8. Making Sense of Wacky Mutual Fund Names
When I started going to physical therapy for a back problem a few years ago, word spread quickly that I was a new patient there. One of the therapists, Mark, told me while strapping me into a weight machine one day that he and other therapists were trying to edge their way onto the schedule so they could get me as a patient and grab a little investment advice.
He apologized for “taking advantage of a client” but then persevered anyway.
It wasn’t unusual. I’m used to being cornered at parties, at doctors’ offices, at the hair salon, and even in the gym by apologetic people who are perplexed about investing and desperate for help. I can almost predict their questions before they ask them.
Nothing prepares Americans to invest money for their futures. So everyone, from doctors to hair stylists, commits similar, devastating mistakes that they could easily avoid if they simply knew about stock market cycles, picked up about a dozen vocabulary words, and had a few basic tidbits of information about making mutual fund choices.
So I told Mark I was happy to assist him or anyone else.
At the therapist’s office, there was a sense of urgency. The staff, like so many ordinary investors, had been badly bruised by the 49 percent plunge in the stock market during the technology stock wreck. They had no idea how to rehabilitate their long-lost savings.
Mark, for example, was a therapist by day and a blues musician at night. When he looked at his list of mutual funds, he saw nothing but “wacky words.” None of them made sense, so he made the same mistake that masses of other novice investors do. He looked over his list of 401(k) funds and saw one that was making more money than any of the others. Figuring that it had to be the best one, he put all his money into it.
Picking the big money maker, the fund that looked the best, had led him into a dangerous snare. By selecting the champion among his fund choices, he had set the groundwork for a disaster, but he didn’t know it. For a while, he was ecstatic. Every time he eyed the account, he saw more thousands. The sum was getting so big that, at one point, he had visions of retiring rich and devoting his time to his music. Then one day the cycle changed, and thousands of dollars vanished for some seemingly mysterious reason. Every day he peeked at his 401(k), it was worse. Instead of retiring rich, he began envisioning himself forever setting up weight machines for sweaty people.
When Mark told me about his missed fortune, he looked like he was in more pain than I as I struggled to finish my 19th repetition on the weight machine. Then he asked me the same naive question thousands of others have asked me: “I’ve lost so much money in my mutual fund. Should I sell it?”
“What fund is it?” I asked. And the answer he gave to that critical question was totally predictable, an area where most investors get tripped up unnecessarily. Like the average person with a 401(k), Mark didn’t know the name of his fund, and, of course, didn’t have the slightest idea what the fund manager’s job was. All he knew was that he was losing money.
“Knowing what the fund manager has been hired to do is essential,” I told Mark. “The clue often comes from the fund’s name.”
Then I delivered the shocker: “I know it’s awful to be losing money, but the loss alone tells me nothing about whether your fund is good or bad. Your fund might simply have suffered along with others in a bad market cycle.”
Poor Mark! He looked like he had just edged his way onto the physical therapy scheduling list for nothing. Yet when I returned for my next therapy session, Mark was primed. He knew the name of his fund and gave me his full list of 401(k) choices.
“Which is the best fund?” he asked. He was making another toxic mistake that virtually every novice investor makes.
“That’s the wrong question,” I told him as I watched his earnest face turn disappointed once again. “There is no single best or right fund in your 401(k) plan—or anyone else’s 401(k) or IRA. If you rely on just one fund again, your retirement dreams will probably implode one more time. Instead, what you have in your 401(k) are several funds that you need to combine.
“Think of it like baking a cake. Flour is one of the right ingredients, but if you leave out sugar, eggs, and a few more ingredients, your recipe is going to be a flop. You have a retirement fund disaster now because you tried to make a recipe using only sugar.
“So now look at your 401(k) list,” I told him. “I will give you a quick recipe for retirement investing success. To start, I am going to help you understand the wacky words, because everyone needs to recognize them. They are invaluable. They tell you whether you are selecting flour or sugar,” I explained.
“Next, I’m going to tell you how to mix them together. Proportions matter a lot. You can ruin a 401(k) or IRA by using too much or too little of an ingredient, just like you will ruin a cake by using only a tablespoon of flour when the recipe calls for a cup.”
Mark was wearing his hopeful, earnest face again. And in less than an hour, I gave him all the basics he—or anyone—needs to be a successful investor in a 401(k), an IRA, or any other retirement account.
