Fund Category

AAA

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.

INVESTOPEDIA EXPLAINS '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. Growth Fund

    A diversified portfolio of stocks that has capital appreciation ...
  2. Equity Fund

    A mutual fund that invests principally in stocks. It can be actively ...
  3. Bond Fund

    A fund invested primarily in bonds and other debt instruments. ...
  4. Style Box

    Created by Morningstar, a style box is designed to visually represent ...
  5. Mid-Cap Fund

    A type of stock fund that invests in mid-sized companies. A company's ...
  6. All-Cap Fund

    A stock mutual fund that invests in equity securities without ...
RELATED FAQS
  1. Is there a situation in which wash trading is legal?

    Wash trading, the intentional practice of manipulating a stock's activity level to deceive other investors, is not a legal ... Read Full Answer >>
  2. What action is the SEC likely to take on 12b-1 fees?

    The Securities and Exchange Commission (SEC) may take action to impose greater regulation on how 12b-1 fees are used, or ... Read Full Answer >>
  3. What is considered a reasonable 12b-1 fee?

    A reasonable 12b-1 fee is generally considered to be 0.25% of the assets of the mutual fund. The maximum amount allowed for ... Read Full Answer >>
  4. What are some of the most common mutual funds that give exposure to the retail sector?

    There are a number of mutual funds that give exposure to the retail sector. Three of the most popular funds are the Fidelity ... Read Full Answer >>
  5. What is the 12b-1 fee meant to cover?

    A 12b-1 fee in a mutual fund is meant to cover the fees of companies and individuals through which investors of a fund buy ... Read Full Answer >>
  6. What are the most popular mutual funds that give exposure to the utilities sector?

    Some of the most popular mutual funds that provide exposure to the utilities sector include American Century Utilities, Prudential ... Read Full Answer >>
Related Articles
  1. Mutual Funds & ETFs

    Which Mutual Fund Market Cap Suits You?

    Different funds invest in companies with different market caps. Find out which is right for you.
  2. Mutual Funds & ETFs

    How To Pick A Good Mutual Fund

    Learn how to evaluate mutual funds and find the right one for you.
  3. Mutual Funds & ETFs

    Understanding The Mutual Fund Style Box

    Evaluate your investments with this simple tool.
  4. Professionals

    Advisors: Start Coaching Clients from the Start

    Behavioral coaching is vital to help investors stick to plan during market turbulence. Start coaching early and maintain it through the relationship.
  5. Mutual Funds & ETFs

    5 Disadvantages of Mutual Funds Compared to ETFs

    In the mutual funds vs. exchange-traded funds debate, ETFs have some clear advantages.
  6. Professionals

    Active or Passive ETFs: Which is Better?

    What will be more popular in the near future: active or passive ETFs?
  7. Chart Advisor

    Looking To The Mega Caps For Strength

    Increased volatility is making it difficult to find areas of strength in the market. Even utilities are breaking below key support levels. The mega caps could be the answer.
  8. Mutual Funds & ETFs

    Why Mutual Funds are Still Better than ETFs

    Mutual funds might not be as sexy as they used to be, but they offer some advantages over ETFs – especially for certain types of investors.
  9. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Germany

    Learn about iShares MSCI Germany, which is a nondiversified exchange traded fund that invests principally in large-cap German companies.
  10. Mutual Funds & ETFs

    Top 3 ETFs For Investing in China

    Discover the top three China ETFs. Chinese stocks tend to be quite volatile, presenting opportunities for savvy investors, given the country's high growth rate.

You May Also Like

Hot Definitions
  1. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  2. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  3. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  4. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  5. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
  6. Sin Tax

    A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!