What is a mutual fund?

Mutual funds combine investors' money to purchase investments. Mutual funds create a more diversified portfolio than most investors can on their own. "Mutual funds" as a category includes index funds, exchange-traded funds, bond funds and target-date funds.

Which stocks do mutual funds invest in?

This fund invests in the market’s largest stocks, such as those in the Russell 200 or S&P 100, and will own both growth and value stocks. This fund invests in U.S. large- and mid-cap companies with low relative valuations, strong balance sheets and high-quality management. What are the pros and cons of mutual funds?

What is a bond mutual fund?

Bond mutual funds. Also referred to as fixed-income funds, this kind of mutual fund owns Treasurys, municipal bonds or corporate bonds. Bond fund investors tend to want income preservation and yield. Balanced funds. Also called blended funds, these mutual funds invest in a portfolio of both stocks and bonds.