A 12b-1 fund is a type of mutual fund that charges its holders a 12b-1 fee, which covers the costs of the marketing and selling of shares, paying brokers, and advertising the fund to potential investors.

A 12b-1 fund is a mutual fund that charges its holders a 12b-1 fee. 12b-1 fees include the cost of marketing and selling fund shares, paying brokers and other sellers of the funds, as well as advertising costs, such as printing and mailing fund prospectuses to investors.
Once popular, 12b-1 funds have lost investor interest in recent years, particularly amid the rise of exchange-traded funds (ETFs) and low-cost mutual funds. Distribution fees include fees paid for marketing and selling fund shares, such as compensating brokers and others who sell fund shares and paying for advertising, the printing and mailing of prospectuses to new investors, and the printing and mailing of sales literature. The SEC does not limit the size of 12b-1 fees that funds may pay, but under FINRA rules, 12b-1 fees that are used to pay marketing and distribution expenses (as opposed to shareholder service expenses) cannot exceed 0.75% of a fund’s average net assets per year. If shareholder service fees are part of a fund’s 12b-1 plan, these fees will be included in this category of the fee table.

12b-1 Fund

A 12B-1 plan is a plan structured by mutual fund companies for the distribution of funds through intermediaries. 

Distribution [and/or Service] (12b-1) Fees

How to Read a Mutual Fund Prospectus (Part 2 of 3: Fee Table and Performance)

A 12B-1 plan is a plan structured by mutual fund companies for the distribution of funds through intermediaries. Mutual fund companies will pay 12B-1 fees from a mutual fund to compensate distributors.﻿﻿ In some cases, funds may also be structured with a low-level load that is paid to financial advisors annually during the course of an investor's holding period.
Financial industry legislation typically restricts 12B-1 fees to 1% of the current value of the investment on an annual basis, but fees generally fall somewhere between 0.25% and 1%. Mutual fund companies are required to provide full disclosure on their sales load schedules and 12B-1 annual fund expenses in the fund’s prospectus. The prospectus is one aspect of documentation required for the mutual fund’s registration and is also the key offering document providing information on the fund for investors.﻿﻿ 12B-1 plans and any changes to their expense structuring must be approved by the fund’s board of directors and amended in its prospectus filed with the Securities and Exchange Commission. In most cases, fund companies will have higher 12B-1 fees on share classes paying a lower sales charge, and lower 12B-1 fees on share classes with higher sales charges.

12B-1 Plan

An abnormal return describes the returns generated by a security or portfolio that differ from the expected return over a specified period.

An abnormal return describes the unusually large profits or losses generated by a given investment or portfolio over a specified period. After the calculation of a security or portfolio's expected return, the estimate for the abnormal return is calculated by subtracting the expected return from the realized return. The capital asset pricing model (CAPM) is a framework used to calculate a security or portfolio's expected return based on the risk-free rate of return, beta, and the expected market return. The performance diverges from the investments' expected, or anticipated, rate of return (RoR)—the estimated risk-adjusted return based on an asset pricing model, or using a long-run historical average or multiple valuation techniques.
Returns that are abnormal may simply be anomalous or they may point to something more nefarious such as fraud or manipulation. The abnormal return is calculated by subtracting the expected return from the realized return and may be positive or negative.

Abnormal Return

Accumulation plans help an investor increase the value of a portfolio. Read how mutual fund investors use accumulation plans to build retirement nest eggs.

An accumulation plan is a general financial strategy in which an investor attempts to build the value of a portfolio. For companies, capital accumulation ordinarily refers to:
Real investment in tangible means of production, such as acquisitions, research and development, and other investments that can increase the capital flow.
Investment in financial assets represented on paper, yielding profit, interest, rent, royalties, fees, or capital gains.
Investment in physical assets such as residential or commercial real estate that could rise in value.
A prudent accumulation plan is key to building a financial nest egg for retirement. A voluntary accumulation plan is an investment method in which a retail investor periodically invests (at their discretion) relatively small amounts of money into a mutual fund, building a large position over an extended period. Along with the advantage of being able to build up an investment over an extended period, the voluntary accumulation plan has the benefit of being an investment option with mutual funds that are considered to be relatively low risk. An investor with a mutual fund accumulation plan may at some point want to develop a withdrawal plan, which is a payment structure that allows the investor to make periodic withdrawals.

Accumulation Plan

Acquired fund fees and expenses (AFFE) are a line item in a prospectus that shows the operating expenses of the underlying funds. 

Acquired fund fees and expenses (AFFE) are a line item in a multi-manager or fund-of-funds (FOF) prospectus that shows the operating expenses of the underlying funds. Acquired fund fees and expenses (AFFE) are a line item in a multi-manager or fund-of-funds (FOF) prospectus that shows the operating expenses of the underlying funds. Acquired fund fees and expenses (AFFE) let investors of a fund of funds (FOF) understand how much they are paying in management fees to the portfolio funds that the FOF invests in. Just like an individual fund, an FOF may charge management fees and a performance fee, although the performance fees are typically lower than individual mutual funds to reflect the fact that most of the management is delegated to the sub-funds themselves. A fund of funds (FOF) is a pooled investment fund such as a mutual fund or hedge fund that does not pick its own investments.

Acquired Fund Fees and Expenses (AFFE)

Active risk is a type of risk that a fund or managed portfolio creates as it attempts to beat the returns of the benchmark against which it is compared. 

Table of Contents
What Is Active Risk?
Understanding Active Risk Year four: fund = 2%, index = 5%_
The differences equal:
> _Year one: 8% - 5% = 3%
> Year two: 7% - 6% = 1%
> Year three: 3% - 4% = -1%
> Year four: 2% - 5% = -3%_
The square root of the sum of the differences squared, divided by (N - 1) equals the active risk (where N = the number of periods):
> _Active risk = Sqrt( ((3%²) + (1%²) + (-1%²) + (-3%²)) / (N -1) ) = Sqrt( 0.2% / 3 ) = 2.58%_ All portfolios have risk, but systematic and residual risk are out of the hands of a portfolio manager, while active risk directly arises from active management itself. A fund volatility measure that is higher than the benchmark shows higher risk while a fund volatility below the benchmark shows lower risk. Oppenheimer Global Opportunities Fund (data for year-end 2017)
3 Year Beta
3 Year Standard Deviation
3 Year Sharpe Ratio
Oppenheimer Global Opportunities Fund
The Fund's beta and standard deviation show the active risk added in comparison to the benchmark.

Active Risk

An aggressive growth fund seeks above-average returns by taking above-average risk in high-growth companies.