This is what I told him, and I offer it as a roadmap for you now and in the next couple chapters. It is your guide to maneuver through cycles and make sense of the befuddling language. It’s what people pay financial advisers to handle for them. But regular people can master it, regardless of their background. It’s your recipe for a decent retirement. I promise.
Avoid the Traps
When employers create 401(k) plans for their employees, they typically provide about a dozen mutual fund choices—but that doesn’t mean they are all for you. Some people like to tinker with their mutual funds more than others. Some want to take more risks than other people. Some will be retiring in a couple years, and some have decades to go. Consequently, a few of the mutual funds in the 401(k) will be essential for you, and others are available so that there is something for everyone. You need to zoom through the mess and focus on what you need—not what looks like a winner.
The mutual fund with the best return is often not the essential one. In fact, you can think of it as a decoy or trap, perhaps distracting you from the mixture of funds that ultimately will be best for you. If you throw all your money into the enticing fund, it will likely hold you hostage from a decent retirement. Falling into the trap seems to be human nature. In a recent study, Harvard students were given a list of mutual funds, and almost everyone fell into the dangerous snare.
Instead of falling for it, when you see the highest return, remind yourself about cycles. The fund that is attracting you is probably riding a cycle that could be about to end. This was the case with Mark’s choice, a stock fund on steroids, filled with technology stocks. He was attracted to it when it was on its last legs.
Instead of focusing on the hot fund, there’s another way—the only way that works: Make your way through categories.
The Three Main Choices: Stocks, Bonds, and Cash
Having a dozen or more choices of mutual funds can be overwhelming, but while they make your head spin, the pros see it much more simply—and you can, too. Realize that virtually all the funds before you in a 401(k), and almost all available for an IRA, fall into three basic categories: stocks, bonds, and cash.
When you know that, your choices will start to dwindle. Instead of feeling like you have to make sense of a dozen funds with strange names, now you are focusing on just three simple categories.
Even discerning between stocks and bonds on a 401(k) list might seem hard at first because investment pros muck up those easy words by using their own lingo. When they mean stocks, they sometimes use the word equity. When they mean bonds, they might use the words fixed income. The same might happen when you go to a broker to open an IRA. But your choices ultimately come from the same three basic categories.
To the pros, the special language has extra meaning, but just speak English to yourself. Say, “Okay, I have a choice between a fund that will buy stocks for me and a fund that will buy bonds for me.”
In addition, just about every 401(k) has something in it called a money market fund. When you see one, consider it like a piggy bank for cash. That’s your relatively safe place to store money when you are trying to decide what investment to use next. It’s similar to a savings account at a bank, although not as safe as a bank account because no FDIC insurance guarantees your money.
After you recognize the difference between stocks, bonds, and cash, you are halfway home. You don’t need to use the money market fund, but you will need to put a good chunk of money into stock mutual funds and another chunk into a bond mutual fund. Using both stocks and bonds is what the professionals refer to as diversification. That’s important, and I will explain how to do it right and simply.
First, I must teach you a few more vocabulary words so that the “wacky words” help you rather than hurt you, and so that your mutual funds no longer act in mysterious ways. The wacky words sound strange, but they alert you to how each fund will behave in cycles. The words guide you to the variety of funds you need to weather all cycles.
If you put money into a stock mutual fund, you will own stocks—maybe 100 of them, all within that one mutual fund. So when people are making money in the stock market, you will likely be making money in your fund. When people are losing money on stocks in a rough cycle, it’s likely that you will be losing, too. This is why it was not relevant that Mark’s mutual fund was losing money. It was natural that he would be losing when the stock market was dropping 49 percent. In fact, losing some money, though unpleasant, doesn’t necessarily mean a mutual fund is defective.
What mattered was whether Mark’s mutual fund was losing more money than other funds like his and whether he’d given himself enough protection from inevitable market cycles by investing in a variety of mutual funds instead of just the one. Without knowing the name or the description of his fund, he was in the dark, absolutely unable to make a smart decision. His quandary is almost universal among people with a 401(k) or an IRA.
By the end of my session with Mark, he realized where he’d gone wrong. He had not known about cycles, so in his attempt to be prudent and pick the best fund, he had chosen a dangerous one: a fund posing as a mild-mannered large cap fund but hyped up on an overdose of technology stocks. That overdose made it exceedingly vulnerable to cycles. His fate was sealed the moment the tantalizing fund lured him in.
