The Most Common Types of Mutual Funds
Mutual funds can be broadly classified into three major categories: stock, bond or money market. Stock funds, also known as equity funds, are generally the most volatile since their values rise and fall over a short time period. Some of the most common stock funds include growth funds, income funds, index funds and sector funds. Bond funds or fixed income funds invest in corporate and government debt with the aim of providing income through dividend payments. Bond funds can range from low-risk such as a US-backed Treasury bond; or high-risk like junk bonds. Money market funds are relatively low-risk compared to other types of mutual funds and other investments. Such funds are limited to investing only in specific high-quality, short-term investments issued by the U.S. government, U.S. corporations, and state and local governments, by law.