Bond, Stock, and Income Funds

Most funds that hold stocks, bonds , and some other securities in varying proportions are referred to simply as bond, stock, and income funds.

Which types of mutual funds are most popular with investors? The answer to that question is shown in Figure 3-1, which shows the percentages of total mutual fund assets that each of the four major categories constitute . ^[2]

^[2] The source for the numbers used to construct this graph is the ICI Web site, "Frequently Asked Questions About Mutual Fund Shareholders."

Figure 3-1. Types of Mutual Funds Owned by Investors, 2000.

Equity (stock) funds are the most popular type of mutual fund, and they constitute 56 percent of all mutual fund assets. Money market funds, a good place for short- term savings that have to be kept both safe and immediately accessible, are the next largest category at 27 percent of all assets. Bond funds, which include various taxable and nontaxable categories, make up only 12 percent of all mutual fund assets. Hybrid funds, which hold a combination of both bonds and stocks, are the smallest category at 5 percent of all assets.