sharply. After oil prices rose, it was up 34% over the 12 months through mid-September. That kind of gain illustrates the potential for a strong run, but it also makes clear why commodities may suit only a limited role for investors who can tolerate substantial changes in value. Rosenbluth describes the fund’s tax treatment as a “better tax experience,” saying it tends to mean lower payments to the Treasury. Tax outcomes depend on individual circumstances, so that description shouldn’t be treated as a forecast of what any investor will owe.

Real estate: an alternative with its own price cycle

Stovall also names real estate as a possible small portfolio holding. His choice is the Vanguard Real Estate Index Fund ETF (VNQ). The fund lost money in two years from 2018 through 2025 and gained 8.9% in the year through mid-September. Its annual expenses were 0.13%.

Real estate prices move through their own cycles, so a dedicated fund can add another source of exposure without ensuring steadier results. Its place in a portfolio depends on the investor’s goals, tolerance for losses and time horizon. The same questions apply across all five categories: what job should the holding do, what could make its value fall, and how much risk can the household live with?

Costs, recent returns and asset mix provide a starting point for comparing funds; they don’t determine a suitable allocation on their own. A financial adviser can help assess how different holdings fit together. The practical takeaway is to judge each fund by both its intended role and its risks, then keep the portfolio aligned with changing needs over time.