What are the Different Types of Mutual Funds

Before we get to know the different types of mutual funds, it is crucial to be aware of what mutual funds are. Well, mutual funds are nothing but investment funds in which a large number of investors combine their money to purchase securities such as stocks or bonds. This commonly invested pool of investments is then governed by a single investment strategy common to all fund investors.

Different Types of Mutual Funds

Treasury Bill Funds: This is the safest bet for investors. These are the most conservative mutual funds, which primarily focus on investments in government securities or other equally safe options.

Fixed Income Funds: The main objective behind investing in fixed income funds is to seek sizable and regular payments and capital gains. This generally includes investment in a combination of bonds, debentures, treasury bills and mortgages.

Equity Funds: An equity fund, also known as a ‘stock fund’ is essentially a mutual fund that invests in stocks. It can be actively or passively managed.

Balanced Funds: Balanced funds are mutual funds, which provide income as well as growth by investment in common stocks, shares, bonds and even cash.

Special Equity Funds: Special equity funds include several types of mutual funds, which involve investment in areas like real estate investment, resources, and precious metals like gold investment.

Dividend Funds Dividend funds are a type of mutual fund that involve investment in first preferred shares and common shares that pay regular dividends at above-average rates.

Global and International Funds: These are mutual funds, which invest in money-market securities and in bond and stock markets throughout various countries and regions of the world.

You can also read our articles about mutual fund investing for the layman and mutual fund investing for the long-term.