Mutual Funds
value fund.
A fund that invests in stocks that tend to be undervalued or overlooked is called a
Mutual fund
A pool of shareholders' money invested by professional managers in an assortment of different securities
Bond fund
A pool of shareholders' money invested in bonds
Balanced fund
A pool of shareholders' money invested in both stocks and bonds; also called a hybrid fund
Money market fund
A pool of shareholders' money invested in securities that earn relatively higher rates of return over the short-term; also called a money fund
Exchange-traded fund
A security that represents a "basket" of stocks like a mutual fund, but trades like an individual stock (Spiders and Cubes)
Index fund
A stock portfolio that copies the performance of a particular stock market index, such as the S&P 500 or the Nasdaq 100
Passive management
A style of mutual fund management that does not attempt to "beat the market"; the buy-and-hold approach
Active management
A style of mutual fund management that involves hands-on research and high volumes of trading
Prospectus
Document containing all vital information about a mutual fund
Closed-end mutual fund
Fund with a set number of shares to be issued, determined before the fund is ever established
Open-end mutual fund
Fund with no limit on the number of shares it can issue or the amount of money it can hold
Fund manager
Professional who makes investment decisions for a mutual fund
Diversification
Spreading out your investment dollars among a number of different securities
Liquidity
The ability to easily convert your investment back into cash
Net asset value
The total value of a fund's investment portfolio, minus its liabilities, divided by the number of its outstanding shares