An aggressive growth fund is a mutual fund that seeks capital gains by investing in the shares of growth company stocks. They will typically be found in the growth fund category with fund names such as: aggressive growth fund, capital appreciation fund or capital gain fund. Conservative growth funds usually allocate a high percentage of the fund to fixed income while investing the remaining allocation in growth or aggressive growth stocks. The Russell 3000 Growth Index is a good market index benchmark for investors when considering aggressive growth funds.
Aggressive growth funds offer some of the highest return potential in the equity markets, also with some of the highest risks. Aggressive growth funds invest in growth stocks with relatively more aggressive projections for revenue and earnings than the standard growth stock universe.

Aggressive Growth Fund

The Alaska Permanent Fund pays an annual dividend to eligible residents and is funded from surplus oil and gas reserve revenues. 

Bicameral Permanent Fund Working Group Report

The Alaska Permanent Fund is an investment fund whose investment capital originates from the surplus revenues gained from the development of Alaska's oil and gas reserves. The Alaska Permanent Fund is an investment fund whose investment capital originates from the surplus revenues gained from the development of Alaska's oil and gas reserves. The Alaska Permanent Fund is an investment fund that invests capital that originates from surplus revenue obtained from Alaska's oil and gas reserves. The Alaska Permanent Fund is a sovereign wealth fund (SWF), which invests in a wide array of asset classes, including domestic stocks, U.S. bonds, global stocks, real estate, and private equity. After completion of the Trans-Alaska Pipeline System, which introduced Alaskan oil to the market in 1976, Alaska’s government added a state constitutional amendment setting aside a share of oil revenues for future generations of Alaskans.

Alaska Permanent Fund

An all-cap fund invests across the range of market capitalizations, from very small to very large companies.

An all-cap fund is a stock fund that invests in a broad universe of equity securities with no capitalization mandates or constraints. Stocks are characterized by their market capitalization, ranging from nano-cap (under $50 million market value) to mega-cap (over $200 billion).
All-cap funds may be either actively or passively managed and may have varying degrees of market breadth.
An all-cap fund does not focus on a specific capitalization style. While there is no universal consensus on the exact definitions of the various market caps, the following parameters are a good approximation:
Giant or mega-cap: Above $200 billion
Large-cap: From $10 billion to $200 billion
Mid-cap: From $2 billion to $10 billion
Small-cap: From $300 million to $2 billion
Micro-cap: from $50 million to $300 million
Nano-cap: Below $50 million Passively managed all-cap funds can provide investors with total market exposure using indexes like the Dow Jones U.S. Total Stock Market Index and the Wilshire 5000 Index (TMWX).
Actively managed all-cap funds often take a more targeted approach to achieve capital gains. In the case of long/short funds, investment managers seek to take long positions on stocks they believe will continue to outperform, while expanding the investment options to also include taking short positions on stocks they believe will underperform in the short and long term.

All-Cap Fund

An allocation rate is a percentage of an investor's cash or capital outlay that goes toward a final investment. 

An allocation rate is a percentage of an investor's cash or capital outlay that goes toward a final investment. For example, if a mutual fund carries a 4% front-end load, then only 96% of an investor's initial investment will be placed into the fund itself, with the rest being paid to the intermediary—the higher the fees, the lower the overall allocation rate for the investor. Most investors are likely to encounter allocation rate models when they sign-in to their robo-advisor accounts and choose their fee structure but also their target allocation in regards to risk, sector, and investment attitude. The allocation rate is a percentage value that helps an investor measure the total amount of capital invested in any one sort of investment vehicle whether that be a stock, REIT, or something else. An allocation rate may also be used when determining the percentage of income an investor plans to contribute to specified investments through an automatic investment plan.

What Is an Allocation Rate?

An all weather fund is a fund that tends to perform reasonably well during both favorable and unfavorable economic and market conditions.

An all weather fund is a fund that tends to perform reasonably well during both favorable and unfavorable economic and market conditions. Actively managing the equity portion of the fund to take advantage of varying market conditions while maintaining steady returns for investors from fixed-income investments provides for balanced allocations that produce positive performance in all market conditions. Global risk allocation funds are a unique category because they adjust portfolio allocations by asset class to mitigate and offset losses in the high-risk equity market with greater allocations to high yielding fixed-income investments. All weather funds typically have flexible investment strategies that allow them to diversify across asset classes and utilize alternative techniques, such as sector rotation or macro-hedging, in order to manage for varying market changes. These funds have the flexibility to overweight long positions in times of market gains and overweight short positions in times of market losses.

All Weather Fund

Asset size is the total market value of the securities in a fund. The asset size of a fund can be important for investors to consider for a few reasons.

Asset size is the total market value of the securities in a fund. 1.  Vanguard 500 Index Fund Admiral Shares (VFIAX)
2.  SPDR S&P 500 ETF Trust (SPY)
3.  Fidelity 500 Index Fund (FXAIX)
4.  Vanguard TSM Index Fund Admiral Shares (VTSAX)
5.  iShares Core S&P 500 (IVV)
6.  Vanguard TSM Index Institutional Plus Shares (VSMPX)
7.  Fidelity Government Cash Reserves (FDRXX)
8.  Vanguard Federal Money Market Fund (VMFXX)
9.  Vanguard Total Stock Market Index Fund (VTI)
10.  Fidelity Government Money Market Fund (SPAXX) Key aspects for investment fund quality and investment consideration are typically the fund’s investment style and its ability to meet or exceed the returns of market benchmarks through its investment allocations. While asset size does not greatly influence a fund’s performance, top investment managers and top-performing funds are likely to see greater fund inflows. Investors in funds with a larger asset size can also benefit from greater economies of scale which translate to lower fund expense ratios since the expense ratio is calculated as a percent of total assets.

Asset Size

Back-end load refers to the money a mutual fund charges to a client for withdrawing money. 

A back-end load is a fee paid by investors when selling mutual fund shares, and it is expressed as a percentage of the value of the fund's shares. Although back-end loads are frequently criticized, they do have some advantages:
Back-end loads discourage overtrading and unnecessary early withdrawals.
Unlike front-end loads, investors can often avoid back-end load fees by holding the fund for five to ten years. Class A shares generally charge a front-end load, while Class B and Class C shares typically carry a back-end load. A back-end load is a fee paid by investors when selling mutual fund shares, and it is expressed as a percentage of the value of the fund's shares. A back-end load is a fee paid by investors when selling mutual fund shares, and it is expressed as a percentage of the value of the fund's shares.

Back-End Load

Behavioral funds are a category of mutual funds that use behavioral finance as a basis for their investment strategy.

Behavioral funds are a category of mutual funds that use behavioral finance as a basis for their investment strategy. Behavioral funds may also invest in stocks that may have temporarily underperformed relative to the overall market based on irrational exuberance, but continue to have strong fundamentals.
Finally, behavioral funds may seek to Identify stocks based on other potential developments that can lead to profitable opportunities, like from an expected share buy-back or stock split. Irrational biases in the market may exaggerate the impact of negative news—beating the stock prices to much deeper levels (for low-cost buying opportunities)—or overplay the impact of positive news by pumping the stock prices to higher levels (for high-cost short selling opportunities).
Behavioral funds attempt to identify those stocks that temporarily having lower or higher than expected indicators (for example, price-to-earnings ratio). Behavioral funds are a category of mutual funds that use behavioral finance as a basis for their investment strategy. Behavioral funds are a category of mutual funds that use behavioral finance as a basis for their investment strategy.

