Which Mutual Fund Investing Style Matches Your Needs?

As an investor, it is important to choose a mutual fund that matches your investing style. There are many different types of mutual funds on the market and each of them employs a different investment strategy. Here are a few of the different types of mutual fund strategies that are available so that you can choose one that meets your individual needs.

Balanced Fund

One of the most popular forms of mutual fund is the balanced fund. This provides you a very diversified portfolio to work with. This type of fund will invest in stocks, bonds, and the money market in order to provide you with the lowest risk possible. With this type of fund, if the stock market goes through down period, the other holdings in the fund can often make up the difference. This type of fund tries to provide some capital appreciation as well as a source of income for the investors. This makes it an attractive investment for those that wish to slowly grow their capital over time.

Growth Fund

The growth fund is another popular mutual fund option that is available. With this type of fund, the growth of the portfolio is valued above everything else. There will be no emphasis on creating regular income for the investors. These funds are focused on finding stocks that have a high growth potential for the future. Fund managers for this type of fund will analyze financial reports in an attempt to uncover trends. For example, if a company exceeds profit forecasts for several quarters in a row, this can signal that more growth is on the way. This type of fund is good for those that have a high risk tolerance and have plenty of time to invest. These types of funds can grow significantly over the course of year and then lose significantly the next. Therefore, this is definitely a long-term form of investment.

Bond Fund

Another popular type of mutual fund is the bond fund. This type of fund invests solely in corporate or government bonds. When investing in bonds, the mutual fund is entitled to a regular interest payment from each bond that they buy. These interest payments are then accumulated and divided between all the shareholders of the mutual fund. This provides a nice regular income for all of the investors. This type of fund does not usually appreciate much in value, but it does provide a steady paycheck.

Value Fund

This type of fund looks to invest in value stocks as its primary investment method. A value stock is a stock that is determined to be selling at a price that is below what it should be selling at. Therefore, the fund managers hope to find value stocks and purchase them, then when the rest of the market catches on, the value of the stocks will increase. This type of strategy requires a great deal of financial research on the part of the fund managers.

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