Six Major Mutual Fund Products
Mutual Funds mange the money and assets collected from various investors in order to achieve financial goal. It is simply collecting the savings of the large number of investors so that the money is re-invested to earn profits, after which the dividend is distributed among-st all the investors.
These funds are managed by companies known as Asset Management Companies, which charge a small fee for their services. Mutual Funds are launched with various schemes, and each scheme is managed by a Fund Manager.
The mutual funds invest in bonds debentures, equities, gold or other assets. There are various Mutual Fund products that one can avail. A few of them are as follows:
These funds invest in stocks and are also known as Stock Funds. They can be determined by factors such as the size of the company, the portfolio and the investment holdings. One can only determine the size through knowledge about the company’s capitalization. Stock funds or Equity Funds can be broadly categorized into two categories, Domestic and International, while ‘Specialty’ Stock Funds target the Real Estate and Healthcare sectors.
Debt Funds are one of the fewer Mutual Fund products that hold a larger amount of fixed income investments and may also invest in short-term bonds, long-term bonds, floating rate debt, etc. On account of the fact that the management costs are not that high, the fee ratio is lower in a debt fund. The main objective of a debt fund is to generate income as well as preserve capital.
This fund is extremely useful for reduction in the risk factor; thus, it helps in maintenance of the portfolio. This fund differs from other funds such as focussed funds and specialized funds.
These funds were originally created in Britain and invest in various types of long-term and medium government securities. They differ from Bond Funds and maintain their standard of a lower risk.
Money Market Funds
Money Market Funds strive to maintain their Net Asset Value so as to earn an interest for all its shareholders. It consists of short-term securities and liquid debt.
An Index Fund provides lower operating expenses as well as a broad market exposure. The portfolio turnover is lower.