Financial economics, types of investment funds


 investment funds

Investment funds are a method used to provide funds for a group of investors by keeping their securities. Each investor retains ownership of his securities, and the investment fund contributes to providing a range of diversified investment opportunities. [1]


Investment funds are also known as a pool of money shared in the ownership of a group of investors, and it is managed by specialists in the field of financial investment, and those who make decisions to buy or sell a group of securities, such as bonds and stocks, which contributes to the diversity of private ownership in each shareholder. Investment Fund. [2]


Another definition of investment funds is that they are a means of collecting money for individuals, companies, and diversified establishments, and then contracting with a financial manager or expert to manage the contents of investment funds, and the goal is to provide the highest financial returns with the least possible risk. [3]


Types of investment funds

There are a group of types of investment funds, each of which has a role in the stock market, and the following information about them:


Equity funds: They are funds that rely on the trading of investments in general away from any ownership of companies within the private sector, and these investment funds are the most volatile and changeable; As its value continues to rise and fall within a short period of time. Historically, equity funds have performed the best among other types of mutual funds. This is because stock trading depends on the future results of companies within their market share, which includes an increase in their revenues and profits, which leads to an increase in the value of the rights of investors in them. [4]

Fixed Income Funds: They are mutual funds, also called bond funds, that invest in private debts in public and private sector companies. In order to provide income based on the distribution of profits, these funds usually contain an investment portfolio that enhances financial returns for the investor; By providing him with a steady income when equity funds lose their value in the financial market. [4]

Financial market funds: They are funds with a low risk ratio compared to other investment funds. These funds are limited to high-quality investments, which are often short-term and issued by the government or local companies. [4]

Balanced funds: These are funds that aim to provide a balanced mixture of safety (with little risk), capital, and income. Balanced investment funds depend on implementing an investment strategy in stocks and fixed income. A typical balanced fund contains 60% of stocks and 40% of fixed income, but it is possible to achieve a balance at the maximum or minimum value of assets. [5]

International funds: they are investment funds also known as global funds or foreign funds, and they are often used by investors who invest their money outside their countries of origin, and these funds depend on the application of investments in all parts of the world, and they often suffer from difficulty in classifying their own funds. It is possible that they are more dangerous or have a higher level of safety than are private funds for local investments. Because it tends to be more variable due to many factors such as political influences. [5]

Specialized Funds: It is one of the most comprehensive mutual funds. Because it contains more than one class of securities, most of which are considered popular, but these funds dispense with the diversification of categories within the economy sector, but rather target funds belonging to certain economic sectors, such as health, money and technology that increase the likelihood of making profits, and the types of these funds are: 5]

Index funds: are the funds that are interested in investing within the index numbers, and include the results of stocks in the financial markets. Index funds are distinguished by their few

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