Think Through Mutual Fund Investment Objectives And Styles.

985 WordsMar 15, 20174 Pages
Think Through Mutual Fund Investment Objectives and Styles By Amy E. Buttell | Submitted On February 12, 2013 Recommend Article Article Comments Print Article Share this article on Facebook Share this article on Twitter Share this article on Google+ Share this article on Linkedin Share this article on StumbleUpon Share this article on Delicious Share this article on Digg Share this article on Reddit Share this article on Pinterest Every mutual fund has an investment objective that spells out its goals. The objective states what investing style fund managers pursue and how they intend to carry out that objective. For example, a typical growth and income fund 's objective could read like this: "Growth and Income Fund X seeks growth…show more content…
Index funds attempt to replicate the performance of a portion of the market or even of the entire market. The most widely followed index is the Standard and Poor 's 500 index, which consists of the 500 largest publicly traded U.S. companies on domestic stock exchanges. Index funds are based on a variety of domestic and foreign indexes. Before you invest in an index, be sure you know exactly what types of companies your chosen index invests in. Balanced funds hold stocks and bonds. Traditionally, the proportion allocated to stocks and bonds has been close: 60/40 or 65/35 one way or the other. Make sure that whatever balanced fund you choose does divide its assets between stocks and bonds using a stated formula; otherwise, you may be purchasing a stock fund or bond fund in disguise. Stock income funds focus their investment on high-dividend-yielding companies and pay out more dividends and distributions to shareholders than other types of funds. Stocks held by a stock income fund typically account for 60% to 75% of such a fund 's portfolio. The trade-off here is that the dividend income gained by fund shareholders is often at the expense of slower growth and lower price appreciation for fund holdings. Growth and income funds hold growth and income stocks. They can also hold more bonds to generate income. These funds are designed to be less volatile than typical

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