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| PicCredits: TardingCampus |
1. Money market funds:
These
funds invest in short-term fixed income securities such as government bonds,
commercial paper and certificates of deposit. They are generally a safer
investment, but with a lower potential return then other types of mutual funds.
2. Fixed income funds:
These
funds buy investments that pay a fixed rate of return like government bonds,
investment-grade corporate bonds and high-yield corporate bonds. They aim to
have money coming into the fund on a regular basis, mostly through interest
that the fund earns.
3. Equity funds:
These
funds invest in stocks. These funds aim to grow faster than money market or
fixed income funds, so there is usually a higher risk that you could lose
money. You can choose from different types of equity funds including those that
specialize in growth stocks (which don’t usually pay dividends), income funds
(which hold stocks that pay large dividends), value stocks, large-cap stocks,
mid-cap stocks, small-cap stocks, or combinations of these.
4. Balanced funds:
These
funds invest in a mix of equities and fixed income securities. They try to
balance the aim of achieving higher returns against the risk of losing money.
Most of these funds follow a formula to split money among the different types
of investments.
5. Index funds ETF’s:
These
funds aim to track the performance of a specific index such as the NIFTY/SENSEX
Index. The value of the mutual fund will go up or down as the index goes up or
down. Index funds typically have lower costs than actively managed mutual funds
because the portfolio manager doesn’t have to do as much research or make as
many investment decisions.
6. Thematic funds/ Sector funds:
These
funds focus on specialised mandates such as real estate, commodities or
socially responsible investing. For example, an IT-Mutual Fund will invest in
IT sector funds.
