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Mutual fund is a form of collective investment scheme that is professionally managed by a fund manager, or also known as portfolio manager or investment manager. In stock mutual fund, equities or stocks are invested instead of bonds and money market instruments. Meanwhile, the definition of collective investment scheme may vary in every country although it is often referred to as funds, managed funds and mutual funds. In the US, mutual fund can have different meaning.

In the United States, the term mutual fund refers to an organization that pools money from different investors and use them for investment in various types of financial instruments. Management of investment decision is usually handled by the investment manager while the transactions of funds such as unit pricing, valuation and reconciliation are managed by the fund administrator.

Meanwhile, stock refers to ownership of corporation. Hence, one who has shares of stocks has ownership of a certain corporation that issues that stock. Typically, stock takes in the form of common stock shares although preferred stocks can also be issued by a corporation. A common stock can entitle the shareholder for a voting right. However, preferred stock shareholders can receive dividend payments before other shareholders.

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Common stock is a popular kind of stock that is offered in the market by a public corporation although there are institutions that can offer preferred stock and other forms of stocks to the public. Stocks can be of different characters. It has been known that all equity shares are not alike in each corporation.

Stocks have outperformed other financial instruments in the marketplace. When stocks perform well in the market, stock mutual funds can follow suit.   Nevertheless, the performance of stock mutual funds in the stock exchange may have variations for they are not all alike.

Stock mutual funds, also called equity funds, are a kind of mutual funds that can have more risks than other types of mutual funds. These are funds that are held either in cash or stock. The objective of stock fund is to accrue capital appreciation through long-term growth. This is in the case of growth fund, a type of stock fund that invests in companies that experience significant revenue growth.

Nevertheless, there are other types of stock funds that invest in other forms of stocks in the market place. Value fund is a contrast to growth fund. While growth fund prefer companies that focus on significant earnings and use their earnings for reinvestment instead for paying dividend to shareholders, value fund invests in companies that have reached maturity stage. Investors that invest in value stock can earn from dividends received. It is also likely that they can gain from the capital appreciation of their assets once the corporation that issues the value stock has experienced another growth in the marketplace and its stocks are again popular to investors and stockholders.

A fund that invests in both growth stock and value stock is a blend fund. Investors can have both advantage features of two kinds of stocks from one fund. Nevertheless, the risks that can come with this fund cannot be adequately assessed. It is more likely less risky than growth fund and more risky than funds invested in value stock.

Another type of stock mutual fund is the sector fund. This fund invests in one industry sector. For it to be called a sector fund, it should invest at least a quarter of its assets value in one sector. Although this fund can offer capital gain potential when assets are invested in one industry that can possibly do well in the future, the risks that can come with it is also considerable.

Other types of stock fund include focused funds, aggressive growth fund and index fund. There are other types that invest in small cap, mid cap and large cap corporations.