Different types of fund explained

There are lots of different types of funds, and it won't take long until you encounter many different types in your research.

One of the types of fund you might hear about the most is the so-called Managed Fund, or a Mixed fund. What does this refer to?

Well this is the type of fund that has different types of assets in it - for instance perhaps shares and bonds. These funds are then sub-divided into further types that suggest what type of risk profile the fund has (e.g. Cautious Managed) and there are certain percentage restrictions in place as to the contents of the fund for certain sub-divisions.

Protected Funds are another type you will hear about. What does protected mean in this context? Well it refers to the fact that losses will be limited if the market falls and the fund suffers as a result, or alternatively a certain amount of capital will be repaid.

A currency fund as the name suggests is one that invests in different currencies.

How about a mirror fund? This is one that you may not have come across before as a private investor. A mirror fund is one that pension providers and life insurance companies offer.

Another type of fund that you will hear about often in newspaper articles and the like is the Hedge Fund. But this has nothing to do with gardening! Rather, a hedge fund is one that uses a range of complicated trading methods over and above the standard buy and sell. The aim here is that the fund will try to get positive returns no matter what is happening to the market.

Ethical or Green funds. These funds will invest only in a certain range of companies that are deemed to accord to the morals of the fund, as laid down in the aims and literature with a fund. For a green fund it might invest in companies that do suitable amounts of recycling or are actively involved in green energy etc. Ethical funds will tend to avoid things like arms companies, and possibly products like tobacco too.

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Different types of fund explained

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