Types of mutual funds Flashcards
growth funds
capital appreciation is the primary objective, portfolio of common stock
conservative growth funds
capital appreciation is the primary objective, common stock in large- cap companies for lower risk.
aggressive growth funds
capital appreciation with rapid growth, common stock in small-cap emerging growth companies. Ex. technology, younger investors with risk tolerance, high risk
value funds
capital appreciation, common stock in established large-cap companies with undervalued stock due to market inefficiency and long-increasing dividend payment history.
blended funds
capital appreciation is primary with a mix of value and growth stocks
equity income funds
dividend income primary, typically preferred stock, dividend paying large-cap companies, energy and utilities
growth and income
hybrid fund that has two objectives capital appreciation and current income. invests in a mix of growth stock and income bearing securities such as bonds and/or preferred stock.
corporate bond funds
higher risk than U.S. government and municipal bond funds, invests in corporate debt instruments
high-grade bond fund
investment grade, lower risk, lower yield
high- yield bond fund
speculative (junk bonds) higher risk
U.S. treasury funds
Safety and preservation of capital: invests in T-bills, T-notes, T-bonds, virtually default free (the mutual fund shares are not guaranteed by government), interest rate risk
GNMA bond fund
safety and income are key, invests in mortgage-backed securities backed by the federal government.
Risks of a GNMA bond fund
interest rate, extension and prepayment risk
municipal bond fund
tax-free income at a federal level (and possible state and local) invests in portfolio of municipal bonds, recommended for investors in higher tax bracket.
balanced funds
provides moderate growth and income through a portfolio of stocks and bonds, moderate risk
