Mutual Funds
What is Mutual Fund?
Mutual funds offered investors the opportunity to group their money together and buy stocks, bonds and other investments “mutually.” 8,000 mutual funds on the market today.
Because there are funds based on specific trading strategies, investment types, and investing goals. Choosing your own mix of funds is an easy way to build a diversified portfolio.
Baskets of investments chosen and managed by professionals. A simple way to diversify your portfolio. Many offered with no loads and no transaction fees (NTF).Created around specific market strategies
Diversification
Diversification means not having too many eggs in one basket. Because mutual funds hold many investments, they can be diversified by: Type of investment (i.e., stocks or bonds), Size of the companies, Industry,Country or countries
Convenience
In addition to diversification and full‐time professional management, mutual funds offer convenience in several other ways, such as:A low minimum investment amount. The ability to buy or sell on any business day. Free exchanges of funds within the fund family. Various funds with objectives for almost any investment need. Free automatic reinvestment of dividends and capital gains.
Take a look at the following basic types of funds.
Balanced funds
A fund that combines stocks and bonds is called a “balanced fund.” These funds have a predetermined mix of stocks and bonds that are either moderate with more stocks or conservative with more fixed-income investments.
Equity funds or “stock funds”
An equity fund (also known as a “stock fund”) is a type of mutual fund that invests primarily in stocks. Typically, equity funds are defined by the types of stocks they hold.
Growth and income funds
Typically pay a dividend, so investors can make money from taking or reinvesting the dividend income and from the growth of the fund itself.
Growth funds — usually pay no dividend or a small dividend and instead focus on choosing stocks with growth potential.
Aggressive funds
Hold more aggressive stocks, like those of smaller or younger companies. Some aggressive funds are considered “specialty funds” because they focus on only one sector such as healthcare, commodities or real estate.
Stock funds can also be categorized by whether most of the holdings are domestic, international or both.
Bond funds
Bond funds invest in bonds (municipal, corporate and government) and other fixed-income type investments, like money market funds or even cash. The exact type of underlying investments in the fund will depend on its focus.