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Conservative Mutual Funds

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Conservative Mutual Funds

A conservative mutual fund is an investment company that pools the money of its investors to buy stocks, bonds, or other assets with a goal of conservation of investors’ principal. Its strategies are guided by the desire to avoid losses while generating investment earnings for its shareholders.

Things To Know

  • Conservative mutual funds generally invest in low-volatility securities.

What they invest in

Many conservative funds invest primarily in securities that return current income to their investors rather than invest in more speculative, high-growth securities. Current income is generated on a regular basis from sources such as stock dividends or bond interest payments.

To generate current income rather than high growth, conservative mutual funds have a high percentage of their investments in bonds, preferred stock, and other fixed-income securities. Some may also have smaller percentages in common stock of blue chip (well-established and financially strong) companies that have a track record of regular dividend payments to their investors.

By investing in low-volatility securities, conservative funds may be able to generate income and modest capital gains while protecting capital on the downside.