What Types Of Mutual Funds Are There ?
There are several types of mutual funds and they are categorized based on their risk level, the type of investments they make or the type of market they belong to. There is a wide variety of funds to choose from, and there is something for every type of investor immaterial whether he likes high risk or low risk when investing. |
|
Different mutual funds function differently, and they all have some level of risk involved. Some funds are known to be less risky than the others.
Every mutual fund will have an objective that is predetermined. Based on this objective the types of companies to invest in are chosen. The fund manager basically decides what type of companies the fund should invest in. Also, based on the objectivity, the mutual funds can be classified into equity funds, fixed income funds and money market funds.
Fixed income funds are nothing but bonds. Almost every other mutual fund can be classified into one of these three types based on their profile.
The money market funds mainly concentrate on short term investment like debt instruments and also Treasury bills. Though the returns you can get are moderate, the risk is rather low and it is also a safer bet. The income can be compared to a regular saving or checking account.
Bonds provide a minimal income on a steady basis. It may not be much, but it is steady and the company will not miss payments. That is why they are called fixed income investments. The bonds also specify the actual amount of return by the end of the investment period.
More Articles :
|
