TYPES OF MUTUAL FUNDS

There are so many different types of mutual funds to choose from. Find out which mutual fund types are best suited to your personal investing style.

There are many different types of mutual funds you can choose from. Some of the most popular are:

  • Equity Mutual Funds
  • Fixed Income Mutual Funds
  • Money Market Mutual Funds
  • No Load Mutual Funds
  • Growth Stock Mutual Funds
  • Tax Saving Mutual Funds
  • Index Mutual Funds
  • Gold Mutual Funds
  • Socially Responsible Mutual Funds

Read on to learn the ins and outs of each of the above types of mutual funds.

Equity Mutual Funds

Most people who invest in mutual funds invest in equity funds. In a lot of ways, these emulate the principle upon which a lot of stock-market moves are made: long-term investment resulting in capital gain

Fixed Income Mutual Funds

This type of mutual fund relies mainly on bonds — not a stock in a company but a kind of loan that the company (or a municipality, or a state, or the federal government) then pays back with interest. These are going to pay out a lot less than a successful equity type mutual fund, but the risks are controllable by bond type.

Money Market Mutual Funds

If you’re looking for a place to put your money that’s better than a savings account but very much risk-free, this type of mutual funds typically can do the trick. Most of the time you’ll find money market portfolios full of Treasury bills.

No Load Mutual Funds

A no load mutual fund is a fund in which shares are sold without a commission. The reason for this is that the shares are distributed directly by the investment company, instead of going through a secondary party.

Growth Stock Mutual Funds

A growth stock mutual fund is essentially a diversified portfolio of stocks that has, as it’s primary goal, capital appreciation. It consists mainly of companies with above-average growth in earnings. Instead of paying dividends, these companies will reinvest their earnings into expansion, acquisitions, research and development, etc.

Tax Saving Mutual Funds

A tax-free savings account can hold a variety of investment instruments – one of which is a mutual fund. The fund can grow tax-free for life, meaning that interest, dividends and capital gains earned are never taxed – even when withdrawn!

Index Mutual Funds

An index mutual fund has a portfolio constructed to match the components of a market index (i.e.: S&P 500). This kind of mutual fund is said to provide broad market exposure, low operating expenses and low portfolio turnover.

Gold Mutual Funds

A gold mutual funs invests primarily in gold-producing companies or gold bullion. The price of shares within a gold fund correlates closely to the spot price of gold itself (assuming the fund holds the majority of its assets either in bullion or in the stocks/bonds of gold miners).

Socially Responsible Mutual Funds

Socially responsible mutual funds hold securities in companies that adhere to social, moral, religious or environmental beliefs. To ensure the stocks chosen have values that coincide with the fund’s beliefs, companies undergo a careful screening process.


 

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