Types of investment funds (2024)

FAQs

What are the different types of investment funds? ›

Types of investment funds include mutual funds, exchange-traded funds (ETFs), money market funds, and hedge funds.

What Are Some Types of Investments? There are many types of investments to choose from. Perhaps the most common are stocks, bonds, real estate, and ETFs/mutual funds. Other types of investments to consider are real estate, CDs, annuities, cryptocurrencies, commodities, collectibles, and precious metals.

The Generally Accepted Accounting Principles (GAAP) basis classification divides funds into three fund categories: governmental, proprietary, and fiduciary.

Equity mutual funds are the best option for long term investment. Based on your risk-taking capacity, investment can be made in other sub-categories within equity mutual funds, such as large cap funds, mid-cap funds, and small-cap funds.

The concept of the "safest investment" can vary depending on individual perspectives and economic contexts, but generally, cash and government bonds, particularly U.S. Treasury securities, are often considered among the safest investment options available. This is because there is minimal risk of loss.

While the product names and descriptions can often change, examples of high-risk investments include: Cryptoassets (also known as cryptos) Mini-bonds (sometimes called high interest return bonds) Land banking.

Money market mutual funds = lowest returns, lowest risk

They are considered one of the safest investments you can make. Money market funds are used by investors who want to protect their retirement savings but still earn some interest — often between 1% and 3% a year. (Learn more about money market funds.)

What is a mutual fund vs ETF? ›

While they can be actively or passively managed by fund managers, most ETFs are passive investments pegged to the performance of a particular index. Mutual funds come in both active and indexed varieties, but most are actively managed. Active mutual funds are managed by fund managers.

3 As of year-end 2015, passive index funds managed total assets invested in equities of more than U.S. $4 trillion. Crucially, this large and growing industry is dominated by just three asset management firms: BlackRock, Vanguard, and State Street.

Equities are generally considered the riskiest class of assets.

Stock investment refers to investing in company shares directly, whereas mutual funds create a pool, collecting funds from different investors before investing in the market.

There are four broad types of mutual funds: Equity (stocks), fixed-income (bonds), money market funds (short-term debt), or both stocks and bonds (balanced or hybrid funds).

Mutual funds and ETFs may hold stocks, bonds, or commodities. Both can track indexes, but ETFs tend to be more cost-effective and liquid since they trade on exchanges like shares of stock. Mutual funds can offer active management and greater regulatory oversight at a higher cost and only allow transactions once daily.