Sponsored Links :
Types Of Mutual Funds
| Selecting the right investment is critical to the success of any financial plan. In case of mutual funds, this theory holds even greater importance. There are thousands of funds available in the market. Understanding different types of funds that are available would help in making a selection from the lot. |
|
Listed below are different categories of mutual funds available.
Growth Funds -- These are high-risk funds where the funds are primarily invested in high-yield bonds and equities. Investment objective of growth funds is to generate high returns to the investor. As a result, active buying and selling is quite common in growth funds. Apart from this, growth funds are the ones mainly affected due to market fluctuations.
Balanced Funds -- These funds are considered to be moderate risk funds. The investment objective of balanced funds is to generate moderate growth and steady income. Asset allocations include a mixture of stocks, bonds and money market funds.
Debt Funds or Bond Funds -- These funds are primarily invested in government, municipal and treasury bonds. Bonds funds are used to generate a steady income and are considered to be a low risk and safe mode of investment.
Money Market Funds -- Also known as preserver funds, money market funds are considered to carry the lowest risk funds. Primary objective of investment is to preserve funds while generating a little income. Funds are mainly invested in short-term debt instruments. Returns from a money market fund are almost equal to or slightly higher than the returns offered by a bank in a checking or savings account.
Apart from these, other categories of mutual funds include index funds, international funds, global funds, small cap funds, large cap funds, middle cap funds and value funds. All these funds differ from each other in their investment pattern and the amount of risk they carry.
|
