5 List of Mutual Fund Descriptions (Incomplete)

This is an INCOMPLETE LIST, but it should give you a basic idea of many of the types of Mutual Funds by name, what they invest in, and the risk tolerance; Conservative, Moderately Conservative, Moderate, Moderately Aggressive, Aggressive. Remember, in many of these cases the fund’s aren’t one or the other, but being pulled in one direction or the other; one investment “is more conservative than another”.

Bond Fund

A Bond Fund is a mutual fund that invests in bonds. Maybe different types, maybe only corporate or municipal, but the primary goal is current income, generally pretty stable income. More conservative investors.

Corporate Bond Fund

Just like a regular bond fund, but these funds invest in Corporate Bonds. Corporate bonds are some of the more aggressive bonds, though they are still bonds which are generally less aggressive than equity. It can be hard to state a specific risk tolerance, but in the middle, moderate conservative to moderate aggressive depending on credit ratings, and investors seeking current income.

Government Bond Fund

Just like a regular bond fund, but these funds invest in US Government Treasury debt (including potentially Bills, Notes, and Bonds). Very conservative investors still seeking current income.

Municipal Bond Fund

Just like a regular bond fund, but these funds invest in Municipal Bonds. Generally, very conservative investors still seeking current income and with stated concerns about current taxes, or marginal tax rates.

High Yield Bond Fund

Just like a regular bond fund, but these funds invest in higher risk bonds, so for lower initial investment may be able to get more income, but there is a risk to principal and income that a regular bond fund doesn’t necessarily have to as great a degree. More aggressive investors still seeking current income.

“Capped” Funds

These are pretty much pure equity portfolios. There could be very limited non-equity, but it will be very limited. These are designed for growth. The difference between the names is the market capitalization of the investments. To find market capitalization you take the total number of outstanding shares and multiply it by the market price of the shares.

Small Cap Fund

A mutual fund that invests in Small Cap companies. This is an aggressive equity mutual fund. Small caps are generally considered companies with market caps under $2B.

Mid Cap Fund

A mutual fund that invests in Mid-Cap companies. This is generally considered to be a more moderately conservative thru moderately aggressive equity mutual fund. Mid Cap companies generally aren’t under much risk of going bankrupt, and they can also be doing massive growth, but they are more at risk of going bankrupt than Large Cap, and less large percentage value shifts of Small and Micro Cap. Mid caps are generally considered companies with market caps between $2B and $10B.

Large Cap Fund

A mutual fund that invests in Large Cap companies. This is generally considered a more conservative equity mutual fund, as Large Cap generally maintain their value, but don’t increase or decrease much. It is not “a conservative investment”, but it is the more conservative equity. It also could be generating dividend income from the Large Cap company dividends. Large caps are generally considered companies with market caps greater than $10B.

Balanced Fund

A mutual fund that is a balance of stocks and bonds. It is generally a moderate mixed mutual fund but could be moderately aggressive to moderately conservative.

Asset Allocation Fund

A mutual fund that chooses an asset allocation strategy. That is a strategy that will invest in many different types of asset classes (common stock, preferred stock, short-term bonds, long-term bonds, money markets, etc.) in an attempt to minimize risk and maximize returns. It will be rebalanced; if Stocks outperform bonds, stocks will be sold, bonds will be bought to return the percentage to the normal levels. Many types; target retirement or college date funds that get more conservative automatically as the dates get closer.

Equity and Income Fund

As the name implies, this is a fund that specializes in Equity and Income. This means that it invests mostly in common stock that pays dividends, or preferred stock with a good history of dividends as well. This is generally going to be a moderate maybe moderately conservative approach, as it is equity, but it is a more conservative equity.

This is basically a type of balanced fund. It is a mix of equity and income generating securities.

Growth and Income Fund

This type of fund will invest in companies that are 1 of 3 options; Really good at growth, Really good at income, or Good at both. This is an equity portfolio, though could contain some debt (mostly convertible bonds). It is going to be better at Income than a Growth Fund, and it will be better at Growth than an Income Fund, but it will not be better at either than a fund that specializes in that. This is a more moderate type of choice.

Sector Fund

A mutual fund that invests in certain types of companies, like Healthcare companies, or Energy companies. Generally considered aggressive, they can make huge gains if the entire industry benefits, or losses while others gain if only one sector of the economy takes a hit. There are lots of different types of Sector Funds.

Value Fund

A mutual fund that generally chooses stock that the manager believes are currently undervalued, and usually, pay dividends. Can be combined with any other type. Many have dividends. Makes the investment more conservative.

Growth Fund

A mutual fund that generally chooses stocks that the manager believes are likely to increase in value and don’t generally pay dividends. Can be combined with any other type. Generally, need longer time horizon. Makes the investment more aggressive.

Blend Fund

A mutual fund that chooses equity that are a mix of Growth and Value stocks. Can be combined with other types.

Index Fund

This is a mutual fund that wants to emulate a market. If the DOW goes up 3% the fund goes up 3%, if the S&P500 goes down 2%, the fund goes down 2%, those illustrate a DOW index, the other an S&P500 index. These are generally going to be inactively managed, maybe occasional trades, but only when the index changes, which depending on the index can be very rarely. These thus have lower costs than most mutual funds, and many times are the No Load Funds we have discussed.

International

This is attachable to other types and is different from global. International focuses on Non-US companies. Generally more aggressive.

Global

This is attachable to other types and is different from international. Global focuses on all investment opportunities, US and Non-US. Generally more aggressive.

Hedge Fund

Not a true mutual fund, but still a collection of securities. In this case generally options, derivatives, and other very complicated instruments. These have all different risk tolerances possible, but generally, would be considered very aggressive. They try to make a profit using complicated investments in all market conditions. You will not be able to sell these.

Fund of Funds

A mutual fund that invests in other mutual funds. Not particularly tested.

Fund of Hedge Funds

A mutual fund that invests in Hedge Funds. A Series 6 representative can sell these. They have the fees and liquidity risks inherent in Hedge Funds.

 

Updated: 5/27/2018

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