Mutual Fund – Know The Different Types Of Mutual Funds To Choose The Best Investment Option
One can buy the mutual fund online. However, before you invest in the mutual fund scheme understand the different types of schemes that are available for you to invest in.
The mutual funds are designed in line with QProfit system trading system, which lets you invest in them based on your risk taking capability and the time span that you plan to invest for. There are many kinds of mutual fund schemes and thus you need to know about them to invest in them.
Money Market funds
The money market funds invest in commercial papers, government bonds, and treasury bills. These invest in the short-term fixed income securities and the investment is safe. This means that the return offered are also low in the money market funds.
Fixed income funds
These funds pay a fixed rate of return to those who invest into the fund. The fund invests into corporate bonds, government bonds and those bonds that are high yielding.
These funds invest in stocks. The fund is designed in order to grow fast and the risk is also more in the equity funds. This means that the probability of return is higher in this fund. The fund could invest into growth stocks, large cap, mid cap stocks or into different combinations of stocks.
These funds invest both into fixed income securities and into equities. The conservative funds invest more into the fixed income instruments and the aggressive funds invest more into equity.
The index funds invest only in the benchmark index. This is a passive fund and here the fund manager only has to make alterations to the investment if there is some change in the stock portfolio of the index. The aim of this fund is to give returns to match the index rate of return.
These funds invest into a particular type of asset class like real estate or commodities. The fund may also choose to not invest into certain companies that deal with tobacco or gambling.
Fund of funds
These funds invest into the other funds. The fund is managed as a balanced fund and it allows the investor to diversify his investment as well as allows asset allocation.
Mutual fund investments are risky but if you choose the investment fund properly it helps you to achieve your financial goals. Mutual funds are managed by professional fund managers and they charge you a fee for the same.