Types of Mutual Funds

asset allocation funds

A fund that switches among stocks,bonds,and money-market instruments in an attempt to reduce risk while increasing return. The fund often uses computer models to determine the proper allocation of each asset.

growth and income funds

Large cap fund A mutual fund whose investment goal is to earn returns from both dividends and capital gains

balanced funds

Mutual Funds that invest in BOTH stock and bonds. 60% stocks and 40% bonds

money market funds

Mutual funds that invest in short-term, low-risk securities and allow investors to write checks against their accounts. investments include T-bills , commercial paper repurchase agreements and banker's acceptances.

index funds

Mutual funds that select stock or bond portfolios to exactly match a stock or bond index (a collection of stocks or bonds meant to capture the overall behavior of a particular category of investments) such as the Standard & Poor's 500 Index or the Russell 3000 Index

life cycle funds

Mutual funds that try to tailor their holdings to the investor's individual characteristics, such as age and risk tolerance.

dual purpose funds

a close-end fund with two sets of shareholders. investors seeking income purchase income shares and receive all the interest and dividends that the fund's portfolio earns and investors interested in capital gains purchase the gains shares and receive those gains.

Bond funds

focus on earning current income while preserving the invested capital. the biggest risk faced by bonds and bond funds is that their values can fall as interest rates rise

Tax free bond funds

invest in primarily municipal bonds

growth funds

invest in stocks of companies whose businesses are growing rapidly. generate capital gains rather than income

us government and agency security funds

investment objective is to provide current income while preserving safety of capital through investing in securities backed by the US Treasury or issued by a government agency.

income funds

stresses current income over growth; the funds objective may be accomplished by investing in the stocks of companies with long histories of dividend payments, such as utility companies, blue-chips and preferred stocks.