There was a better way to pick funds, I told Mark. I gave him all the tools he needed to assess whether a certain fund is better or worse than others. I will provide you with that same ability. In addition, I started with the most essential of investing lessons: To avoid grief in the future, Mark could not depend merely on a single stock mutual fund. He needed bonds, too. He needed to start diversifying. In other words, he needed to start mixing and matching mutual funds into an appropriate combination so that cycles wouldn’t hurt him badly the next time conditions turned brutal.
That strategy would save him from the destruction that was about to brutalize others between late 2007 and early 2009, as people from throughout the world feared a global depression.
Why You Need Bonds
Mark was a lucky guy. After holding me captive in a weight machine for an hour a week for a few weeks, he would never have his money ravaged again the way it had been in the technology stock wreck that ended 2002. I gave him the antidote against stock market poisoning: a good dose of bonds.
Unfortunately, too many people didn’t learn early in the decade that they needed bonds for protection. So they were completely defenseless a second time when once again the stock market devoured half their money, this time from late 2007 to early 2009, in the worst crash since the Great Depression.
When you lose half your money twice in a decade, you wise up. People learned through the school of hard knocks that stocks can turn cruel. As a result, many dumped stocks completely and figured they would hide in bonds.
Yet they still didn’t really understand how bonds work. They didn’t realize that people can lose money in bonds as well as stocks. So many naive investors inadvertently made a move with their money once again that would potentially bring on hardship.
I explain later in this chapter how bonds can hurt you. Now I simply want you to know that bonds are critical to your future. Yet they work best for people saving for retirement when they are combined with stocks instead of being used as your sole investment.
You can think of bonds like shock absorbers, or protection that you always want installed in your retirement savings. When the stock market suddenly starts to bang you around, bonds soften the blows and return you to a smooth ride. They reduce the damage stocks alone can inflict on your money.
Because you keep that protection in place all the time, you can have more courage day in and day out with your money. Stocks, while potentially destructive, also can be benevolent, growing your money far more than bonds alone. When you have the security of holding bonds all the time, you can dare to also own stocks. That way, you have the best of all worlds: protection provided from bonds, but the possibility of enjoying the huge growth spurts that only stocks deliver.
Let me walk you through an example of how bond protection works. Let’s go back to 2007. You might recall that the year started blissfully, with no inkling of the horror to come. The economy was booming, people were still making money on homes, stocks were soaring, and Americans were feeling secure about the future. They had forgotten the devastation of the technology stock wreck in 2000–2002. Since that 49 percent decline in the stock market, stocks had soared more than 70 percent.
Fear was gone. People trusted stock funds in their 401(k) again to do the heavy lifting for their meager savings. One in four baby boomers was rushing to catch up for lost time by keeping 90 percent of 401(k) money in the stock market.
This cozy feeling wasn’t unusual. Before every major market crash, the last thing people imagine is trouble. Everything around them points to prosperity. That very comfort level drives excessive risk taking and, ultimately, ends badly in a crash.
That’s why, in good times and in bad times, people need bonds constantly in their 401(k) and IRA. Bonds are protection when horrible stock markets sneak up on investors.
So observe the outcome.
Imagine that it is that comfortable time in 2007, and you take a look at your 401(k). The money in your stock fund has increased 16 percent since the previous year. At the same time, however, you’ve had a bond fund—a huge disappointment, by comparison. It’s gained just 2 percent in a year. So you figure, “Why let my money languish in the lousy fund that pays just 2 percent?”
You don’t realize that there is absolutely nothing wrong with that bond fund. It has been behaving exactly as bond funds do. In good times, bonds usually pay you less than stock funds—often significantly less.
Naively, you snub that bond fund and put all $10,000 that’s in your 401(k) into the stock fund that’s been so sweet to you. You figure that you’ve been pretty clever with your money by moving all of it where it will grow more.
Then investors throughout the world start getting spooked by the mortgage mess in the U.S. and stocks start falling. You ignore it at first, but then it’s early 2009—the nation’s unemployment rate is spiraling, businesses are crippled, banks have been collapsing, and investors throughout the world are panicking. You imagine losing everything, and you are horrified when you look into your 401(k). Your original $10,000 in stocks has turned into only $4,300.
