FUND PERFORMANCE TESTBoth mutual funds and the variable annuity invest in market securities. As a market security, the value of your investment is not guaranteed, and your account value can fluctuate. One of the reasons mutual funds are so popular is because they give investors built-in diversification and professional management. While there are literally thousands of different kinds of stocks and bonds, most mutual fund and variable annuities offer investors a choice of funds from among four different categories. As defined by FINRA, those four fund categories are as follows:
- Stock funds that invest in stocks.
- Bond funds that invest in bonds.
- Balanced funds that invest in a combination of stocks and bonds.
- Money market funds that invest in short-term investments sometimes called “cash equivalents.”