Common Stock Fund

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.

BREAKING DOWN '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. Investment Fund

    A supply of capital belonging to numerous investors that is used ...
  2. Diversified Common Stock Fund

    A mutual fund that invests its assets in a relatively large number ...
  3. Common Stock

    A security that represents ownership in a corporation. Holders ...
  4. Equity Fund

    A mutual fund that invests principally in stocks. It can be actively ...
  5. Value Fund

    A stock mutual fund that primarily holds stocks that are deemed ...
  6. Closed Fund

    A mutual fund that has been closed - either temporarily or permanently ...
Related Articles
  1. ETFs & Mutual Funds

    Top 5 American Funds for Retirement Diversification in 2016

    Discover five mutual funds from industry leader American Funds with high yields that are perfect for retirement savings diversification.
  2. ETFs & Mutual Funds

    The Benefits of Picking Mutual Funds Over Individual Stocks

    Learn about the advantages of investing in mutual funds rather than individual stocks, including the benefits of affordability, oversight and diversification.
  3. ETFs & Mutual Funds

    Analyzing The Best Retirement Plans And Investment Options: Mutual Funds

    What they are: A professionally managed pool of stocks, bonds and/or other instruments that is divided into shares and sold to investors. Pros: Diversification; liquidity; simplicity; ...
  4. Managing Wealth

    How Mutual Fund Managers Pick Stocks

    Learn about how mutual fund managers choose stocks based on the type of funds they manage and the investment goals of the funds' shareholders.
  5. ETFs & Mutual Funds

    Trading Mutual Funds For Beginners

    Learn about the basics of trading and investing in mutual funds. Understand how the fees charged by mutual funds can impact the performance of an investment.
  6. Investing

    Advising FAs: Explaining Mutual Funds to a Client

    More than 80 million people, or half of the households in America, invest in mutual funds. No matter what type of investor you are, there is bound to be a mutual fund that fits your style.
  7. ETFs & Mutual Funds

    The Top 5 All Cap Core Mutual Funds for 2016

    Learn how to shop for the best all-cap mutual funds, and identify five funds that invest in companies of all sizes and offer good returns with low expenses.
  8. ETFs & Mutual Funds

    The 4 Best American Funds for Growth Investors in 2016

    Discover four excellent growth funds from American Funds, one of the country's premier mutual fund families with a history of consistent returns.
  9. ETFs & Mutual Funds

    5 Characteristics of Strong Mutual Fund Shares

    Discover some of the basic characteristics shared by good mutual funds that investors can use to help them in selecting funds.
  10. Managing Wealth

    Mutual Funds: Different Types Of Funds

    No matter what type of investor you are, there is bound to be a mutual fund that fits your style. According to the last count there are more than 10,000 mutual funds in North America! That means ...
RELATED FAQS
  1. Can mutual funds only hold stocks?

    Learn about which types of mutual funds consist of only stocks, which may include stocks in addition to other assets and ... Read Answer >>
  2. What is the difference between the equity market and the stock market?

    Discover the basic information about the equity, or stock, market and the two primary classifications of equities that are ... Read Answer >>
  3. Why would a person choose a mutual fund over an individual stock?

    There are a number of reasons why an individual may choose to buy mutual funds instead of individual stocks. The most common ... Read Answer >>
  4. What is common stock and preferred stock?

    Learn about the differences between common and preferred shares. Explore situations where preferred shares have more favorable ... Read Answer >>
  5. How do I calculate the loan-to-value ratio using Excel?

    Learn what a mutual fund and a money market fund are, and understand the differences between each and how they serve various ... Read Answer >>
  6. How are blue-chip stocks similar to mutual funds and exchange-traded funds (ETFs)?

    Understand the primary differences between making investments in blue-chip stocks, mutual funds and exchange-traded funds ... Read Answer >>
Hot Definitions
  1. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  2. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  3. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  4. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
  5. Weighted Average Life - WAL

    The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, ...
  6. Real Rate Of Return

    The annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other ...
Trading Center