What are the different types of mutual funds?

There are four broad types of mutual funds: Equity (stocks), fixed-income (bonds), money market funds (short-term debt), or both stocks and bonds (balanced or hybrid funds).

What is an index fund?

An index fund is a type of mutual fund whose holdings match or track a particular market index. It's hands-off, and you could build a diversified portfolio earning solid returns using mostly this type of investment.

What is a closed-end fund?

Closed-end funds are a lesser-known kind of mutual fund. Your best odds of success come when you buy them at a discount.

What is a target-date fund?

Target-date funds are designed to age with you by automatically rebalancing your portfolio from growth investments toward more conservative ones as retirement nears.

What are money market funds?

Money market mutual funds are popular short-term investments with low risk. Yields on money market funds are more appealing than they used to be.

What is an equity fund?

Equity funds buy stock in a range of companies. Unless you have cash and time to burn, they're the better way to invest than buying individual company stocks.

Funds

Mutual funds, index funds and ETFs are an effective way to build a diversified portfolio of stocks, bonds and other investments.

The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.

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