Behavioral Funds

A blend fund is a type of equity mutual fund that includes a mix of value and growth stocks. 

MFS® Blended Research® Core Equity Fund

A blend fund (or blended fund) is a type of equity mutual fund that includes a mix of both value and growth stocks. Blend funds, which contain only stocks and no fixed-income securities, are a type of equity fund that holds a mix of both growth stocks and value stocks. The horizontal axis is also divided into three categories based on the stocks in a fund's stock portfolio: value, value/growth blend and growth stocks. A blend fund (or blended fund) is a type of equity mutual fund that includes a mix of both value and growth stocks. Investors seeking diversification to blend funds would choose to filter by stocks in the value/growth blend category.

Blend Fund

Bogey is a buzzword that refers to a benchmark used to evaluate a fund's performance and risk characteristics. 

Bloomberg Barclays US Aggregate Bond TR USD

Bogey is a buzzword that refers to a benchmark used to evaluate a fund's performance and risk characteristics. Furthermore, some investors may compare and contrast bogey benchmarks with relative benchmarks to gain a better understanding of how a fund and its benchmark are performing in comparison to other broad market options. In relative comparison this fund and its bogey benchmark are also outperforming the Bloomberg Barclays U.S. Aggregate Bond Index with a return of -1.85% year to date, as of June 23, 2021. A bogey refers to a benchmark for a mutual fund that provides the investor with a representative sample of a market segment for which it can compare performance and other characteristics. Other funds may use the bogey benchmark as the investment universe while building an investment strategy that seeks to outperform the benchmark.

Bogey

A breakpoint is the dollar amount for the purchase of a load mutual fund's shares that qualifies the investor for a reduced sales charge.

A breakpoint is the dollar amount for the purchase of a load mutual fund's shares that qualifies the investor for a reduced sales charge. Mutual funds also allow investors to qualify for breakpoints through letters of intent (LOI) and rights of accumulation (ROA).
A LOI, a formal document signed by the investor outlining their plans for investment in the fund, enables an investor to qualify for breakpoints by committing to an investment schedule over a period of time. A breakpoint is the dollar amount for the purchase of a load mutual fund's shares that qualifies the investor for a reduced sales charge. A breakpoint is the dollar amount for the purchase of a load mutual fund's shares that qualifies the investor for a reduced sales charge. Rights of accumulation (ROA) grant existing holders of mutual fund shares the potential for reduced loads (commissions) when purchasing more fund shares to reach breakpoints.

Breakpoint

A breakpoint sale is the sale of a mutual fund at a set dollar amount that allows the fundholder to move into a lower sales charge bracket. 

A breakpoint sale is the sale of a mutual fund at a set dollar amount that allows the fundholder to move into a lower sales charge bracket. Accumulation privileges allow an investor’s sales charge from a breakpoint schedule to be based on their total investment in the fund. Accumulation privileges allow an investor’s sales charge from a breakpoint schedule to be based on their total investment in the fund. Breakpoint sales provide fee discounts to investors based on investment breakpoint levels determined by the fund company. Letters of intent allow an investor to pledge a specified investment in the fund and receive the sales load fee for their comprehensive investment.

Breakpoint Sale

A B-share is a class of shares offered in a mutual fund with a sales load.

A B-share is a class of shares offered in a mutual fund that charges a sales load. The CDSC declines the longer you hold the shares and is eventually eliminated, and after a certain period after elimination, usually two years, Class B shares convert to Class A shares, which offer investors the benefit of a lower annual expense ratio.﻿﻿ These sales loads are separate from the operating expenses of a fund. Class B shares do not charge a front-end sales load like A-shares but are characterized by a back-end sales load structure, also known as a contingent deferred sales charge (CDSC). With B-shares, an investor pays a sales charge when they redeem from the fund, known as a back-end sales load or a contingent deferred sales charge (CDSC). A B-share is one type of class of shares offered in a mutual fund that charges a sales load.

B-Share

Capital shares are a share class offered by a dual purpose fund. 

Capital shares are a share class offered by a dual purpose fund. Dual purpose funds were introduced in the 1960s and gained popularity in the 1970s, though many dual purpose funds closed in the 1980s after new tax rules changed tax obligations for the funds. Popular versions of these funds included the American Dual Vest Fund, managed by Haywood Management; the Gemini Fund, managed by Wellington Management; Income & Capital Shares Inc., managed by John P. Chase Inc.; the Leverage Fund of Boston, managed by Vance, Sanders & Co.; and the Scudder Duo Vest fund, managed by Scudder, Stevens & Clark. In a dual purpose fund, investors can invest in either capital shares for gains or income shares for dividends. In a dual purpose fund, investors can invest in either capital shares for gains or income shares for dividends.

Capital Share

A capped fund is a fund with specified maximum limitations included in its investing or expense structure.

A capped fund is a pooled investment fund that has imposed specified maximum limitations included on its investing or expense structure. Capped indexes from S&P include the following:
S&P/TSX 60 Capped
S&P/TSX Capped Composite
S&P/TSX Capped Energy
S&P Russia BMI Capped
S&P Italy Large and Mid-Cap Capped
S&P All Africa Capped
DJCI Gas & Oil Capped Component
S&P GSCI Cap Component The iShares Core S&P/TSX Capped Composite Index is a passively managed index fund that seeks to replicate the holdings and performance of the S&P/TSX Capped Composite Index. A capped fund is a pooled investment fund that has imposed specified maximum limitations included on its investing or expense structure. Some funds may choose to limit the expense ratio of the fund by detailing a capped expense level.

Capped Fund

A contingent deferred sales charge (CDSC) is a fee, or sales charge or load, which mutual fund investors pay when selling Class-B fund shares.

A contingent deferred sales charge (CDSC) is a fee, sales charge or load, which mutual fund investors pay when selling Class-B fund shares within a specified number of years from the original purchase date. A contingent deferred sales charge (CDSC) is a fee, sales charge or load, which mutual fund investors pay when selling Class-B fund shares within a specified number of years from the original purchase date. For mutual funds with share classes that determine when investors pay the fund's load or sales charge, Class-B shares carry a contingent deferred sales charge during a five- to 10-year holding period calculated from the time of the initial investment. If a mutual fund investor were to buy and hold Class-B fund shares until the end of the specified hold period, they could avoid paying this type of fund's sales charge, thereby enhancing their investment return. Unfortunately, fund research indicates that mutual fund investors are holding their funds, on average, for less than five years, which often triggers the application of a back-end sales charge in a Class-B share fund investment.