From that point, the stock market starts climbing. But you don’t see relief coming. At the ugliest point, nothing calms your nerves. Virtually, every Wall Street talker you hear on the news predicts doom and gloom ahead.
You might have felt more calm if you hadn’t relied on stocks alone and had been holding bonds for protection. Instead of putting everything into a stock fund in 2007, if you had divided your retirement savings in half—with 50 percent in the stock market fund and the other half in bonds—the outcome would have been ugly, yes, but significantly better.
With bonds and stocks together, you would have had $7,700 at the scariest point in the cycle instead of a mere $4,300. You would have still been way below your original $10,000, so even $7,700 probably would not have been reassuring.
But then came the healing. The fact that you retained $7,700 instead of only $4,300 while the stock market was plunging positioned your money to recover relatively quickly and start growing again. By the end of 2011, about 2½ years after the scariest period in the market, you would have had about $12,500—or $2,500 more than your original $10,000. Not bad at all for the most dreadful period for investors since the Great Depression.
Yet if you had not used bonds and had relied 100 percent on stocks, by the end of 2011, you still would have been in sorry shape. You would have recovered somewhat from the point when only $4,300 of your original $10,000 remained. But as 2012 began, you would have had just $9,000 and still would have been wondering when your original $10,000 might reappear.
In other words, here’s the moral of this story: When you mix bonds in with the stocks, you get a smoother, more reassuring ride. You don’t have to know when stocks will be kind to you, or cruel to you. Bonds become your lifesaver.
What’s a Bond?
Bonds generally are safer than stocks for one basic reason. When either a person or a mutual fund buys a bond, a specific promise is made—one that doesn’t exist for stocks: The promise is the following: If you buy an individual bond, you will loan money temporarily to a corporation, to the U.S. government, to a city, or to some other entity. (The entity’s name appears on the bond.)
You know the concept if you’ve ever given a reliable friend a loan and been paid interest for doing it. The bond itself works the same way. It’s simply an IOU for a loan that you make to a stranger instead of a friend. At some specific date in the future, the loan will end and the corporation or government will give all your money back to you. Until that date arrives, however, you will get a certain amount of interest on a regular schedule. It won’t change; it will be like a tiny paycheck that comes regularly.
This promise is why people buy bonds. They want to earn interest on their money, and they like the safety of knowing that the interest check will arrive like clockwork. They want to earn more interest than they would in a savings account. They especially like the assurance that eventually they will get all their original money, or principal, returned to them.
If you own an individual bond, you will get your interest payments directly on a specified date. But if you instead invest in a bond mutual fund, your fund will hold the bonds for you and hundreds of other investors in your fund. The interest payments will go into your fund, not directly to you. In effect, you will be sharing the interest payments with all the other investors who put money into your mutual fund.
Regardless of whether you buy a bond directly or your fund manager buys a bond for your fund, the same process occurs. When you loan money to a corporation or governmental entity by buying a bond, that entity tells you up front when it will return that money to you. It might be 5 years or even 30 years.
Take, for example, the hypothetical Nimble Pots and Pans Company. It needs money to develop some new pan factories around the world, so it decides to borrow the money by selling bonds to many different people. You hear about it from a broker and decide that you will buy one of the bonds so that you can earn interest. Nimble sells you a $1,000 bond through your broker. The bond is like an IOU. You turn over $1,000 to your broker, she gives it to Nimble, and then Nimble promises to give you back the full $1,000 on September 15, 2023. Meanwhile, to make it worth your while, Nimble also promises to pay you interest for the next ten years. In this case, let’s say it’s 5 percent, paid semiannually. That’s $50 a year, or $25 paid in September and $25 paid in March every year until September 15, 2023.
As the years go by, you rely on Nimble to keep its promise. After 10 years, you assume that you will get your original $1,000, or what’s called your principal, returned to you.
How to Lose Money in Bonds
Although bonds are your insulation from painful stock market cycles, they are not absolutely safe. You need to know this so that you don’t bail out of your bond fund at the first sign of a loss. I’ve had people call me horrified over a dip in a bond fund. “There’s something wrong with my bond fund— it’s losing money,” they say, unaware that losses can occur even in relatively safe bond funds during a few months or even a year.
