An Overview of Investment Fund and Its Types

An investment fund is a financial medium that has a money pool that is collected from various investors used to invest in different securities like money market instruments, bonds, stocks, as well as other assets. Professional money managers are in charge of operating mutual funds. They will allocate the assets of the funds and try to make income or capital gains for the investors of the funds. An investment fund will have a structured portfolio and be well maintained to complement the investment objectives mentioned in the prospectus.

An investment fund company’s value depends on the securities’ performance they decide to purchase. So when you decide to buy a share or unit of an investment fund, you are purchasing a part of the value of its portfolio. Investing in investment fund shares is very different from stocks investment. Investment fund shares don’t provide any voting rights to the holders. There will be more than a hundred various securities in an average investment fund. Thus the shareholders of the investment funds get significant diversification at an affordable rate. Likewise, investors can invest in Amazon more cheaply now, and the group expects strong growth in both sales and profits in the coming years. You can check the Amazon investieren Test blog to learn about investing in Amazon stock.

Types of Investment Fund

Investment funds are categorized into different sections. Each of them represents the types of securities they focus on for portfolios and the return types they wish for. Every investor approaches and investors can find a fund that satisfies them. Here are some of the popular investment types.

• Equity Funds
  Stock funds or equity funds are the largest categories and they will invest mostly in stocks. There are various subcategories for this section. Some of the equity funds get their name for the company’s size like small, medium, or large depending on the capital. Other funds are named according to the investment approach they take like income-oriented, aggressive growth, etc. Equity funds can be categorized according to those who invest in foreign equities or domestic (U.S.) stocks.
• Fixed-Income Funds
  Fixed-income funds are also a bigger category. They will be targeting investments that can pay a fixed return rate like corporate bonds, government bonds, etc. Therefore the fund portfolio of fixed income creates an income that will be transferred to the shareholders.
• Index Funds
  Index Funds is a category that has become highly popular recently. These funds consider that beating the market frequently is expensive and hard. Therefore, the managers of the index funds purchase stocks correlated with a bigger market stock like the Dow Jones Industrial Average or S&P 500.
• Balanced Funds
  Balanced Funds focus on investing in a combination of assets like bonds, stocks, alternative investments, or money market instruments. They aim at decreasing the exposure risks over asset classes. They are also called asset allocation funds. Such funds have two variations that aim to serve the objectives of the investors.
• Money Market Funds
  Money Market Funds include short-term, safe debt instruments, commonly government Treasury bills. You can store your money safely here. You will not get significant profits, however, you will not lose your capital. The return from these funds will be a bit more than the returns you get from a savings or checking account.