Types of Mutual Funds

There are different kinds of Mutual funds in the market which can be availed by the public. some of them are following as listed below-:

1) Open Ended Mutual Fund- Open ended mutual funds also called open ended funds are the most common and prevalent type of mutual fund available in the financial market. They are evaluated by the mutual fund company and also by external evaluating agents. The investment of the funds are evaluated as per "fair market" price which is the final or the closing valuation in the market of the public listed securities. assets of open ended funds are kept aside as securities in the money market as well as short term investment. This way the open ended fund is made available for repurchase. Most of the open ended funds are invested in the liquid securities which can generate cash by disposing off the securities almost equivalent to a value used for evaluations.

2) Closed Ended Funds - Close Ended mutual funds also known as Close ended funds are referred to as financial securities which are pooled in the stock market.Close ended funds makes available to the public fixed numbers of shares in the IPO also called initial public offering. These shares are traded on the stock exchange. Prices of the shares are determined by the demand of the individuals investing. Share prices are not ascertained by NAV(Net Asset Value). One cannot buy close ended funds by posting a check. The close ended funds are required to be bought from the open market similar to the stocks. The best time to purchase close ended funds is promptly after the close ended funds are issued in the market. When there is abrupt fall in the prices of the share it gets sold at discounts. Close ended funds have the advantage that the quality stocks can be bought at discount prices on the other hand they have disadvantage that they change and fall abruptly.

3) Equity Based Funds- Equity based funds can be referred to as the share that an indivisual owns in a particular corporate house by aquiring some of its shares. Equity based funds can contain several selectively chosed stocks. An equity based funds manager takes care of the stocks whoose main aim is to choose those stocks which have the capability of achieving the equity based funds objectives that can be capital appreciation, return as a whole, growth for a long term. Equity based funds are diversified and offers a variety of stocks. The equity based funds are volatile, the price of their shares fluctuates on daily basis with even a slightest change in economy of functioning of a company. They provide rewards on a long term basis.

4) Bond Funds- Bond funds are for those indivisuals who opt for security as well as earning on their investment. Bond funds enables a person to earn more than from any other sources of earning like fixed deposits etc. There are different kind of Bond funds depending upon the issuer of the bond.
* A Goverment bond is the one which is issued by the treasury of the goverment and are regarded as quality bonds as they are backed by the goverment and so it's more or less ensured gauranteed payment in the event of maturity yet they yield the least.
* A Corporate bond is the one which is issued by different corporate houses for the purpose of expansion and fulfilling and funding the different activities of the corporate houses. Agenicies like CRSIL, CARE & ICRA determine the degree of safety which is determined by the ability to pay back.
* The bond funds issued by the State goverment are known as municipal bond funds on which the municipal body does not levy taxes.

5) Hedge Funds- The Hedge Fund includes those securities that are traded in the popular exchanges. The investors interested in investing in the Hedge Fund do need to follow the terms and conditions that have been set by the hedge fund company that is constructing the index.
The Hedge Fund is constructed by a hedge fund company through the adoption of certain strategies and specialized instruments those act as reflector of the whole hedge fund. These funds are structured in such a way that the tracking of the specific fund is done with minimum possibility of error.

6) Exchange Traded Funds( ETF)- An Exchange Traded Fund (ETF) is an investment vehicle, much like a mutual fund, through which an investor can own an assortment of companies. An ETF contains a basket of funds or securities, often of the same investment category, such as energy and gold. The most distinguishing factor between a mutual fund and an ETF is that the latter can be traded on exchanges throughout the day like stocks. unlike mutual funds, ETFs are open to price fluctuations during the entire trading period. Since ETFs are traded on the stock market through brokers, minimal interaction with fund houses is required. Fees associated with ETFs are also lower that the mutual fund fees. Additionally, ETFs afford greater tax efficiency than mutual funds. While these benefits do exist, the one driving the popularity of ETFs is liquidity.

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