S. Small-cap stocks are worth several hundred million dollars,.
and are newer, up-and-coming firms. Mid-caps are somewhere in between. There are also bond funds that purchase bonds issued by corporations, municipal governments,.
or the federal government agencies. You can invest in tax-free bond funds, just as you can buy tax-free bonds, and the interest you earn is exempt from federal and.
perhaps state and local income taxes. Mutual funds that specialize in securities outside the U.S are known as international funds or global funds. These funds can also.
specialize in bonds, stocks, or some mix of the two. An international fund can also specialize in a particular country or region of the world, such as the Pacific Rim, Latin.
America, or Germany. .
Equity-fund managers usually use one of three particular styles of stock picking when they make investment decisions for their portfolios. First there is value, where a fund.
manager uses a value approach search for stocks that are undervalued when compared to other similar companies. Next, there is growth and those funds try to find stocks.
that are growing faster than their competitors, or the market as a whole. These are often the stocks of well-known established corporations. There is blend where managers.
buy both kinds of stocks, building a portfolio of both growth and value stocks. .
Only 25 years ago, there were fewer than 500 funds available. Today, there are over 7,000, with more added every year. There are many advantages to buying mutual funds,.
but there are disadvantages as well. Mutual funds can offer instant diversification, and diversification reduces risk. For example, funds can reduce risk by spreading it.
among a large number of investments, if one stock performs badly, its impact on the overall portfolio is lessened. Funds can also reduce risk by investing in different asset.
classes: stocks (which can include international as well as U.S. stocks), bonds, cash and other securities.
