Types of Mutual Funds

There are many types of mutual funds with differing objectives to meet investor’s needs. In general there are four basic types: equity funds, fixed income funds, balanced funds and money market funds.

Expand All | Collapse All

  • Equity mutual funds invest primarily in common stocks and represent the largest category of mutual funds. Some equity funds only invest in companies from a specific country or industry while others can invest broadly in any country or industry.

    General Characteristics

    Equity funds are usually more volatile than money market or fixed income funds, however, they also offer the highest potential returns. While a stock's value may rise and fall quickly over a short period of time, history has shown stocks to perform better over the long term than other types of investments, such as bonds and money market instruments.

    Investor Profile

    Equity funds are often appropriate for investors with a longer-term investment horizon.

    View details on Franklin Templeton Funds.

    Equity Funds

  • Fixed income funds invest primarily in long-term debt instruments, such as corporate, government and municipal bonds, debentures and mortgages, with a specified interest rate.

    General Characteristics

    Fixed income funds are intended to provide investors with income on a steady basis, while offering the possibility of capital growth with capital protection. Fixed income funds can be affected by interest rate changes, currency changes and the economic outlook.

    Investor Profile

    Income funds may be appropriate for conservative investors seeking regular cash flow. This type of fund is also a good choice for adding diversification to any investment portfolio.

    View details on Franklin Templeton Fixed Income Funds.

    Fixed Income Funds

  • Balanced funds invest primarily in equities and fixed income securities, shifting assets among stocks, bonds and money market instruments depending on current market conditions.

    General Characteristics

    Balanced funds are intended to provide a balanced mixture of safety, income and capital appreciation. Balanced mutual funds are affected by interest rate changes, stock market performance, and economic outlook. Another similar fund is an asset allocation fund, which maintains comparable objectives to balanced funds, but which typically do not hold a specified percentage of any asset class. In asset allocation funds, the portfolio manager is usually free to hold whichever assets, in whatever amounts, he or she determines may best benefit from current and future market trends.

    Investor Profile

    Balanced funds may be appropriate for investors seeking a more diversified portfolio in one fund. If you are new to mutual fund investing or have only a small amount to invest, a balanced fund may be a good starting place. It can give you the benefits of diversification in a single fund.

    View details on Franklin Templeton Balanced Funds.

    Balanced Funds

  • Money market funds are conservative investments that offer minimal returns, but are liquid and provide safety of capital.

    General Characteristics

    Money funds provide investors with current income and are managed to maintain a stable share price. Because of their stability, money funds are often used for cash reserves or money that might be needed right away. Money funds typically invest in short-term, high-quality fixed income securities, such as Treasury bills, short-term bank certificates of deposit (CDs), banker's acceptances and commercial paper issued by corporations. The average maturity of a money fund's portfolio must be 90 days or less to help protect against interest rate risk. The income money funds provide is generally determined by short-term interest rates.

    Investor Profile

    This type of fund may be appropriate for investors looking for safety of principle and a slightly better return than they would earn in a regular savings or debit account. A money market fund may be the ideal place to keep money that you need in the near future, or are holding while seeking more attractive investment opportunities.

    View details on Franklin Templeton Money Market Funds.

    Money Market Funds

Investor Education