Complete Guide To Investment Companies, Funds And REITs


Mutual Funds - Popular Fund Types

There are a wide variety of mutual funds, including those that specialize in specific type of investments. Some of the more popular fund types include:

Money Market Funds
A money market fund seeks to earn interest for shareholders while maintaining a net asset value of $1 per share. Mutual funds, brokerage firms and banks offer these funds. Portfolios are comprised of short-term (less than one year) securities representing high-quality, liquid debt and monetary instruments. A money market fund's purpose is to provide investors with a safe place to invest easily accessible cash-equivalent assets characterized as a low-risk, low-return investment.

SEE: Why Money Market Funds Break The Buck and The Pros And Cons Of Money Market Funds

Bond Funds
Bond funds invest primarily in bonds and other debt instruments. The exact type of debt the fund invests in will depend on its focus, but investments may include government, corporate, municipal and convertible bonds, along with other debt securities like mortgage-backed securities. A bond fund's purpose is to provide investors with a source of income that is generally less volatile than income derived from investments in the stock market.

SEE: Evaluating Bond Funds: Keeping It Simple and Bond Funds Boost Income, Reduce Risk

Balanced Funds
Balanced funds combine a stock component, a bond component and, sometimes, a money market component in a single portfolio. These funds generally stick to a relatively fixed mix of stocks and bonds that reflects either a moderate (higher equity component) or conservative (higher fixed-income component) orientation. A balanced fund's purpose is to provide a mixture of safety, income and modest capital appreciation.

SEE: In Praise Of Portfolio Simplicity

Equity Funds
Equity funds invest primarily in stocks. They are principally categorized according to the size of the companies in which they invest (large cap, small cap, mid cap), the investment style of the holdings in the portfolio (growth, value, core) and geography (domestic, international).

Global/International Funds
International funds come in two varieties. The first is global funds, which invest in both foreign and domestic markets. The second is international funds, which invest only in foreign markets. These can be broad market, regional or single-country funds. For investors who live in developed nations, global and international funds generally offer both the opportunity for higher returns and the possibility of greater volatility.

Specialty Funds
Specialty stock funds invest in target business sectors such as healthcare, commodities and real estate. Because their focus is more concentrated than other equity funds, they tend to offer both the opportunity for higher returns and the possibility of greater volatility.

Sales Charges
Related Articles
  1. Mutual Funds & ETFs

    How Mutual Fund Companies Make Money

    Read about the many different kinds of fees and sales charges mutual fund companies can use to generate revenue from those who invest in their shares.
  2. Investing Basics

    The Lipper Rating System Explained

    Take a closer look at how Lipper Inc., a subsidiary of Thomson Reuters, determines the ratings for mutual funds in its Lipper Rating System.
  3. Mutual Funds & ETFs

    The Democratization of the Hedge Fund Industry

    The coveted compensations of hedge fund managers are protected by barriers of entry to the industry, but one recent startup is working to break those barriers.
  4. Retirement

    Two Heads Are Better Than One With Your Finances

    We discuss the advantages of seeking professional help when it comes to managing our retirement account.
  5. Investing

    Where the Price is Right for Dividends

    There are two broad schools of thought for equity income investing: The first pays the highest dividend yields and the second focuses on healthy yields.
  6. Retirement

    Using Your IRA to Invest in Property

    Explain how to use an IRA account to buy investment property.
  7. Chart Advisor

    Now Could Be The Time To Buy IPOs

    There has been lots of hype around the IPO market lately. We'll take a look at whether now is the time to buy.
  8. Professionals

    A Day in the Life of a Hedge Fund Manager

    Learn what a typical early morning to late evening workday for a hedge fund manager consists of and looks like from beginning to end.
  9. Investing

    The Pros and Cons of High-Yield Bonds

    Junk bonds are more volatile than investment-grade bonds but may provide significant advantages when analyzed in-depth.
  10. Stock Analysis

    Why did Wal-Mart's Stock Take a Fall in 2015?

    Wal-Mart is the largest company in the world, with a sterling track-record of profits and dividends. So why has its stock fallen sharply in 2015?
  1. Hedge

    Making an investment to reduce the risk of adverse price movements ...
  2. Benchmark

    A standard against which the performance of a security, mutual ...
  3. Private Equity Real Estate

    A Definition of "Private Equity Real Estate" and how it applies ...
  4. Alpha

    Alpha is used in finance to represent two things: 1. a measure ...
  5. Capitalization Rate

    The rate of return on a real estate investment property based ...
  6. Equity

    Equity is the value of an asset less the value of all liabilities ...
  1. Can hedge funds trade penny stocks?

    Hedge funds can trade penny stocks. In fact, hedge funds can trade in just about any type of security, including medium- ... Read Full Answer >>
  2. How liquid are Vanguard mutual funds?

    The Vanguard mutual fund family is one of the largest and most well-recognized fund family in the financial industry. Its ... Read Full Answer >>
  3. Are hedge funds regulated by FINRA?

    Alternative investment vehicles such as hedge funds offer investors a wider range of possibilities due to certain exceptions ... Read Full Answer >>
  4. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  5. Does OptionsHouse have mutual funds?

    OptionsHouse has access to some mutual funds, but it depends on the fund in which the investor is looking to buy shares. ... Read Full Answer >>
  6. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  2. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  3. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  4. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  5. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  6. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
Trading Center