The main types of investment funds are money market funds, bond funds and stock funds, according to Investor.gov, the investment guide maintained by the U.S. Securities and Exchange Commission. Additionally, there are target date funds that hold a mix of investments types and target a specific retirement date.
Money market funds offer the lowest risk and invest only in high-quality, short-term investments issued by U.S. corporations and federal, state and local governments, explains Investor.gov. Bond funds are similar to money market funds except that bond funds invest in a wider variety of bonds and vary in terms of their risk and return. Stock funds invest in corporate stocks.