| November 26
What are Mutual Funds and their types?
Mutual funds are a form of investment that
pool money from various investors to invest the collected funds in securities.
These funds get managed systematically and the investors pay a small fee for
Both retail and institutional investors can
put their money in mutual funds. Mutual funds are also a great form of
investment for new investors who aren’t acquainted to manage their stock market
investments on their own.
Types of Mutual Funds
Mutual funds can be segmented into different
categories based on their asset classes, structures, and investment objectives.
Let’s take a look at the different types of mutual funds that you can invest
Based on Asset
· Equity Funds
· Debt Funds
· Money Market Funds
· Hybrid Funds
· Open-Ended Funds
· Closed-Ended Funds
· Interval Funds
· Growth Funds
· Value Fund
· Sectoral Fund
· Index Fund
· Income Funds
· Liquid Funds
· Tax-Saving Funds
· Exchange Traded Funds
· International Equity Funds
Let’s discuss in brief about a few types of mutual
funds that you can invest in.
Equity funds pool money from investors and
invest it in the shares of different companies. When you invest in equities,
the returns or losses depend on the movement of the market value of those
stocks. Investments in equity funds come with a greater risk as compared to
Debt funds pool money from investors and put
that money in fixed income securities such as bonds, treasury bills, gilt
funds, or liquid funds. These funds are less risky.
Money market funds pool money from investors
and invest that money in money market securities such as bonds, treasury bills,
and certificate of deposit (CDs). These funds are usually governed by banks or
the government, and are hence less risky.
Hybrid funds are a combination of equity
funds and debt funds. These funds pool money from the investors and invest that
money in more than one type of investment securities, such as stocks
and bonds. These funds are perfect for beginners.
Now that we have talked about the various
types of mutual funds, please feel free to share your opinions on investing in
mutual funds. In case you have any more questions, you may connect with our financial experts at 0161-4155000.