Recently, we launched mutual funds in beta.

Plus customers can now diversify their portfolios with access to 22 Vanguard mutual funds.

If you haven’t had a chance to explore them yet, or you're wondering what each fund type actually does, here’s a quick guide to help you make sense of it all.
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💼 LifeStrategy® Funds

Think of these as ready-made portfolios that bundle together a range of index funds, giving you access to a variety of shares and bonds in one investment.

LifeStrategy funds combine shares and bonds in different proportions to suit your risk appetite.

Shares can offer higher long-term returns, but they also carry risk and can be volatile. Bonds on the other hand tend to be steadier with lower potential returns. Combining both helps balance growth and stability.
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🎯 Target Retirement Funds

These funds are designed to simplify long-term investing for retirement. Choose the fund closest to your planned retirement year, and the fund will invest accordingly.

In the early years, the Target Retirement Funds invest mostly in shares to maximise growth, since you have time to ride out market ups and downs. Then, as your retirement date approaches, it gradually shifts into more stable investments like bonds, aiming to protect the wealth you’ve built.

Gradual rebalancing helps reduce the risk of big losses as you near retirement. The goal is to grow your money while you're far from retirement and to preserve it as you get closer. Use Vanguard’s calculator to help find the right Target Retirement fund for you.
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📈 Equity Index Funds

Index funds aim to mirror the performance of a specific market index, like the S&P Total Market Index, by investing in the same companies listed in that index. Sometimes this means buying every share in the index, other times it will seek efficiency and buy a representative sample.

The goal of an index fund isn’t to beat the market, but to match it. That means your investment will rise or fall in line with the index it’s tracking. It’s a good option if you want broad exposure without the effort of choosing individual stocks.
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👥 Actively Managed Equity Funds

Unlike index funds that simply track the market, active funds are managed by Vanguard’s analysts who decide which companies, sectors, or regions to invest in, all with the goal of beating a specific benchmark.

It’s important to note that actively managed funds come with extra risk. Because fund managers are deliberately picking investments that differ from the broader market, performance can vary — and there’s no guarantee of beating the index. Charges are also typically higher than index funds, which can impact long-term returns.
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🌍 ActiveLife Climate Aware Funds

These actively managed funds are designed for investors who want to align their portfolio with the journey to net zero. These funds target companies committed to reducing their greenhouse gas emissions in line with the science-based targets of the Paris Agreement. Their ambition is to have 100% of the fund’s shares and corporate bonds invested in these companies by 2050, gradually increasing along the way.

The funds also consider climate-positive characteristics when selecting investments, favouring companies that show progress toward sustainability goals. They avoid investing in tobacco, thermal coal, oil sands, and controversial weapons.

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This isn’t investment advice. Before choosing a fund, make sure it’s right for you and always read the Key Investor Information Document (KIID). These are linked on each mutual fund’s instrument screen in your app and web platform.

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For a deeper dive, check out Vanguard’s website on these different fund types.

LifeStrategy Funds
Target Retirement Funds
Index Funds
Active Funds
ESG Funds (including ActiveLife Climate Aware Funds) 

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Important information

When you invest, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you invest.

Freetrade does not give investment advice and you are responsible for making your own investment decisions. If you are unsure about what is right for you, you should seek independent advice