Contingent Deferred Sales Charge (CDSC) Fee Explained

Certified fund specialists receive a certification from the Institute of Business and Finance for their expertise in mutual funds and the industry.

Series 6—Investment Company and Variable Contracts Products Representative Exam

A certified fund specialist (CFS) has received a certification from the Institute of Business & Finance (IBF) for their expertise in mutual funds and the mutual fund industry. The IBF also offers other industry certifications, including those in the following areas: certified annuity specialist, certified estate and trust specialist, certified tax specialist, certified income specialist, Social Security and Medicare certification, alternative investment certification, divorce certification, and a Master of Science in financial services. In order to become a certified fund specialist, a certificate must be acquired from the Institute of Business & Finance (IBF).
Certified fund specialists can be accountants, bankers, brokers, money managers, personal financial advisors, and other professionals within the financial industry. Before taking the exam, a prospective CFS must have a bachelor’s degree or 2,000 hours of work experience in the financial services industry and have completed the IBF self-study program consisting of six modules.
Certified fund specialists receive training for the exam from the IBF, which is the creator and issuer of the CFS designation. A certified fund specialist (CFS) has received a certification from the Institute of Business & Finance (IBF) for their expertise in mutual funds and the mutual fund industry.

Certified Fund Specialist (CFS)

Chartered Mutual Fund Counselor is a professional designation for mutual fund advisers. It is not currently offered for new applicants.

History of the College For Financial Planning

Chartered Mutual Fund Counselor (CMFC) is a professional designation for mutual fund advisers. It was previously awarded by the College for Financial Planning, now part of Kaplan, to financial services professionals who completed a study program and passed an exam covering mutual fund topics.﻿﻿ While it is no longer a current certification offered by Kaplan/College for Financial Planning, as of 2021, the organization still supports the designation. The Chartered Mutual Fund Counselor (CMFC) was a designation for mutual fund advisers offered by the College for Financial Planning, now part of Kaplan. The study program to become a Chartered Mutual Fund Counselor covers types and characteristics of open and closed-end funds, other packaged investment products, risk and return, asset allocation, selecting a mutual fund for a client, retirement planning, and professional conduct. The Chartered Mutual Fund Counselor program was developed in conjunction with the Investment Company Institute and is the only mutual fund designation recognized in the financial services industry.

Chartered Mutual Fund Counselor (CMFC)

A clone fund is a mutual fund modeled on the ideas of a more successful fund. 

A clone fund is a mutual fund strategically designed to emulate the performance of a successful mutual fund. Before 2005, if a Canadian investor had already reached the 30% investment cap wished to invest in the S&P 500, they could get around the restriction by investing in an S&P 500 clone fund offered by a Canadian mutual fund company to replicate the performance of the S&P 500. A clone fund is a mutual fund strategically designed to emulate the performance of a successful mutual fund. A clone fund is a mutual fund strategically created to perform as a success of a larger and more successful mutual fund. For instance, a mutual fund company may choose to establish clone funds when the original fund has grown too large to be efficiently managed.

Clone Fund

A closed-end management company is an investment company that manages closed-end mutual funds.

A closed-end management company is an investment company that manages closed-end mutual funds and sells a limited number of shares to investors on an exchange by way of an initial public offering. Closed-end funds have many differences from open-end funds managed by open-end management companies. Closed-end management companies issue a fixed number of shares of closed-end funds to the market through initial public offerings on financial market exchanges. A closed-end management company is an investment company that manages closed-end mutual funds and sells a limited number of shares to investors on an exchange by way of an initial public offering. Closed-end management companies specialize in the management of publicly-traded closed-end funds.

What Is a Closed-End Management Company?

A closed fund is a fund that is closed to investors, either temporarily or permanently. Learn why funds close and what this means to your investment.

A closed fund is a fund that is either closed to investors (temporarily or permanently) or has ceased to exist. If inflows have been decreasing, or if demand for a new fund has not generated enough inflow to keep it active, then a fund company will take action to liquidate or merge the shares into a fund with a similar objective. The fund company can close to new investors only or stop allowing new investments from any investors. A closed mutual fund should not be confused with a closed-end fund, which has a fixed number of shares, generally invests in specialized sectors, and trades like a stock on a stock exchange. If a fund is only closing temporarily, then both current and potential fund investors can seek to understand the specific parameters of the closing and when it may be opening again.

Closed Fund

Closet indexing is a strategy used to describe funds that claim to actively purchase investments but end up tracking a benchmark index.

Closet indexing is a strategy used to describe funds that claim to actively purchase investments but wind up with a portfolio not much different from the benchmark. Closet indexing is a fund purchasing strategy that claims to actively purchase investments, but winds up with a portfolio very similar to its benchmark.
Typically looked upon negatively, closet indexing results in higher fees for investors that pay a management fee for fund managers that simply mirror an index fund, displaying a false sense of management abilities. Metrics such as R squared and active share can help determine a portfolio's statistical deviation from the benchmark index, and hence if it is a closet index. In the end, active funds that beat benchmark returns tend to have lower fees than the traditional actively managed fund. A manager's performance is usually compared to a benchmark index, so there is an incentive for managers to gain returns that are at least like the index.

Closet Indexing

Commingled funds mix assets from several accounts, which affords them lower costs and other economies of scale benefits.

QUARTERLY REVIEW: Fidelity® Contrafund® Commingled Pool

A commingled fund is a portfolio consisting of assets from several accounts that are blended together. If a commingled fund and a comparable mutual fund post the exact same gross performance, the commingled fund's net return would likely be better because its expenses were lower than the mutual fund's. The Contrafund Commingled Pool has a 0.43% expense ratio, which is lower than the average expense ratio of mutual funds—including its mutual fund counterpart, the Fidelity Contrafund, with its .86% expense ratio. Also, like mutual funds, commingled fund investments benefit from economies of scale, which allow for lower trading costs per dollar of investment, and diversification, which lowers portfolio risk. Pros
Professionally-managed
Diversified portfolio
Lower fees and expenses
Economies of scale
Less transparent/harder to track
Not SEC-regulated
Limited availability
Like a mutual fund, the Fidelity Contrafund Commingled Pool has a portfolio manager and publicly discloses pertinent information via quarterly reports.

Commingled Fund

A common stock fund is a mutual fund that invests in the common stock of numerous publicly traded companies. 

A common stock fund is a mutual fund that invests in the common stock of numerous publicly traded companies. Also, some funds call themselves common stock funds because they invest primarily in common stock (perhaps 80% of the fund's investments), but they might also invest in other types of securities (perhaps 20% of the fund's investments). Traditionally, common stock funds have been mutual funds, but with the advent of different types of funds, common stock funds can come in a variety. A common stock fund is a fund that will invest only in the common stock of companies listed on stock exchanges. A common stock fund is a mutual fund that invests in the common stock of numerous publicly traded companies.

Common Stock Fund

Conduit theory describes the tax basis for companies that pass capital gains, interest and dividends on to its shareholders, known as investment conduits.

