There are many types of mutual funds, but in this article, we will discuss the 5 most common types. This should set you up to be aware and informed on what you are investing in, and where your money is being invested in.
These funds are typically for short-term fixed income securities such as bonds, treasury bills, commercial paper, and certificates of deposit. They are generally a safer investment, but with a lower potential gain than other types of mutual funds
These funds buy investments that pay a fixed rate of return such as government bonds, investment-grade corporate bonds, and high-yield corporate bonds. Earnings are expected to be generated on a regular basis and usually come from interests. However, high-yield corporate bond funds are relatively riskier than funds that hold government and investment-grade bonds.
These are funds invested in the stock market. This possesses a higher risk as these funds aim to grow faster than money market or fixed-income funds.
A balanced fund is a mutual fund that typically contains a mix of stock equities and fixed-income securities such as bonds.
An index fund is a type of mutual fund constructed to match the components of a financial market index, such as the Philippine Stock Exchange index (PSEi). Essentially, the value of the mutual funds fluctuates depending on the performance of the index. Generally, it has lower management costs than actively managed mutual funds since the portfolio manager does not have to do heavy research or conduct plenty of investment decisions.
With that out of the way, do you have a specific type of fund you want to invest in? Check our platform out and find the fund that fits your financial needs.