How do mutual funds differ?
Every mutual fund has what’s called an investment objective: a goal that the fund manager follows when deciding which stocks and bonds should be in the fund’s portfolio. There is no guarantee that a mutual fund will meet its stated objectives. These objectives are used to construct funds that fall into four basic categories: growth funds, growth and income funds, income funds, and money market funds. Growth funds invest mainly in stocks that have the potential for appreciation. These are generally among the riskiest stocks. Growth and income funds, as their name suggests, generally invest in a mix of securities – some with growth potential and some with a history of paying dividends. These funds are designed for investors who seek regular income and more stability than growth funds offer, but still want some potential for growth. Income funds are just that: funds that invest largely in bonds, with the goal of achieving regular income for the fund’s shareholders. Taxable bond funds usua