Conduit theory is a theory stating that an investment company that passes all capital gains, interest, and dividends on to its shareholders shouldn't be taxed at the corporate level like most regular companies. Conduit theory is a theory stating that an investment company that passes all capital gains, interest, and dividends on to its shareholders shouldn't be taxed at the corporate level like most regular companies. Other types of companies that may also be considered conduits include limited partnerships, limited liability companies, and S-corporations. Rather than actually producing goods and services in the way that regular corporations do, these companies serve as investment conduits, passing through distributions to the shareholders and holding their investments in a managed fund. Some types of companies that may be considered conduits include limited partnerships, limited liability companies, and S-corporations.

Conduit Theory

Conservative growth is an investment strategy that aims to preserve wealth and grow invested capital over the long term. 

Conservative growth is an investment strategy that aims to grow invested capital over the long term. It uses a fund-of-funds approach, with its top equity allocation to the Vanguard Total Stock Market Index Fund Investor Shares at 24% and its top fixed income allocation to the Vanguard Total Bond Market II Index Fund Investor Shares at 42%.
Many investors find the potential returns of aggressive growth funds appealing. Rather than investing nearly 100% of the portfolio in growth or aggressive growth stocks, these portfolios take a more conservative approach by investing with a high allocation of fixed income and a smaller portion of the portfolio in growth stocks. Conservative growth funds usually allocate a high percentage of the fund to fixed income while investing the remaining allocation in growth or aggressive growth stocks. Conservative growth funds typically target long-term investors who place high importance on wealth preservation but would also like to take advantage of some of the market’s high growth opportunities.

Conservative Growth

A creation unit is a block of new shares sold by an exchange-traded fund (ETF) company to a broker-dealer for sale on the open market. 

A creation unit is a block of new shares sold by an exchange-traded fund (ETF) company to a broker-dealer for sale on the open market. A creation unit is a block of new shares sold by an exchange-traded fund (ETF) company to a broker-dealer for sale on the open market. A creation unit is a block of new shares sold by an exchange-traded fund (ETF) company to a broker-dealer for sale on the open market. An ETF creation unit is central to the process an exchange-traded fund issuer undergoes when providing new ETF shares to the market. ETF issuers work with ETF distributors to issue new shares in creation units to broker-dealers.

Creation Unit

A crossover fund is an investment fund that holds both public and private equity investments.

A crossover fund is an investment fund that holds both public and private equity investments. While both public and private equity tap into the equity risk premium, private equity investors also expect to be compensated for other risks, including liquidity risk and manager risk. Crossover funds attempt to tap into the risk premium behind private equity, while also offering some of the liquidity of the public equities market. Investors in public equity can gain access to the equity risk premium return driver. Equity risk premium refers to the excess return that investing in the stock market provides over a risk-free rate of return.

Crossover Fund

Class C-shares are classes of mutual fund shares that carry annual administrative fees, set at a fixed percentage. However, unlike other share classes, they do not carry sales charges when they are bought or when they're sold after a certain period.

Class C shares are a class of mutual fund share characterized by a level load that includes annual charges for fund marketing, distribution, and servicing, set at a fixed percentage. Pros
No upfront commission—entire deposit is invested
No back-end sales charge after one year
Good intermediate-term (1-3 years) investment
High expense ratios
Back-end load on first-year withdrawals
Not good for a buy-and-hold strategy
Because of the back-end load charged on short-term redemptions, investors who plan to withdraw funds within a year may want to avoid C-shares. In comparison, a front-end load carries charges paid when the shares are bought and a back-end load assesses charges when the investor sells shares; and no-load funds contain no commission charges at all, with the fees simply calculated into the net asset value (NAV) of the fund. Unlike A-shares, class C shares do not have front-end loads, but they often carry small back-end loads, officially known as a contingent deferred sales charge (CDSC), just as class B shares carry. C-shares tend always to pay the maximum 1% and, since 12b-1 fees figure into the mutual fund's overall expense ratio, their presence can push that annual expense ratio above 2% for the class C-shareholder.

Class C Share

A deferred load is a sales charge or fee associated with a mutual fund that is charged when the investor redeems his or her shares.

A deferred load is a sales charge or fee associated with a mutual fund that is charged when the investor redeems their shares, rather than when the initial investment is made. Distribution fees include money paid for marketing and selling fund shares, such as compensating brokers and others who sell fund shares and paying for advertising, the printing and mailing of prospectuses to new investors, and the printing and mailing of sales literature.
The SEC does not limit the size of 12b-1 fees that funds may pay, but under FINRA rules, 12b-1 fees that are used to pay marketing and distribution expenses (as opposed to shareholder service expenses) cannot exceed 1% of a fund’s average net assets per year.
Deferred loads and 12b-1 fees are both declining in popularity. A deferred load is the mutual fund fee that is charged after an investor cashes out their shares, as opposed to a fee that is charged when the fund is first purchased. A deferred load is a sales charge or fee associated with a mutual fund that is charged when the investor redeems their shares, rather than when the initial investment is made. For example, if the shareholder initially invests $10,000, and at redemption, the investment has appreciated to $12,000, a deferred sales load calculated in this manner would be based on the value of the initial investment—$10,000—not on the value of the investment at redemption.

Deferred Load

A discount to net asset value is a pricing situation that occurs when a fund’s market trading price is lower than its net asset value (NAV).

A discount to net asset value is a pricing situation that occurs when an exchange-traded fund (ETF) or mutual fund’s market trading price is lower than its daily net asset value (NAV). A discount to net asset value refers to when the market price of a mutual fund or ETF is trading below its net asset value (NAV).
A discount to NAV is most often driven by a bearish outlook on the securities in a fund.
Since a fund’s NAV only represents the total value of the assets in the fund at the end of the day, there is significant latitude for funds trading on exchanges to fluctuate from their NAV.
A discount to net asset value can occur with closed-end mutual funds and ETFs as both of these investments trade on the open market and calculate a daily NAV. A discount to net asset value is a pricing situation that occurs when an exchange-traded fund (ETF) or mutual fund’s market trading price is lower than its daily net asset value (NAV). A discount to NAV surfaces when the market trading price is lower than the most recent NAV. The NAV is the value of the fund’s total assets at market close, minus the fund’s liabilities, divided by the total number of shares outstanding.

Discount to Net Asset Value

A diversified common stock fund is mutual fund that invests its assets in a relatively large number and variety of common stocks.

