Post by Admin on Jan 30, 2017 8:02:43 GMT -5
Many sources have classified mutual funds into numerous categories that just leaves the reader puzzled.To be honest,mutual funds can be broadly classified into 7 categories...trust me.
Lets look into those categories and get introduced to them :
1. Money market funds
These are short termed investments (maybe as short as 90 days). They typically invest in Government bonds, Treasury bills and Commercial papers. They are generally fixed income securities and hence, safer and low rewarding than the remaining categories. Example -gilt funds.
2. Fixed income funds
They generally invest in bonds - both Government and corporate. They also more or less guarantee a fixed income.
3. Equity funds
These funds invest solely on stocks. One such fund's portfolio can contain several companies. They are the most risky and also the most rewarding among all categories of mutual funds.
4. Balanced funds
These funds contain a mixture of stocks as well as fixed income securities.
5. Index funds
These mutual funds resemble or imitate the performance of an index,like the Nifty 50 itself.These are among the lowest cost funds as the fund manager doesn't have to analyse too many things.
6. Specialty funds
They concentrate on special markets / social / mentality segments. They can be following one particular economic sector, the real estates, or an aggregate of companies that satisfy a particular social notion.
7. Fund-of-funds
They are just permutations and combinations of the 6 categories as mentioned above.
Lets look into those categories and get introduced to them :
1. Money market funds
These are short termed investments (maybe as short as 90 days). They typically invest in Government bonds, Treasury bills and Commercial papers. They are generally fixed income securities and hence, safer and low rewarding than the remaining categories. Example -gilt funds.
2. Fixed income funds
They generally invest in bonds - both Government and corporate. They also more or less guarantee a fixed income.
3. Equity funds
These funds invest solely on stocks. One such fund's portfolio can contain several companies. They are the most risky and also the most rewarding among all categories of mutual funds.
4. Balanced funds
These funds contain a mixture of stocks as well as fixed income securities.
5. Index funds
These mutual funds resemble or imitate the performance of an index,like the Nifty 50 itself.These are among the lowest cost funds as the fund manager doesn't have to analyse too many things.
6. Specialty funds
They concentrate on special markets / social / mentality segments. They can be following one particular economic sector, the real estates, or an aggregate of companies that satisfy a particular social notion.
7. Fund-of-funds
They are just permutations and combinations of the 6 categories as mentioned above.