Common Stock Fund

AAA

DEFINITION of 'Common Stock Fund'

A mutual fund that invests in the common stock of numerous publicly traded companies. Common stock funds provide investment diversification and offer time savings over researching, buying and selling individual stocks. Common stocks are shares of ownership in a corporation that doesn't confer any special privileges, such as guaranteed dividends or preferred creditor status. Investing in a fund that specializes in common stock can provide cost savings if the fund's loads and management fees are lower than the commissions associated with buying and selling individual stocks.

INVESTOPEDIA EXPLAINS 'Common Stock Fund'

A common stock fund will always be specialized in some way. It might invest in all the companies in the S&P 500, or it might invest only in small-cap tech stocks or mid-cap dividend-paying value stocks, for example. The fund will usually name itself after its specialization and not call itself a common stock fund, because the term "common stock fund" is so broad.

Also, some funds call themselves common stock funds because they invest primarily in common stock (perhaps 80% of the fund's investments), but they might also invest in other types of securities (perhaps 20% of the fund's investments). Investors should look beyond the fund's name and see what it actually owns, when evaluating whether the fund is a good fit for their investment objectives.

RELATED TERMS
  1. Total Stock Fund

    A mutual fund or ETF that seeks to replicate the broad market ...
  2. Common Stock

    A security that represents ownership in a corporation. Holders ...
  3. Index Fund

    A type of mutual fund with a portfolio constructed to match or ...
  4. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected ...
  5. Diversified Common Stock Fund

    A mutual fund that invests its assets in a relatively large number ...
  6. Aggressive Growth Fund

    A mutual fund that attempts to achieve the highest capital gains. ...
Related Articles
  1. Is Your Mutual Fund Safe?
    Options & Futures

    Is Your Mutual Fund Safe?

  2. What is the minimum amount of money ...
    Retirement

    What is the minimum amount of money ...

  3. What does a mutual fund's beta coefficient ...
    Mutual Funds & ETFs

    What does a mutual fund's beta coefficient ...

  4. How can I get a mutual fund prospectus?
    Mutual Funds & ETFs

    How can I get a mutual fund prospectus?

Hot Definitions
  1. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  2. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  3. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  4. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
Trading Center