A diversified common stock fund is a particular type of mutual fund that seeks to invest its assets in a relatively large number and variety of common stocks. A diversified common stock fund manager has the advantage of not being limited by company size or investment style when making their investment selections. Portfolio composition usually includes common stock issued by blue chip and other reputable and stable companies of different market capitalizations.
Diversified common stock funds allow fund managers to use a variety of investment strategies, so long as the investments remain exclusively in shares of common stock.
There are several variations of diversified stock funds. The managers of diversified common stock funds can use a variety of investment strategies, so long as the investments remain exclusively in common stock shares. A diversified common stock fund is a particular type of mutual fund that seeks to invest its assets in a relatively large number and variety of common stocks. Diversification is a type of risk management strategy that brings into play several different investments across an investor’s portfolio.
The idea is that a portfolio that includes different kinds of investments and across different time horizons will, on average, yield higher returns and pose less risk than any individual investment found within the portfolio.
Overall, diversification strives to level out unsystematic risk events in a portfolio so the positive performance of some investments effectively neutralizes the negative performance of others in the portfolio.

Diversified Common Stock Fund

A diversified fund is a fund that is broadly diversified across multiple market sectors or geographic regions. 

A diversified fund is an investment fund that is broadly invested across multiple market sectors, assets, and/or geographic regions. Index funds are prime examples of diversified funds, although diversified funds need not track an index and may be actively managed. Typically, balanced funds stick to a fixed asset allocation of stocks and bonds, such as 70% stocks and 30% bonds, or 60/40, etc.
Vanguard and JPMorgan offer some of the industry’s top actively managed diversified funds. Diversified funds can range in focus from passive indexed funds that replicate broad indices to actively managed funds that invest broadly. A diversified fund can be contrasted with specialized or focused funds, such as sector funds, which focus on stocks in specific sectors such as biotechnology, pharmaceuticals, or utilities

Diversified Fund

The EURO STOXX 50 Index is a market capitalization weighted stock index of 50 large, blue-chip European companies operating within eurozone nations.

STOXX Index Methodology Guide (Portfolio Based Indices)

The EURO STOXX 50 Index is a market capitalization\-weighted stock index of 50 large, blue-chip European companies operating within eurozone nations. The EURO STOXX 50 Index includes the largest 50 stocks in the eurozone automatically chosen from the EURO STOXX Index by market capitalization.﻿﻿ For inclusion in the EURO STOXX Index, companies must be Other funds available for investors seeking to track the EURO STOXX 50 Index include the iShares EURO STOXX 50 UCITS ETF and the Xtrackers EURO STOXX 50 UCITS ETF. The EURO STOXX 50 Index typically represents approximately 60% of the EURO STOXX Index. The EURO STOXX 50 Index is managed and licensed by STOXX Limited which provides indexes representing equity market investments all over the world.

EURO STOXX 50 Index

A dual-purpose fund is a closed-end fund that offers two classes of stock: Common and preferred shares. 

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What Is a Dual-Purpose Fund? Dual-purpose funds are closed-end funds that trade on an exchange throughout the day. In addition, closed-end funds require a brokerage account to buy and sell, unlike most open-end funds. Dual-purpose funds are investments that held both common stock and preferred shares, wanting to maximize both growth over time and shares that paid dividends. Dual-purpose funds fell out of favor in the late 1980s when tax rules made them unattractive compared to other types of funds.

Dual-Purpose Fund

An emerging market fund invests the majority of its assets in securities from countries with economies that are considered to be emerging.

American Funds Emerging Markets Bond Fund

An emerging market fund refers to a fund that invests the majority of its assets in securities from countries with economies that are considered to be emerging. An emerging market fund is a type of mutual fund or ETF which invests heavily in securities of varying asset classes—stocks, bonds, and other securities—from developing or emerging market economies. In the emerging markets category, investors will also find both passive and active funds providing emerging market exposure across the market segment. An emerging market fund refers to a fund that invests the majority of its assets in securities from countries with economies that are considered to be emerging. Emerging market funds seek to capitalize on the return opportunity presented by emerging market economies.

Emerging Market Fund

An equity unit investment trust is a publicly offered, pooled trust fund managed by an investment company.

An equity unit investment trust (EUIT) is a closed-end, publicly offered pooled trust fund managed by an investment company. Equity unit investment trusts are managed by investment companies and can be offered alongside open-end mutual funds, closed-end mutual funds and exchange-traded funds (ETFs). An equity unit investment trust (EUIT) is a closed-end, publicly offered pooled trust fund managed by an investment company. There are various types of equity unit investment trust products available, allowing investors to choose an investment that closely matches their own risk tolerance and investment goals. An equity unit investment trust (EUIT) is a type of closed-end investment fund that invests in the stocks of public companies.

Equity Unit Investment Trust (EUIT)

An ex-distribution is an investment that is sold without the rights to a specific payment. The rights belong to the previous owner.

Dividends and Distributions - Use in the Proper Context

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What Is Ex-Distribution? When an ex-distribution investment, such as a mutual fund or an income trust, starts trading on an ex-distribution basis, the seller (that is, the previous owner) rather than the buyer is entitled to receive the distribution. The ex-dividend date is set the first business day after the stock dividend is paid (and is also after the record date). On the ex-distribution date, the NAVPS of the fund will be $9.50 because the fund shares are now trading without the rights to the distribution. With a significant dividend, the price of a stock will probably fall by that amount on the ex-dividend date.

Ex-Distribution

Exchange fees are a type of investment fee that some mutual funds charge to shareholders if they transfer to another fund within the same group.

Publication 550: Investment Income and Expenses

Exchange fees are a type of investment fee that some mutual funds charge to shareholders if they transfer to another fund within the same group. Mutual fund exchanges are discussed in a mutual fund’s prospectus along with the other fees an investor will pay with investment in the fund.﻿﻿ Many mutual fund companies do not charge a fee for exchanging shares.
The opportunity to exchange mutual funds is often called an exchange privilege. However, exchanging shares may trigger taxation if a capital gain occurs.﻿﻿ Tax requirements are most common in a fund-to-fund transfer, but converting share classes in the same fund is usually considered a non-taxable event.
Vanguard is one mutual fund company that has an open exchange policy among its mutual funds. Exchange fees are charged by management investment companies that allow investors to exchange or transfer shares from one mutual fund to another mutual fund managed by the company. Mutual fund exchanges are generally a common practice that is allowed by most mutual fund companies with multiple fund offerings.

Exchange Fees

An exit fee is a fee charged to investors when they redeem shares from a fund. Exit fees are most common in open-end mutual funds. 

An exit fee may be charged to investors when they redeem (sell) shares of an investment fund. Static back-end sales loads are typically lower than front-end fees, averaging approximately 1%
Contingent deferred back-end fees decrease over the life of the investment. An open-end mutual fund is required to disclose its sales load schedule as well as its operating fee schedule and any redemption fees in its prospectus. The mutual fund company decides on the exit fee and structures share classes to mandate a redemption fee—a charge credited to that share classes' costs. When exiting such a fund, an investor may have to pay a redemption fee along with any back-end sales loads associated with their share class.

Exit Fee

A family of funds includes all of the funds managed by one investment company.

