Types of investment funds

Investment Funds

Investment funds are a method of providing funds to a group of investors by holding their own securities, with each investor retaining ownership of their securities, and the mutual fund helps provide a range of various investment opportunities.

Investment funds are also known as a money pool owned by a group of investors, and is managed by specialists in the field of financial investment, who make decisions to buy or sell a group of securities, such as bonds and stocks, that contributes to the diversity of private property in each contributor in the investment fund.

Other definition of Investment funds is that they are a means of collecting money for individual investors, companies and various establishments, and then hiring a manager or financial expert to manage the contents of the mutual funds, and the objective is to provide the highest return financial with the least possible risk.

Types of investment funds

There is 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: These are funds that are based on commercial investments in general, away from any property of private sector companies. These investment funds are considered the most volatile and changing; Its value keeps going up and down in a short period of time. Historically, equity funds have had the best performance among other types of mutual funds; This is because stock trading is dependent on the future performance of companies within their market share, including an increase in their income and earnings, leading to an increase in the value of their investors' rights.
• Fixed Income Funds: They are investment funds also called bond funds, and they invest in private debt in public and private sector companies; In order to provide income based on profit distribution, these funds generally contain an investment portfolio that improves financial returns for the investor; Providing you with stable income when equity funds lose their value in the financial market.
• Financial market funds: These are funds with a low risk ratio compared to other investment funds, these funds are limited to high-quality investments, which are usually short-term and issued by the government or local companies.
• Balanced Funds: Funds that aim to provide a balanced mix of security (low risk), capital, and income. Balanced mutual funds depend on the application of an investment strategy in stocks and fixed income. A typical balanced fund contains 60% of the shares and 40% of the fixed income, but it is possible to achieve a balance at the highest or lowest value of the assets.
• International funds: They are investment funds also known as global funds or foreign funds, and are usually used by investors who invest their money outside their countries of origin. Your risk or safety rate may increase more than that of local investment funds; Because it tends to be more variable as a result of many factors, such as political influences.
• Specialized Funds: It is one of the most complete investment funds; Because it contains more than one category of securities, most of which are popular, but these funds dispense with the diversity of categories within the economic sector, but instead target funds belonging to certain economic sectors, such as health, finance and technology, which are most likely to make a profit, and the types of these funds are:

1. Regional funds: these are funds that are interested in applying investments within a specific region; That is, the focus is on a specific place, such as governments or countries, and these funds are easy to use in investments that depend on the purchase of foreign stocks.
2. Social funds: Also known as ethical funds, they depend on the application of investment in companies that meet specific investment criteria linked to ethics, since they do not invest money in weapons or companies with prohibited beverages.

• Index funds: These are funds that are interested in investing within numerical indices, and include the results of stocks in financial markets. Index funds are characterized by being low risk. 

investment fund risks

Investment funds are affected by a series of risks and are distributed according to the following categories:

• low level of risk; Because investors are interested in reducing risk to stay away from the negative results that result in the short term of the investment.
• Stay away from all fluctuations in investment prices to ensure that all investments remain safe.
• Relatively low benefits; Due to the low level of risk approved in these funds.The constant need of investors to obtain financial liquidity.

Investment Funds Risks Investment funds are affected by a range of risks, and they are distributed according to the following categories:

• Medium risk investment funds: These are funds with relatively medium risks, and are characterized by the following characteristics:

1. The ability to withstand various price changes, while accepting the idea of ​​financial losses in the capital.
2. The need for liquidity is almost moderate.

• High-risk investment funds: These funds depend on the following characteristics:

1. The presence of great experience among the investors of these funds within the financial markets.
2. The need for financial liquidity is minimal.