Kinds of Mutual funds

There are mutual funds to suit every investor’s needs, each with a predetermined investment objective that specifies what types of investments are made and what investment strategies are pursued. Funds vary widely in the risk to return ratio, and it is important to understand that risk and reward are directly related – the higher the potential return, the higher level of risk that is assumed.
Funds typically invest in stocks, bonds and short-term money market instruments, and may target certain geographic regions, company types (small cap or large cap, for example), industries or sectors of the economy. Funds may invest according to particular investments strategies, for example value or growth. They may be actively managed, meaning that the managers select securities on the basis of the value they are believed to add to the portfolio, or passively managed, meaning that the fund is created to replicate the performance of an index, for example, the S&P 500.