Top 100 Mutual Fund Companies Ranked by AUM

A family of funds (or fund family) includes all the separate funds managed by a single investment company. Management investment companies can offer a broad range of products to investors, including closed-end funds, open-end exchange-traded funds (ETFs), and open-end mutual funds. A family of funds (or fund family) includes all the separate funds managed by a single investment company. Investing broadly across different funds from the same family of funds can offer investor benefits such as lower costs and sales charges, as well as access to research and investment advice. A family of funds refers to the set of mutual funds managed by a particular investment management firm.

Family of Funds

Feeder funds take money from investors and channel it to a master fund that does the management work, cutting down on costs. 

A feeder fund is one of several sub-funds that put all of their investment capital into an overarching umbrella fund, known as a master fund, for which a single investment advisor handles all portfolio investments and trading. The use of this two-tiered fund structure can be very advantageous when the feeder funds share common investment goals and strategies but are not appropriate for a feeder fund with a unique investment strategy or aim since those unique characteristics would be lost in the combination with other funds within a master fund. The feeder funds that invest capital in a master fund operate as separate legal entities from the master fund and may be invested in more than one master fund. In the same way that a feeder fund is free to invest in more than one master fund, a master fund is likewise free to accept investments from a number of feeder funds. A feeder fund is one of several sub-funds that put all of their investment capital into an overarching umbrella fund, known as a master fund, for which a single investment advisor handles all portfolio investments and trading.

Feeder Fund

A flexible fund is a mutual fund or other pooled investment that has broad flexibility for making investment decisions and allocations. Flexible funds can be U.S. regulated or offshore funds.

A flexible fund is a mutual fund or other pooled investment that has broad flexibility for making investment decisions and allocations. Examples of these funds include the China Flexible Equity Fund, Continental Europe Flexible Fund, Flexible Multi-Asset Fund, Japan Flexible Equity Fund, and the U.S. Flexible Equity Fund. The Fidelity Magellan Fund is one of the most well known flexible funds, thanks in part to Peter Lynch, who advocated a flexible investment strategy while managing the fund in the 1980s and early 1990s. A flexible fund is a mutual fund or other pooled investment that has broad flexibility for making investment decisions and allocations. A flexible fund is a mutual fund or other pooled investment that has broad flexibility for making investment decisions and allocations.

Flexible Fund

A flexi-cap fund is a type of mutual fund that is not restricted to investing in companies with a predetermined market capitalization.

A flexi-cap fund is a type of mutual fund that is not restricted to investing in companies with a predetermined market capitalization. Unlike other funds, such as mid-cap or small-cap funds, the size of a company is not a constraint for flexi-cap funds. Unlike other funds, such as mid-cap or small-cap funds, the size of a company is not a constraint for flexi-cap funds. A flexi-cap fund is a type of mutual fund that is not restricted to investing in companies with a predetermined market capitalization. A flexi-cap fund is a type of mutual fund that is not restricted to investing in companies with a predetermined market capitalization.

Flexi-Cap Fund

A floating rate fund is a fund that invests in financial instruments paying a variable or floating interest rate. A floating rate fund invests in bonds and debt instruments whose interest payments fluctuate with an underlying interest rate level.

A floating rate fund is a fund that invests in financial instruments that pays a variable or floating interest rate. Although floating funds offer yields in a rising rate environment since they fluctuate with rising rates, investors must weigh the risks of investing in the funds and research the fund holdings.
Although there is no formula to calculate a floating rate fund, there can be various investments that comprise a fund. Apart from their lower sensitivity to interest rate changes and the ability to reflect current interest rates, a floating rate fund enables an investor to diversify fixed-income investments, since fixed-rate instruments often comprise the majority of bond holdings for most investors. The biggest advantage of a floating rate fund is its lower degree of sensitivity to changes in interest rates, compared with a fund or instrument with a fixed payment rate or fixed bond coupon rate. The rate on a floating rate bond can be based on the fed funds rate, which is the rate set by the Federal Reserve Bank.

Floating Rate Fund

A focused fund is a mutual fund that holds a relatively small variety of stocks or bonds that focuses on a particular attribute.

A focused fund is a mutual fund that holds a only relatively small variety of stocks or bonds that are similar along some dimension. Its 10 largest holdings, as of April 30, 2018 were:
ADOBE SYSTEMS INC
SQUARE INC CL A
S&P GLOBAL INC
UNION PACIFIC CORP
MICROSOFT CORP
SCHWAB CHARLES CORP
PAYPAL HLDGS INC
BANK OF AMERICA CORPORATION
Combined, these ten holding accounted for 53.22% of the total fund. By definition, a focused mutual fund focuses on a limited number stocks in a limited number of sectors, rather than holding a broad or diversified mix of positions. A focused fund is a mutual fund that holds a only relatively small variety of stocks or bonds that are similar along some dimension. A focused fund is a category of mutual fund that invests in a small number of securities that are each related in some way.

Focused Fund

Forward pricing is an industry standard for mutual funds that requires investment companies to price fund transactions according to the next NAV.

Forward pricing is an industry standard for mutual funds developed by the Securities and Exchange Commission (SEC) that requires investment companies to price fund transactions according to the day's end net asset value (NAV), also known as the forward price. Forward pricing is an industry standard for mutual funds developed by the Securities and Exchange Commission (SEC) that requires investment companies to price fund transactions according to the day's end net asset value (NAV), also known as the forward price. Forward pricing is a convention used by mutual funds to price fund shares based on the end of each day's net asset value (NAV). Swing pricing detailed in Section 22(c)(1) under provisions (a)(3) allow mutual fund companies to marginally account for transactions costs of the fund in order to better manage the fund’s liquidity risks. Thus, forward pricing requires mutual fund accounting to take careful consideration for the timing of fund transactions.

Forward Pricing

Fund supermarkets refers to investment firms or brokerages whose platforms offer investors a wide array of mutual funds from different fund families. 

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What Are Fund Supermarkets? Mutual fund companies list their funds with these platforms through distributors who partner to list a mutual fund company’s funds on fund supermarkets throughout the industry. Fund supermarkets are a sort of mutual fund clearinghouse, in which a brokerage or investment firm offers market participants a variety of mutual funds from different fund families, all under one roof. Many investors prefer this approach as opposed to setting up a single account with a fund family that only allows for investment in that fund family’s mutual fund options. Investors working with full-service fund supermarket platforms will be required to pay sales loads according to the fund’s sales commission schedule, which is established by the mutual fund company.

Fund Supermarkets

Fund overlap is a situation where an investor invests in several mutual funds with overlapping positions. 

