| A mutual fund is simply a financial | | | | income as the first goal. Because bonds are a |
| intermediary that allows a group of investors | | | | loan to the issuer the value of the bond |
| to pool their money together with a | | | | price varies with changing interest rates. |
| predetermined investment objective. The | | | | Bond funds can be bought and sold quickly and |
| mutual fund will have a fund manager who is | | | | are considered more liquid than a direct bond |
| responsible for investing the pooled money | | | | investment. |
| into specific securities usually stocks or | | | | |
| bonds. When you invest in a mutual fund, you | | | | Here are some Bond Fund variations to |
| are buying shares or portions of the mutual | | | | consider. Municipal bond funds which use tax |
| fund and become a shareholder of the fund. | | | | exempt bonds that are issued by government |
| | | | entities. Corporate bond funds which reflect |
| Mutual funds are considered by some to be one | | | | debt obligations of U. S. Corporations. |
| of the best investments ever created because | | | | Mortgage Backed Securities Funds which |
| they are very cost efficient and very easy to | | | | reflect residential mortgages. United States |
| invest in you do not have to figure out which | | | | Government Bond Funds which use treasury or |
| stocks or bonds to buy. | | | | other government securities. |
| | | | |
| There are many varieties of mutual funds, and | | | | The strategic goal of a balanced fund is to |
| each one will have different strategies and | | | | balance returns on current income and long |
| different goals. Before you begin searching | | | | term capital gains. Balanced funds tend to |
| for your particular mutual fund match, you | | | | encompass a quarter to a half of the |
| should know what your investment objectives | | | | portfolio in bond securities in order to keep |
| are. Mutual Funds are categorized by their | | | | a high level of current income, but the funds |
| stated policies and objectives. The following | | | | may shift the balance toward capital |
| is a list of and descriptions pertaining to, | | | | appreciation or back toward higher current |
| a few of the most basic types: | | | | income. The more fixed income securities |
| | | | bonds in the portfolio, the higher the income |
| An equity income fund is a mutual fund that | | | | will be. |
| invests in high yielding common stocks and is | | | | |
| intended to provide current income and | | | | Stock funds generally have a higher risk than |
| protect the invested capital. The funds | | | | most bond funds and do not offer current |
| invest mostly in high value common stocks, | | | | income. Stock funds are used to increase |
| some convertible securities and an assortment | | | | value; sometimes referred to as growing your |
| of preferred stock, junk bonds and high grade | | | | money. Stock funds may also be called Equity |
| foreign bonds. | | | | Funds, Growth Funds, Value Funds, or Blend |
| | | | Funds. |
| When your risk tolerance is high aggressive | | | | |
| growth funds may be suited to your style. | | | | Index Funds are hold a group of stocks that |
| These are what investors call speculative | | | | focuses on a segment of the market. The |
| investment vehicles, because they buy stocks | | | | strategy is to match an index such as the |
| from small, untested companies whose stocks | | | | Standard and Poor 500 or the NASDAQ. These |
| tend to be more volatile. | | | | funds tend to have low operating costs |
| | | | because the point is simply to match an |
| Aggressive growth funds are popular when the | | | | index. Index Funds may be international such |
| market is doing well but when the market is | | | | as Global funds, Foreign Funds, Country |
| performing poorly, they can take substantial | | | | Specific Funds, or Emerging Market Funds, or |
| losses. The objective is to get big profits | | | | Sector Funds which concentrate on a segment |
| from capital gains. To achieve this goal, | | | | of the market. |
| aggressive growth funds may use turnaround | | | | |
| situations, buy on margin, use hedging | | | | Growth and Income Funds are related to the |
| techniques or sell short. | | | | Balanced Fund because the goal is to achieve |
| | | | both long term growth and current income. The |
| The goal of a growth fund is to increase the | | | | difference is the primary strategic goal of |
| value of the investment. This is called | | | | big capital gains. These funds can generate a |
| capital appreciation. The objective is long | | | | big return but increased risk is associated |
| term growth with the end result of achieving | | | | with the potential for good returns. Consider |
| hefty capital gains when the securities are | | | | this type of fund if you can tolerate price |
| sold. Growth funds generally put most of | | | | volatility and tend to be a risk taker. |
| their investments into stable, established | | | | |
| large or mid-cap firms that have better than | | | | As with all investment decisions, you should |
| average growth outlooks. These are seen as | | | | consult your certified financial planner to |
| long term investment vehicles for young | | | | learn more about the investment options best |
| aggressive investors who want to increase | | | | suited to your financial needs. This article |
| capital. | | | | is not intended to be a substitute for expert |
| | | | advice from a financial professional. |
| A bond mutual fund is one that invests with | | | | |