Types of Mutual Funds

Most funds have a particular strategy they focus on when investing. For instance, some invest only in Blue Chip companies that are more established and are relatively low risk. On the other hand, some focus on high-risk start up companies that have the potential for double and triple digit growth.Finding a mutual fund that fits your investment criteria and style is important.

Types of mutual funds are:
Value stocks
Stocks from firms with relative low Price to Earning (P/E) Ratio, usually pay good dividends. The investor is looking for income rather than capital gains.

Growth stock
Stocks from firms with higher low Price to Earning (P/E) Ratio, usually pay small dividends. The investor is looking for capital gains rather than income.

Based on company size, large, mid, and small cap
Stocks from firms with various asset levels such as over $2 Billion for large; in between $2 and $1 Billion for mid and below $1 Billion for small.

Income stock
The investor is looking for income which usually come from dividends or interest. These stocks are from firms which pay relative high dividends. This fund may include bonds which pay high dividends. This fund is much like the value stock fund, but accepts a little more risk and is not
limited to stocks.

Index funds
The securities in this fund are the same as in an Index fund such as the Dow Jones Average or Standard and Poor's. The number and ratios or securities are maintained by the fund manager to mimic the Index fund it is following.

Enhanced index
This is an index fund which has been modified by either adding value or reducing volatility through selective stock-picking.

Stock market sector
The securities in this fund are chosen from a particular marked sector such as Aerospace, retail, utilities, etc.

Defensive stock
The securities in this fund are chosen from a stock which usually is not impacted by economic down turns.

International
Stocks from international firms.