Since stock markets often have a negative correlation , diversification is a benefit of investing in global or international funds. Mutual funds that invest in the stocks of companies with a minimum or maximum market capitalization . Mutual funds that invest in the shares of companies that belong in the same industry. Examples of major sectors include biotechnology, media, financial services, retail, telecommunications, and pharmaceuticals. Mutual funds that invest in a basket of stocks that mirrors the composition of a popular stock market index.
Index funds offer some diversification and lower fees.
Mutual funds that invest in bonds issued by governments or agencies that are backed by governments. Most government bond funds invest in U.S. Treasurys . Government bond funds are generally the safest of bond funds. Mutual funds that invest in bonds issued by private companies. Corporate bond funds may also invest in bonds issued by foreign companies.