THE SHOPPING MALL OF INVESTMENTS
mutual fund companies have come up with precious metals funds. Theses funds can be viewed as alternates to holding gold or other precious metals directly. The prices of the underlying stocks tend to move with the market prices of the precious metals the firms pro- duce, instead of the stock market itself. These funds may be consid- ered sector funds.
Sector funds invest in the companies that make
up different market segments and industries, such as health care, util- ities, natural resources, etc. By investing in these funds, investors can direct a portion of their investments in fields they wish to invest in. For example, if you wanted to concentrate some of your investment dollars in the financial services area, rather than researching and picking a fund that has a high percentage of stock in that area, you
could purchase a sector fund.
Hybrid Funds When comparing a hybrid fund’s portfolio with an equity fund’s port- folio, hybrid funds are far more diverse.
ASSET ALLOCATION FUNDS.
These funds are required to keep a
certain percentage spread across stocks, bonds, and money market instruments. By investing in an asset allocation fund, you would be taking advantage of the different types of investment vehicles with the convenience of one mutual fund. Different types of asset alloca- tion funds exist. Some may be more heavily weighted in income-pro- ducing investments, while others may be more geared toward growth investments. It’s also important to make sure that if you do invest in one of these types of funds, that you don’t wind up duplicating your overall allocation through some of the other investment choices you make. For example, let’s say your overall asset allocation mix calls for a small percentage to be in growth stocks. Be careful that if you invest in a largely growth-oriented asset allocation fund, you temper that with other, more income-producing mutual funds, rather than an aggressive growth fund. That way, you won’t wind up with too many
of your investment dollars in one side of the investment spectrum.
BALANCED FUNDS. funds since they hold
Balanced funds are similar to asset allocation a substantially equal weighting of common