Mutual Fund Category

There are various Mutual Fund Categories. They can be broadly classified into the following:

  1. Stock funds
  2. Money market funds
  3. Bond funds
  4. Balanced funds
  5. Asset allocation funds

Stock Funds

As the name implies, the fund is based on the stock market’s common stocks. The objective of a stock fund is long-term capital appreciation versus generating income (dividends) more common with bond funds. There are various types of Stock Funds, namely

  1. Large Cap Stock Funds
  2. Small Cap Stock Funds
  3. Mid Cap Stock Funds
  4. International Stock Funds
  5. Sector Stock Funds

Bond Funds

Bond funds invest in various types of bonds – issued by corporations, municipalities, and the government. Bond mutual funds are designed mostly to provide investors with a steady stream of income versus capital gains. The various types of Bond Funds are:

  1. Government Bond Fund
  2. Corporation Bond Fund
  3. Municipality Bond Fund

Money Market Funds

Money market funds invest in short-term securities such as Treasury bills. Most money market funds offer a higher rate of interest than bank savings accounts.

Balanced Funds

Invest in stocks, bonds, and cash investments, in varying proportions.

Asset Allocation Funds

In an asset allocation fund, the manager will diversify the assets among each category: cash, bonds, and stocks and weight them according to the portfolio strategy.

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