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THE SHOPPING MALL OF INVESTMENTS

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VARIETIES OF MUTUAL FUNDS

Just as you can categorize common stocks, you can classify mutual funds. Each individual fund has a specific objective or specialty; however, many funds may all have some of the same underlying stocks as their investments. When choosing mutual funds in which to invest, it’s important to do some research so you don’t wind up buy- ing four different mutual funds that each have the same companies’ stock inside. That would defeat the purpose of diversifying your portfolio. Mutual funds don’t have to invest just in common stock from corporations; there are many funds that are bond funds, inter- national funds, and hybrid funds.

Equity Funds These are mutual funds that invest their assets in the common stock of corporations. There are different types of equity funds. Equity mutual funds are the most common type of fund traded and held.

GROWTH FUNDS. Primarily, growth funds hold the common stock of more proven, larger growth-oriented corporations. These funds are akin to growth stocks. The goal of growth funds is to pro- vide the investor with longer-term growth and appreciation, rather than give the investor a sizeable income from dividends and capital

gains distributions.

AGGRESSIVE GROWTH FUNDS.

Here, the purpose is capital appre-

ciation, rather than income. Aggressive growth funds represent sub- stantially more risk than regular growth funds because they are apt to invest in smaller companies, newer industries, start-up firms, etc. They may also make a practice of holding fewer companies in their portfolios than the average growth fund. Aggressive growth funds may also use different types of equity investments, such as option writing, in the portfolios . They are the more speculative funds when comparing regular growth funds to aggressive growth funds.

INCOME EQUITY FUNDS.

larger,

stable

corporations

These funds are driven

that

have

long

histories

of

to invest in sizable divi-

dends, thus providing the investor with the ability to derive income

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