There are many types of mutual funds within these three types of mutual funds. Here are the 3 different major types of mutual funds. The risks of mutual fund investing runs the gamut of very low to very high and many levels in between within one type of fund.
Do your research thoroughly before investing, use my easy to understand Ebook for research, in order to understand mutual funds, coming out soon.
I have invested in many types of mutual funds for at least 30 years now, and they have served me well.
1. Allocation Mutual Funds
Risk: Low to Medium
Allocation funds are a combination of stock and fixed income securities and are subject to the risks involved in each of these security types.
Stock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. In general, the bond market is volatile and fixed income securities that carry the interest rate, inflation, price volatility and other risks.
2. Alternative Mutual Funds
Risk: From Low Risk to High
The fund may invest in securities that may have a leveraging effect (such as derivative and forward-settling securities) which may increase market exposure, magnify investment risks, and cause losses to be realized more quickly.
3. Money Market Mutual Funds
Risk: Very Low
A money market mutual fund is a type of fixed income mutual fund that invests in debt securities characterized by their short maturities and minimal credit risk. You could lose money by investing in a money market fund.
An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Before investing always read a money market fund’s prospectus for policies specific to that fund.
There are many types of mutual funds which I intend to cover in a full mutual fund publication soon!