Some mutual funds also charge a 12b-1 fee. These fees are used by the funds to pay for marketing and distributing expenses. Types of Mutual Funds Categorizing funds according to their investment objectives is a common practice in the mutual fund industry. This reflects not only how the funds invest their money, but also their risk and return characteristics. Money market funds have relatively low risks compared to other mutual funds.
Bond funds have higher risks than money market funds, but they seek to pay higher returns.
Because there are many different kinds of bonds, the bond funds can vary considerably in their risks and returns. Stock funds generally involve more risk than a money market or bond fund, but they also can offer the highest returns. Balanced funds or hybrid funds seek capital gains and income, which are earned from a mix of investments from money markets, bonds, and stocks. Investing does not have to be complicated, time-consuming or something only the wealthy can afford. Buying a mutual fund can be done with ease , and most can be purchased by telephone, or mail.