Types/Objectives

MUTUAL FUND TYPES & OBJECTIVES

Selecting the right fund type and objective is the first step in mutual fund investing. The Objective of the fund dictates its risk propensity as well as defines the investments that the fund manager MUST invest in.

An all-stock fund, for example, CANNOT purchase bonds even if the bond market is outperforming the stock market. The PROSPECTUS is the document that outlines the type of fund, the objective of the fund and the permissible investments of that fund.

We as investors must be mindful of the ever changing investment climate to SWITCH from one fund to another to enhance our return as industries or sectors fall in and out of favor.

FUND TYPE	OBJECTIVE
Aggressive Growth Fund	Seeks maximum capital gains, not current income. May invest in new companies, or troubled firms. Use derivative securities to boost returns.
Balanced	Aim to conserve principal, generate current income, and provide long-term growth. Have portfolio mix of bonds, preferred stocks, and common stocks.
Corporate Bond	Seek high level of income. Buy corporate bonds, some US Treasury bonds or bonds issued by federal agencies.
Flexible Portfolio	May be 100% invested in stocks, bonds or money market instruments. Have the greatest portfolio flexibility of all funds.
Ginnie Mae (GNMA)	Invest in mortgage backed securities. Must keep majority of portfolio in these securities.
Global Bond	Invest in debt of companies throughout the world.
Global Equity	Invest in stocks of companies throughout the world.
Growth	Invest in common stocks of well-established companies. Capital gains is primary objective.
Growth & Income	Invest in common stock of dividend-paying companies. Combine long-term capital gains and steady stream of income.
High-Yield Bond	Keep two-thirds of portfolio in lower-rated corporate bonds to achieve higher income.
Income Bond	Invest in corporate and government bonds for income.
Income Equity	Invest in companies with good dividend paying records.
Income Mixed	Seek high current income by investing in equities and debt instruments.
Index	Buy stock to match an index such as the S&P 500. (Click for the Average and Index page on this site)
International	Invests in equity (stock) securities located outside the US.
Long-Term Municipal Bonds	Invest in bonds issued by states and municipalities.
Money Market	Invest in short-term securities sold in the money market.
Option/Income	Seek high current return by investing in dividend-paying stocks on which call options are traded.
Precious Metals (Gold)	Keep two-thirds of portfolio in securities associated with gold, silver, platinum and other precious metals.
Sector	Concentrate holdings in a single industry or country.
Short-Term Municipal Bonds	Invest in municipals with short maturities.
Single-State Municipal Bonds	Portfolios contain issues of only one State for income tax reasons.
Socially Conscious	Avoid investments in corporations that are known to pollute, involved in tobacco, liquor, etc.
US Government Income	Invest in a variety of government securities, including US Treasury and agency issues.