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Are Any Mutual Funds a Sure Thing?

Certain funds offer you guarantees-for a price.

This story appears in the June 2003 issue of Entrepreneur. Subscribe »

Whenever there's an extended bear market, investors start looking for guarantees. Wall Street typically responds by creating products that promise returns-if you follow the rules.

Balanced-target-maturity funds, for instance, come with guaranteed returns. First introduced in the 1990s, these funds invest a portion of their assets in stocks and another in zero-coupon bonds. It's a sweet combination for some investors because the zero-coupon bonds portion of the portfolio gives these funds a maturity date as well as a guaranteed return. Meanwhile, the stock portion can add juice to that return, provided the stocks increase in value over the life of the fund.

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