The combined holdings of a mutual fund are known as the fund's portfolio. When you buy a single share in a mutual fund, you are really buying into the entire portfolio. With a mutual fund, you are not limited to the volatile performance of one or two stocks. Income funds pursue income through the dividends and income provided by stocks and bonds at regular intervals. Income may be reinvested automatically to increase capital appreciation.
Balanced funds provide capital gains and income from a mix of investments of bonds and stocks.
Bonds add stability during down and volatile periods, while stocks provide growth. Stock funds may have small portfolios of 50 stocks to large portfolios of hundreds of stocks. Before investing, always request a prospectus from the fund to learn about its strategies and objectives and fees and expenses to help you choose the fund that best fits your goals and philosophies. Mutual funds provide a way to invest in the market without buying stocks and bonds directly. As a mutual fund investor, you don't have to be an expert in pricing stocks and bonds, to invest in the market.