Fund Category

DEFINITION of 'Fund Category'

A way of differentiating mutual funds according to their investment objectives and principal investment features. This categorization allows investors to spread their money around in a mix of funds with a variety of risk and return characteristics.

BREAKING DOWN 'Fund Category'

With stock funds, the basic categories are defined by the size of the companies in which the fund invests - large-cap, mid-cap and small-cap - and investment style - value, growth and blend (value/growth mix). Specialty stock funds (real estate, healthcare, etc.) and international funds offer additional opportunities.

Bond funds are categorized principally by their average portfolio maturities - long, intermediate and short - and credit quality - high, medium and low. Municipal and international funds provide additional bond investment diversification.

Hybrid, or asset allocation, funds offer a mix of stock and bond investments and come in two types: conservative and moderate allocation.

RELATED TERMS
  1. Equity Fund

    A mutual fund that invests principally in stocks. It can be actively ...
  2. Style

    The investment approach or objective that a fund manager uses ...
  3. Diversified Common Stock Fund

    A mutual fund that invests its assets in a relatively large number ...
  4. Blend Fund

    A category of equity mutual funds with portfolios that are made ...
  5. Value Fund

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

    An investment vehicle that is made up of a pool of funds collected ...
Related Articles
  1. Mutual Funds & ETFs

    Mutual Fund Categories

    By Richard Loth (Contact | Biography)"Mutual funds aren't horses. You don't pick them by name, color or the celebrity who is involved in the ownership group." - Chuck Jaffe, MarketWatch.com, ...
  2. Mutual Funds & ETFs

    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 ...
  3. 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.
  4. Professionals

    Specialized Funds

    FINRA Series 6: Section 10 Specialized Funds. This section deals with types of specialized funds namely index funds, global funds, international fund, asset allocation fund and other specialized ...
  5. Retirement

    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; ...
  6. Retirement

    Too Many Mutual Funds?

    Is there a magic number you should be aiming for? Find out here.
  7. Professionals

    Types of Mutual Funds

    FINRA/NASAA Series 66 Section 2 - Types of Mutual Funds. Types of mutual funds: money market funds, bond funds, balanced funds and equity income funds.
  8. Professionals

    Mutual Fund Benefits and Types

    NASAA Series 65: Section 9 Mutual Fund Benefits and Types. In this section types of mutual funds and their benefits.
  9. Mutual Funds & ETFs

    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. Mutual Funds & ETFs

    Top 4 Conservative Allocation Mutual Funds (VTMFX, TAIAX)

    Discover the top-rated mutual funds in the conservative allocation category, and learn which investors can utilize them most effectively.
RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. What is the difference between a blend fund and a balanced fund?

    As both "blend"and "balanced" describe the particular asset mix of mutual funds, determining the exact distinctions between ... Read Answer >>
  4. How do I judge a mutual fund's performance?

    Evaluate mutual fund performance utilizing resources such as Morningstar; compare the fund with others in its peer group ... Read Answer >>
  5. Do mutual funds invest only in stocks?

    Discover which types of mutual funds invest in only equities, or stocks, and which mutual funds also include investments ... Read Answer >>
  6. Do mutual funds pay dividends or interest?

    Learn how and why mutual funds pay interest or dividends, including the different funds and which types generate each type ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center