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Types of investment fund

Investing your money sounds complicated and risky, but choosing the right fund manager to help you along the way is key to increasing your savings while you grow your business.

There is more than 1 type of private investment fund and they all have different risks and potential rewards. Some require millions (which can be shared among a group of investors) and some require much less Here are the most common types of private investment funds.

Money Market Funds.

 

These are funds are regarded as one of the safest investments. Being compared to storing your money in a bank but with a higher ROI.

Money Market Funds are a type of fixed income mutual fund that invests in debt. The aim is to pick debts which have short maturities and minimal credit risk, this ensures that the return is least risky.

When you buy this debt, you ensure that the creditor (person loaning money out) gains money (not all of what they are owed) and you take on the potential for the debtor (person borrowing money) to give you what you paid plus the interest that the creditor (now you) is owed.

This category of funds are known as Fixed Income Funds, and are basic. Buy investments that pay a fixed rate of return. They aim to invest in return for regular payments into the fund. This is achieved mostly through interest that the fund earns.

Equity Funds

 

Equity funds are mutual funds that invests solely in stocks. Equity funds are also known as stock funds.

Here, money is pooled together by investors to purchase a variety of stocks to diversify investment portfolio. Basically a group buys stocks from multiple companies and not just a single company.

Increases in one stock price might not have a significant impact on the portfolio growth and these funds are more time intensive to manage. You will need private investment fund management.

 

Balanced Funds

 

This type of fund is a mixture of both fixed income funds and equity funds. Most of these funds follow an analytical approach to split money among the different types of investments. They usually to have more risk than fixed income funds, but less risk than equity funds.

Specialty funds

This type of fund has a focus on specialised agendas such as real estate investments, commodities or socially responsible investing. For example, a socially responsible fund may invest in companies that support environmental protection, human rights and diversity, and may avoid companies which are involved in industries such as alcohol, tobacco, gambling, weapons and the military.

 

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