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Types of
Mutual Funds
All mutual funds must have a stated
objective, defined in their prospectus, which give an investor an idea of the types
of securities into which the mutual fund will be investing. Fund objectives can vary
widely, but primarily fall into the following categories.
GROWTH-
invested primarily in equity securities
Value- invested in established
companies that pay dividends or perhaps have low PE ratios
Industry Specific- invested in a
certain sector or industry group (e.g. Technology, Telecommunications, Automotive, etc.),
often referred to as Sector Funds
Capitalization Based- invested
only in companies with a certain level of capitalization (e.g. Small-Cap, Mid-Cap,
Large-Cap)
Precious Metals- invested in precious
metals (gold, silver, titanium, etc.), used to somewhat hedge against inflation
Social Conscience- invested in
companies that do not violate certain moral or ethical standards (e.g. do not invest in
alcohol or tobacco companies)
INCOME- invested largely in
fixed-income securities
Tax Free- invested in municipal bond
securities with favorable tax treatment
High-Yield- invested in bonds with
higher coupon rates that are usually below investment grade
Money Market- invested in short-term
income securities and considered to have low risk
BALANCED- invested in a mixture
of growth and income oriented securities
INTERNATIONAL- invested largely
in international companies, can be either growth, income, or balanced.
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