Mutual Funds

A Mutual Fund is not specifically an asset, as a stock or a bond would be considered, but is rather an investment vehicle.  Mutual Funds are basically pools of capital from a large number of investors that go and invest on behalf of the pool.  They can hold stocks or bonds and most have a different goal.  Some are 'Aggressive Growth' so they will invest in more volatile stocks, while some may be considered 'Stability of Principal' that may mainly invest in bonds.  Still others may be specifically industry-oriented, only investing in the stocks of companies in a certain industry (say Energy or Healthcare as an example).

Organization

Mutual Funds are organized under the Investment Company Act of 1940.  They pool the investment of many different investors, all with the same goals, to be managed by a single investment manager and his or her team.  Each fund has its own charter and is required to file a prospectus that lists and discusses all factors about the fund.  These includes its risks, objectives, fees, managers, and much other information.

Loads

Mutual Fund fees are known as loads.  Whenever you see a mutual fund named somewhere, it is typically followed by an 'A', 'B', or 'C' (there are other types as well but they are not as common and we will not discuss them here).  This letter following the name (ex. Jones Aggressive Growth Fund A) refers to the load structure of the fund.

   A

'A' Load funds are also known as 'Front-End Load' funds.  This means that these funds charge an up- front sales charge (typically around 5% but it varies) as soon as you invest your money.  The benefit, though, is that these funds typically have lower yearly fees than the other load types.

   B

'B' Load funds are also known as 'Back-End Load' funds.  Instead of charging an investor a sales fee when the money is invested, the mutual fund company will instead take their sales charge when the investment is withdrawn.  This will mean that you have more money in the account and working for you but typically have higher yearly fees.

The other thing about 'B' load funds is the declining scale on the sales charge.  In most cases a 'B' load mutual fund will decrease the sales charge to the investor the longer the investment is held with the mutual fund company.  This sales charge typically starts out higher than an 'A' loads (maybe 7% or 8% if you take your money out in the first year), and will generally decrease for a few years after that.  This option may be good if you don't expect to need to touch the invested money for a while, but definitely consider all options before investing and speak with an investment professional about your given situation and needs prior to investment.

   C

'C' Load funds are also known as 'No Load' funds.  Wow, No Load!  Why doesn't everybody just use that one??  "No Load" funds are known as such because they do not charge you a sales fee up front and don't usually have a large back-end fee.  However, they do have higher yearly expenses than 'A' loads (which can add up over the long term) and they usually have an investment minimum of 1 year or so, otherwise they charge you a fee for taking your money out early.  That fee is usually not large, maybe 1% but it is still to be noted.

This is just meant to give you a brief overview and moderately better understanding of your options.  Before you invest in anything you should consider your individual situation and speak with an investment professional about your needs.