Types of Mutual Funds
Types of Assets
One way to classify mutual funds is the type of assets it invests in.
Based on asset-type, a mutual fund could be:
Equity fund: invests only in stocks (shares) of companies.
Bond fund (aka debt fund): invests only in bonds. The bonds could be issued either by a company or a government.
Money market fund: invests only in short-term debt instruments, known as money market instruments. These debit instruments could be issued either by a government or a company; in Egypt it’s mainly the government treasury bills (aka T-bills).
Balanced fund: invest in a mix of stocks, bonds, and money market instruments.
Entry and Exit Restrictions for Its Investors
Another way to classify mutual funds is the terms on which you could enter
or exit the fund.
A “close-ended” mutual fund has a fixed maturity period. Such a fund liquidates (sells) its assets at the pre-determined maturity date and returns the money to its investors.
A “open-ended” mutual fund does not have a predetermined maturity period, and investors can purchase or redeem the certificates they own through the life of the fund.