Written by Sean Pollock

Monday, 12 April 2004 11:54

Mutual funds are professionally managed investments pooled from many investors. The investors' money is being invested into stocks, bonds, money markets, and other similar securities to achieve the fund's stated goals. Depending on their objective and management style, mutual funds can be of different types, which is reflected in their name.

Stock funds invest in stocks pursuing higher growth. Stock funds are volatile compared to other investments and should be used only if you are willing to tolerate that level of risk.

Bond funds are invested in bonds and are more stable. However, that stability comes at cost of possible gains, which you could get in stock funds.

Blend funds are the mutual funds with different proportions of stocks and bonds in them. By combining different volumes of stocks and bonds, these funds tailor their risk-to-return tradeoff to any desired level.