Fund overlap is a situation where an investor owns shares in several mutual funds or exchange traded funds (ETFs) with overlapping positions. Overlap can be reduced by first identifying which securities a fund holds before deciding to purchase its shares.
While small amounts of overlap are to be expected, extreme cases of fund overlap can expose an investor to unexpectedly high levels of company or sector risk, which can distort portfolio returns when compared with a relevant benchmark.
It can be very difficult for a retail investor to keep track of individual fund holdings, but a quarterly or annual check can help investors understand the strategy of each individual fund and provide an opportunity to compare top holdings from one fund with another. An example of having a security being overweight in an investment portfolio would be when a portfolio normally holds a security at a weight of 15%, but the security's weight is raised to 25% in an attempt to increase the return of the portfolio. Overweight is a situation where an investment portfolio holds an excess amount of a particular security when compared to the security's weight in the underlying benchmark portfolio. For instance, if an investor owns both an S&P 500 index mutual fund and a technology sector ETF, they would be overlapping quite a bit with the FAANG stocks (i.e., Facebook, Apple, Amazon, Netflix, and Google), because those stocks are large components of both funds' portfolios.

Fund Overlap

A fundamentally weighted index is a type of equity index in which components are chosen based on fundamental criteria as opposed to market capitalization.

A fundamentally weighted index is a type of equity index in which components are chosen based on fundamental criteria as opposed to market capitalization. The firm’s domestic quality equity ETFs offer investors three passively managed fundamentally weighted index portfolios including WisdomTree U.S. Quality Dividend Growth Fund (DGRW), WisdomTree U.S. Small-Cap Quality Dividend Growth Fund (DGRS), and WisdomTree U.S. Quality Shareholder Yield Fund (QSY). Customized tracker funds are passively managed index funds that go beyond mainstream index offerings, seeking to replicate customized indexes constructed based on a wide range of characteristics. Interest in fundamentally weighted indexes has continued to increase as more fund companies have built customized indexes representing specific investment aspects of the investment market. Fundamentally weighted indexes provide a benchmark for passively managed funds offered to investors seeking exposure to stocks based on fundamental characteristics.

Fundamentally Weighted Index

A fund category is a way of differentiating mutual funds according to their investment objectives and principal investment features.

A fund category is a way of differentiating mutual funds according to their investment objectives and principal investment features. Professionally managed fund of funds is a leading example of how portfolio managers can build a portfolio of funds using different fund categories. These portfolios seek to use funds from different fund categories to achieve their targeted asset allocation objective. Investors will often find the use of fund of funds structuring in asset allocation or balanced mutual fund portfolios. This would include stock funds, bond funds, and any other type of fund that is primarily invested purely in an individual asset class.

What Is a Fund Category?

A global fund is a fund that invests in companies located anywhere in the world, including the investor’s own country. A global fund seeks to identify the best investments from a global universe of securities.

A global fund is a fund that invests in companies located anywhere in the world including the investor’s own country. Major funds in the large-cap global equity space include the American Funds New Perspective Fund, with net assets of over $95 billion as of late June 2020; American Funds Capital World Growth and Income Fund, net assets $91.2 billion; and First Eagle Global Fund, which manages over $41 billion worth of assets.
Global equity funds buy stocks domestically and around the world, and come in hundreds of combinations of guiding philosophies, allocation strategies, and management styles. While there are many funds in the global debt category, some high-profile representative funds include the Vanguard Total International Bond Index Fund, which has over $142 billion in net assets as of late June 2020; the American Funds Capital World Bond Fund, which has over $13 billion in net assets; and the PIMCO International Bond Fund, with net assets of over $11 billion. To further manage risk while attempting to generate a higher return, investors can choose to invest in both global debt and equity funds or hybrid funds, which invest in both asset classes. Global funds can be offered as closed-end mutual funds, open-end mutual funds, or exchange-traded funds (ETF).

Global Fund

Growth and income funds pursue both capital appreciation and current income, i.e., dividends and interest from bonds. 

A growth and income fund is class of mutual fund or exchange-traded fund (ETF) that has a dual strategy of both capital appreciation (growth) and current income generated through dividends or interest payments. The goal of a growth and income fund is to create a diversified portfolio that takes advantage of the capital gains potential of the growth segment and the dividend income and stability of the value segment. A growth and income fund is a mutual fund or ETF strategy that seeks a total return for investors including capital gains and current income. Although returns will typically lag those of pure growth funds, sometimes high-yielding stocks become favored in the stock markets, driving growth and income funds to superior performance.

Growth And Income Fund

Income funds pursue current income over capital appreciation by investing in stocks that pay dividends, bonds, and other income-generating securities.

An income fund is a type of mutual fund or exchange-traded fund (ETF) that emphasizes current income, either on a monthly or quarterly basis, as opposed to capital gains or appreciation. There are two popular types of high-risk funds that also focus mainly on income: high-yield bond funds that invest primarily in corporate junk bonds and bank loan funds that invest in floating-rate loans issued by banks or other financial institutions. Corporate bond funds can be split into investment-grade bond funds and below-investment-grade, or junk, bond funds. Government bond funds carry virtually no default risk and, therefore, can act as a safe haven for investors in times of uncertainty, but normally offer lower yields than comparable corporate bond funds. Income funds are mutual funds or ETFs that prioritize current income, often in the form of interest or dividend-paying investments.

Income Fund

An income share is a class of shares offered by a dual purpose fund. 

An income share is a class of shares offered by a dual-purpose fund. Income shares are one class of shares in a dual-purpose fund; they can be compared to capital shares, which are their counterpart in a pooled dual-purpose fund offering. Dual-purpose funds were structured as closed-end funds with two share class offerings: income shares and capital shares. An income share is a class of shares offered by a dual-purpose fund; this share class pays out distributions and dividends to its investors. Popular versions of these funds included the American Dual Vest Fund managed by Haywood Management, the Gemini Fund managed by Wellington Management, Income & Capital Shares Inc. managed by John P. Chase Inc., the Leverage Fund of Boston managed by Vance, Sanders & Co., and the Scudder Duo Vest fund managed by Scudder, Stevens & Clark.

Income Share

An incubated, or limited distribution, fund is a fund that is first offered privately in an incubation period.

An incubated fund is a fund that is first offered privately in an incubation period. Once a fund company decides to clear a fund for launch, it may also provide additional capital for the fund, which is integrated into its waivers and discount agreements, helping to potentially keep expenses comparatively lower than other fund competitors. Incubated funds can be a prudent way to test a particular fund strategy, specifically if the fund company believes it may have a high susceptibility to risks. In some cases, a fund company may test several funds in an incubation trial with the best performing funds advancing. Overall, a small investment made in an incubated fund can far outweigh the costs of launching an unsuccessful fund that requires closing after only a short period of time.

Incubated Fund

An institutional fund is a fund with assets invested by institutional investors. 

An institutional fund is a collective investment vehicle available only to large institutional investors. Institutional fund offerings can include institutional shares of a mutual fund, commingled institutional funds, and separate institutional accounts. Institutional commingled funds will have similar investing and fund requirements as institutional mutual fund share classes. An institutional fund is an investment fund with assets held exclusively by institutional investors. Separate accounts will have their own fee structures determined by the investment manager, and these charges may be higher than other institutional fund fees because of the greater customization involved with managing the fund.

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