Combined with a stock fund over many years, your bond fund will protect your money. The losses in bonds aren’t nearly as intense as those in stocks and typically don’t last as long. Whereas the worst single year in stocks has been a downturn of 43 percent, the worst for U.S. government bonds has been 15 percent, according to Ibbotson Associates. With less lost, recoveries come faster. So expect bumps from bond funds, and understand why they occur so that you don’t dump a fund you should hold.
You face two types of risks in bonds. I start with what’s called credit risk. You need to know the concept, not the term.
It works like this: When you or your fund manager buys a corporate bond such as a Nimble Pots and Pans bond, you take a risk that you won’t get all your money back. Remember, when you buy an individual bond, you are making a lengthy loan—maybe for five years, maybe longer. Sometimes during that time, business conditions change and companies can’t keep their promise to pay you back. Say that, a few years down the road, Nimble has built new factories all over the world, and suddenly customers don’t like the pots and pans anymore. Nimble’s business starts to deteriorate, and eventually the company is having trouble paying its bills. With time, it ends up filing for bankruptcy.
This is one of the scariest prospects for people, or mutual funds, that invest in individual corporate bonds. When companies go into bankruptcy, they usually don’t pay back all the money investors were promised. If you are lucky, you might get a portion, but your bond definitely is not the safe investment you anticipated.
When you invest in a bond mutual fund, however, you have a lot more protection from bankruptcies than if you had gone to a broker and bought a single corporate bond. Because your fund manager has selected hundreds of bonds for you, you might not even sense one bad bond. Most of the bonds in your fund will continue paying interest. Your bond fund manager should be studying bonds constantly and steering clear of a lot of dangerous companies, like Nimble, so that blowups like Nimble don’t happen often.
Also, if you invest only in U.S. government bonds through government bond funds, you don’t have to worry about bankruptcies. No matter how financially stressed the government gets, it can always raise taxes and use the money to pay back you and other investors. It does that because it needs the entire world to be confident that it will always pay its bills.
Even with ultrasafe bonds such as U.S. Treasury bonds, however, you are not completely safe if you invest in a bond fund. Another risk applies even to the safest of bonds, and people who depend on bonds fear it greatly. It’s called interest rate risk. Again, you don’t have to learn the term, but you need to understand the concept so that you don’t look at your bond fund in your 401(k) someday and panic when you see that you’ve lost a little of your money.
The risk works like this: Whenever you hear in the news that the Federal Reserve is raising interest rates or you notice that mortgage rates are rising, it usually means that your bonds or bond funds are vulnerable to losing some value. Bonds that you purchase today will always lose value tomorrow, next month, next year, or years later if interest rates end up higher then.
This might sound complicated, but it’s not. Think of it this way: Say that I want to borrow $1 from you for a week, and I tell you I will pay you either a nickel or a dime when I return the dollar to you. The nickel will be 5 percent interest, and the dime 10 percent. Naturally, you want to make the most money you can, so you want the dime—in other words, you want 10 percent in interest.
Well, when you invest in bonds, you are always examining the interest that bonds will pay you, and you always hunt for the most interest you can get. That’s why you will be disappointed if you buy a bond that will pay you 2 percent interest during the next 10 years, and then a few months later, interest rates go up and other investors are able to buy new bonds that will pay them 4 percent interest.
At that point in time, you are stuck with money in a lower-interest bond, and although you can sell it, no one else is going to want your 2 percent bond when he or she can simply buy new bonds paying 4 percent. Consequently, your bond will lose value. If you wanted to sell it to someone else, that person would pay you less than you paid for it. In other words, you would lose money.
If you keep holding that bond instead of selling it, you might not care that the value has dropped. You will continue to get your 2 percent interest, and at the end of 10 years, your original money will also be returned to you, as promised. So you won’t lose a penny. But the situation is different if you have a bond fund.
If your bond fund manager bought a lot of bonds paying 2 percent, and new bonds become available at 4 percent, your fund manager might want to sell those old, low-interest bonds. At that point, however, no one is going to pay full price for them. So you are going to look at the bond fund in your 401(k) one day and discover that you are losing money.
You might find that unsettling. If it happens, however, do not assume that your bonds are as dangerous as stocks. With time, your fund manager will adjust to the higher interest rates by buying newer higher-interest bonds, and you will stop losing money.
In other words, you are affected by changing cycles in bonds as well as stocks.
The Trade-Off Between Seeking Safety and Making Money
I want you to understand an important point about safety and investing. It’s a fact of life that is central to all the investing choices you will make.
