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. Investment Fund

    A supply of capital belonging to numerous investors that is used ...
Related Articles
  1. Financial Advisor

    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.
  2. Investing

    Too Many Mutual Funds?

    Is there a magic number you should be aiming for? Find out here.
  3. Financial Advisor

    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.
  4. Financial Advisor

    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.
  5. Investing

    Mutual Funds: Does Size Really Matter?

    The growth of mutual funds isn't always cause for celebration. Read on to find out why.
  6. Investing

    Satisfy Your Investment Objectives With Income Funds

    Discover the various categories of income funds and the types of investors for whom they are appropriate.
  7. Managing Wealth

    Should Balanced Funds Be Part Of Your Portfolio?

    Find out why you should include balanced funds in your portfolio, including the importance of customizability, diversification and professional management.
  8. Investing

    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.
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. 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 >>
  5. 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 >>
  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. Federal Direct Loan Program

    A program that provides low-interest loans to postsecondary students and their parents. The William D. Ford Federal Direct ...
  2. Cash Flow

    The net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company's ...
  3. PLUS Loan

    A low-cost student loan offered to parents of students currently enrolled in post-secondary education. With a PLUS Loan, ...
  4. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  5. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  6. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
Trading Center