Types of Mutual Funds

Aggressive Growth Funds:

Aggressive growth funds aim to maximize capital gains (buy low and sell high). These funds may leverage their assets by borrowing funds, and may trade in stock options.

If the market is going up, these are the funds that will benefit the most. Conversely, aggressive growth funds are the ones hardest hit in bear markets.

Growth Funds:

Growth funds are similar to aggressive growth funds, but do not usually trade stock options or borrow money with which to trade.

Most growth funds do a little better during bull markets, but do a lot worse than average during bear markets. Just as in aggressive growth funds, growth funds are not aimed at the short-term market timer.

Growth-Income Funds:

Growth-income funds are specialists in blue chip stocks. These funds invest in utilities, industrials, and other seasoned stocks.

They work to maximize dividend income while also generating capital gains. These funds are suitable as a substitute for conservative investment in the stock market.

Income Funds:

Income funds focus on dividend income, while also enjoying the capital gains that usually accompany investment in common and preferred stocks. These funds are particularly favored by conservative investors.

International Funds:

International funds hold primarily foreign securities. There are two elements of risk in this investment:

The normal economic risk of holding stocks; as well as the currency risk associated with repatriating money after taking the investment profits.

These funds are an vital aspect of many portfolios, but any individual fund may prove too volatile for the average investor as their sole investment.

Global funds:

International funds invest exclusively abroad, while global funds combine domestic and foreign shares in the same portfolio.

Regional Funds:

These funds confine themselves to a single foreign region, like Latin America, U.S.A., Europe or Asia.

When you buy one of these funds, you are betting on a single part of the foreign markets. Do you really know enough to make that sort of bet?

Asset Allocation Funds:

Asset allocation funds don't invest in just stocks. Instead, they focus on stocks, bonds, gold, real estate, and money market funds. This portfolio approach decreases the reliance on any one segment of the marketplace.

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