Stock funds, also called equity funds, invest primarily in stocks
2.
Bond funds invest primarily in corporate or government bonds
3.
Balanced funds invest in both stocks and bonds
4.
Money market funds make short-term investments, and try to keep their share value fixed at $1 a share
Every fund in each category has a price, known as its net asset value (NAV),
and each NAV differs, based on the value of the fund's holdings and the number of shares investors own. The price changes once a day, at 4 pm EST, when the markets close for the day. All transactions for the day — buys and sells — are executed at that price.
Late trading It's illegal for mutual funds to allow late trading, which means an investor enters an order after 4 pm to buy or sell at the fund's 4 pm closing price. By trading after the close, an investor can take advantage of information others don't have to make a profit or prevent a loss.
