Types of Mutual Funds: Four Basic Types and Features

Types of Mutual Funds: Four Basic Types and Features – In the Philippine mutual fund industry, there are four basic types of mutual funds to choose to invest money. They are stocks (also called equity), balanced, bond and money market funds.

Types of Mutual Funds Features:

Stock Mutual Funds – Stock mutual funds or equity funds invest primarily in shares of stock issued by Philippine corporations. The dominance of stock issues within the portfolio positions the fund to attain a more aggressive rate of growth.

Balanced Mutual Funds – Balanced funds invest in both shares of stocks and bonds, thereby accessing the growth potential of stocks tempered with the presence of secure fixed-income instruments.

Bond Mutual Funds – Bond funds invest primarily in bonds such as treasury notes issued by the Philippine government and commercial papers issued by reputable companies in the Philippines.  Having a full basket of only fixed-income securities, bond funds provide capital preservation while maintaining a conservative stance in terms of asset allocation. Here’s a list of best performing bond mutual funds.

Money Market Mutual Funds – Like bond funds, money market funds also have a conservative stance since they have a full basket of fixed income funds. The main difference lies in the term of investments of money market fund investments, which is one year or less.

Investors of mutual funds need to trust their fund managers. Because professional fund managers create value for shareholders by providing superior yields within controlled risk exposures. Certainly, expective in both security selection and asset allocation go a long way in ensuring better long-term rewards for mutual fund investors.

At present, there are a total of 22 mutual funds in the country. Six (6) of these are bond funds, five (5) are equity funds, while the remaining ten (10) are balanced funds while one is a money market fund.

Now you know the types of mutual funds. You can pick now what is suited for your investment priorities.