Fundamental Types of Mutual Funds

Types of Mutual Funds pic
Types of Mutual Funds
Image: investopedia.com

Currently serving as a managing director, Darin Pastor is an active fellow of the Wharton School of the University of Pennsylvania and a former division manager and owner of a Pepsi distribution company. Darin Pastor has over a decade of experience as a financial advisor focusing on products such as insurance, variable annuities, and mutual funds.

A mutual fund is an investment in financial securities such as stocks and bonds. Operated by fund managers who work to achieve financial returns, mutual funds rely on the combined funds of multiple investors in order to access professionally managed portfolios. These financial portfolios would be too expensive for small investors on their own. The following are three fundamental types of mutual funds.

Equity funds invest in stocks and usually target long-term growth. Equity funds generally come with the greatest risk, but they also have the highest potential returns.

Fixed income funds primarily seek to provide consistent income to clients. This steady cash flow is generated by investing largely in government and corporate debts such as bonds.

Money market funds target short-term debt instruments. These funds are the safest funds to invest in, but they also have the lowest potential returns.

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