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Mutual Fund Investment Approaches

Each mutual fund has it’s own unique investment approaches that it uses.  There are a thousand and one different funds out there, each with it’s own strategy for making money.  Whatever the investment strategy is, its really a question of risk and return potentials.

There are 3 broad categories of mutual funds, value, growth and hybrid.  A value fund is looking for solid companies with a good underlying business that will be strong for the long haul and is undervalued by the market.  In the opposite end are growth funds which seek out stocks that have hot growth potential or have the potential to be acquired at some point by a larger company.

There is also a third category called the hybrid fund.  The hybrid mixes in both value and growth in it’s fund investment strategy.  This approach is good for those wanting to see a more aggressive strategy for growth, but also wants to make sure that the stocks being invested in are solid companies in their own right.

Now within these 3 categories, there are an endless amount of nuances involved and different paths that it can take.  For example, let’s add in the mix of market capitalization. Market caps are the measure of the size of a particular public company, and there are risk and return implications for each cap size.

A mutual fund can have a combination that adds in market cap in it’s investment strategy.  For example, a particular fund can be a growth fund that invests only in small cap companies.  Another one can be a value fund that invests only in large cap companies.

In addition to market cap, you can also include sectors.  For example, you can invest in a growth fund that invests in small cap technology companies.  Another one can be a hybrid large cap fund that invests only in the oil and gas industry.

There are an endless number of combinations and variations you can have with mutual funds.  There is one for every type of investor and for virtually any strategy.  It’s just the matter of doing your research and finding them.