When you choose a safer investment, you also choose to be paid less for it than you would for taking more risks. So stocks have the potential to pay you the most—perhaps more than 20 percent in a year and averaging 9.8 percent a year if history repeats. But they also smack you the hardest—maybe dropping more than 37 percent in a single year like 2008. That’s part of the bargain. You are supposed to know it and go in with your eyes open.
Bonds aren’t as risky, so they pay you less than stocks. The lower returns from bonds don’t just happen by accident. Governments and businesses that sell bonds know they don’t have to pay you as much as stocks pay because they are giving you a special promise instead of big returns—the promise to repay all your money, plus interest.
Stocks, on the other hand, never make promises. You buy a stock for the potential of making money. There is never a “sure thing” with an individual stock, no matter what anyone tells you. You can win; you can lose. Of course, with a stock mutual fund, you have a better shot at winning than if you pin your hopes on one stock because mutual funds hold dozens of stocks.
Although bonds generally are safer than stocks, they come in different varieties. Some are safer than others, and they pay you accordingly based on the risks you take. They don’t do this out of the kindness of their hearts. They do it because they know they have to pay you extra to get you to accept greater risks.
The U.S. government doesn’t have to pay you much interest on U.S. Treasury bonds because you can be sure that you will get every cent back. So historically, that’s meant about a 5.7 percent average annual return for long-term bonds. Corporate bonds are more risky because of the possibility of bankruptcy, so they pay more to entice investors to take the risk—about 6.1 percent, on average, according to the 2012 Ibbotson SBBI Yearbook.
If you reach for the highest return in bonds, you will select what’s known as a high-yield bond fund, or a junk bond. Beware! This fund might say “bond” on it, but it is not mild mannered. It is almost as dangerous as a stock because it purposely picks bonds from companies that are in financial trouble and might go bankrupt.
You might be attracted to a 12 percent return in a high-yield bond fund when a safe U.S. government bond fund is paying only 5 percent. But because you get paid to take risks, that 12 percent return should serve as a red flag. Instead of picking it for the juicy temporary return, you must try to picture that same fund losing 12 percent during a bad cycle and ask yourself whether you want to take the risk of losing money in it then. If your goal is to use bonds for safety, you’d be wise to pass up the high return.
An Easy Bond Fund Choice
Here’s an easy solution for your 401(k) or IRA. Look through your bond mutual fund choices. You might see a short-term bond fund, a long-term bond fund, and an intermediate-term bond fund. The diversified intermediate-term fund is a solid all-around choice. It usually invests in bonds that mature in about ten years or less, so it generally won’t fall as hard as a long-term bond fund when interest rates rise. It also usually yields more than a short-term fund. (By “mature,” I mean that the loan ends and the government or corporation returns the investor’s money, or principal, to the investor.)
If you buy a diversified intermediate-term bond fund, your fund manager buys a mixture of bonds for you—some safe U.S. government bonds, some riskier corporate bonds, and maybe a small number of risky high-yield bonds to boost your return just a little. Mixing bonds cautiously, while relying mostly on safe government bonds, is a sound strategy.
In the words of the investing profession, you balance out your risk and return. You are diversifying your bonds. That means you will get a little jolt from a small quantity of riskier bonds but will protect your money with the safer choices. Such a fund is a good choice for one-stop bond shopping.
You now know how to use bonds to reduce your risks in your retirement savings. You have progressed a long way. You know how to spot a mild-mannered bond fund among 401(k) choices and how to ask for a diversified intermediate-term bond fund for your IRA. You are already better off than most people with 401(k) plans and IRAs. If you went no further, you would be to the point that you’d have a healthier retirement. But you can do even more for yourself. To build up enough money for retirement, you must hold more stocks than bonds.
So next, you are ready to learn how to spot the risks in stock funds, too. Then you can deliberately choose a mixture that will blend different levels of risk and help you weather the cycles that will come your way.
As with bonds, stocks don’t come with just one level of risk. Some can give you explosive growth but also can explode into nothing. (Mark had these.) Others are more mild mannered. You don’t have to guess about which are which or find out in the middle of a scary cycle. Stock mutual funds have specific names that alert you in advance.
Now on to the “wacky words” that help you spot stock funds you will need, along with an introduction to your fund manager’s job.