• A mutual fund is a way for an investor to gain access to a large portfolio with a single investment.stock market analysis screenshot image by .shock from Fotolia.com
  
  A mutual fund is an investment company that takes the contributions of many investors and pools them into a single investment fund. One or more portfolio managers invests the collective capital according to specific investment objectives. While there are thousands of mutual funds available for purchase, there are only a few different types of major fund investment categories.
  
  

Growth

• Growth funds are generally invested in stocks, as over the long run they offer the greatest potential for price appreciation. Funds with a growth objective intend to increase the share price of the fund as rapidly as possible, with less regard for income distributions.
  
  

Income

• Income funds typically invest in bonds or other income securities, such as preferred stocks. A fund with an income objective will be more concerned with distributing large interest or dividend payments to investors, rather than focusing on increasing the share price of the fund.
  
  

Balanced

• A balanced fund invests in growth and income securities in an effort to provide both share price appreciation and current income payments to investors. Also known as growth-and-income funds, balanced funds typically invest in both stocks and bonds and may also invest in high-dividend-paying stocks or real estate investment trusts, both of which possess hybrid growth-and-income characteristics.
  
  

Aggressive

• All types of funds can be aggressive in nature. Aggressive growth funds invest in stocks of companies with high risk-reward profiles, particularly smaller companies in traditionally more risky industries such as biotechnology or oil exploration. Income funds with an aggressive style invest in more speculative bonds, such as bonds with low ratings due to the weak financial nature of the underlying company.
  
  

Conservative

• Funds with a conservative risk profile invest in the safest areas of their respective markets. Conservative stock funds invest in large multinational companies with long histories of predictable earnings growth, while conservative bond funds typically invest in shorter-term, higher-rated securities such as those issued by the U.S. government.
  
  

Specialty

• Specialty funds typically are narrowly focused funds that restrict their investments to a particular section of the market. For example, sector funds invest in specific economic areas of the market, such as the financial or pharmaceutical sectors. Index funds attempt to replicate the performance of various market indices, such as the S&P 500 Index. Regional or country funds invest in a particular area of the world.