Different Types of Mutual Funds

There are various types of mutual funds available to individual investors:

1) Money market fund: This is an open-ended mutual fund that invests in short-term debt securities. It has lower risks as compared to most other investments.

2) Stock fund (or equity fund): This is a fund that invests in equities (common and preferred shares).

3) Bond fund: This is a collective investment scheme that invests in corporate and government debt with the purpose of providing income through periodic dividend payments. Bond funds tend to pay higher dividends than CDs and money market accounts.

4) Balanced fund (also called hybrid funds): This is a type of fund that invests in a combination of common stock, preferred stock, and bonds. The purpose of this fund is to provide investors with both income and capital appreciation in one investment. Balanced mutual funds are affected by factors such as economic outlook, interest-rate changes, and stock market performance.

5) Special equity fund: This includes several types of mutual funds, which involve investment in areas such as real estate, resources, and precious metals.

6) Dividend fund: This is a type of mutual fund that invests in dividend-paying preferred shares and common shares that pay high level of dividend income.

7) Global and international fund: This type of funds invests in bond, money-market securities and stock markets throughout the world. It offers investors the opportunity to increase returns through further diversification.

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