There are dozens of different types of funds. Learn more about the various types of funds.
There are many types and styles of mutual funds. There are stock funds, bond funds, money market funds and balanced funds. Mutual funds allow you to invest in the market whether you believe in active portfolio management (actively managed funds) or you prefer to buy a segment of the market with no interference from a manager (passive funds and index funds).
Bond mutual funds are an excellent diversification tool for investors’ portfolios. Bond mutual funds come in many shapes and styles. Let’s start with five basic types of bond mutual funds.
What is an absolute return mutual fund? As it turns out, the answer to that question isn’t crystal clear. Each company that manages an absolute return mutual fund has a different definition based on the make-up of their fund. But the goal of every absolute return mutual fund is the same -- make money regardless of market conditions with lower volatility than traditional mutual funds.
130/30 funds are revolutionary -- or so say the marketers who explain the funds as a way to take advantage of the fund managers stock picking expertise. What are these 130/30 funds and should you buy one?
TIPS mutual funds offer many advantages to investors. TIPS are bonds issued by the US Treasury that pay a coupon on the adjusted principal of the bond. The bond is adjusted on a semi-annual basis with the rate of the Consumer Price Index (a measure of inflation).
So you have heard a lot of talk about municipal bond funds and do the research to find a fund for you. But your research suggests that the yields of these municipal bond funds are less than many of their bond fund counterparts. So, why would you want to buy a municipal bond fund if you can buy another bond fund that has a higher yield?
Target-date funds are often thought of as “set it and forget it” funds. For example if you plan to retire in 20 years, you might buy a target-date fund that matches your time-frame -– a target of 20 years. As you approach your retirement date, the fund moves its allocation to more conservative mutual fund investments and away from riskier mutual funds investments.
Closed-end funds are often confused with, and mistakenly called, mutual funds. A major difference is that closed-end funds behave more like a stock -- the market value is driven by supply and demand for the shares. On the other hand, an open-end mutual fund continually issues new shares to investors and does not trade on an exchange.
A sector fund is a mutual fund or exchange-traded fund that concentrates its investments in a single sector of the market. If you invest in individual stocks and you’re uncomfortable investing in stocks within a particular sector, then you may benefit from sector funds. You can diversify your portfolio by adding the neglected sector via a sector fund.
Unit investment trusts (UITs) may be the least understood, and certainly least utilized, of all of the US registered investment companies. What's the problem with UITs? Before answering the question, we need to understand the structure of UITs.
Despite the similarities of closed-end funds (CEFs) and mutual funds, they are two distinct types of investment companies. If you have read “What Is a Closed-End Fund?” and learned about the basics of the fund structure, then take a closer look at CEFs below.
Treasury Inflation-Protected Securities are very different from conventional bonds. A conventional fixed rate coupon bond makes coupon payments on the par amount example: 5% annual interest payment on $1,000) and the par amount is returned at maturity of the bond. Not so with TIPS.
Target date or lifestyle funds can provide an easy way to diversify but can also create problems with your overall portfolio.
Mutual funds can generally be placed into one of three primary categories: stock, bond or money market. Many investors will diversify their portfolio by including a mix of the three.
Mutual funds are the simplest and most common way for investors to participate in socially responsible investing. Several mutual fund families focus exclusively on SRI. Here's a guide to get started.
