Equity funds, bond funds and balanced funds | What are the differences

Funds
Funds

Within the broad category of mutual funds, the most common types are the three mentioned in the title. Here in a nutshell is how they differ. Equity funds which are also known as stock funds, are investing in shares for the most part or at most in convertible bonds. Equity funds carry a reasonable level of risk but on the other hand usually offer higher yields and minor fluctuations of stocks tout court. This is because usually they balance the equity component with other non equity investments such as bonds, government securities or liquidity or with a high degree of differentiation by geographical area and by currency.

Funds

Funds

Bond funds are called so because they invest in bonds for most ordinary and government bonds. Compared to equity funds they are far less risky, but usually also less profitable.

A financial product that mediates between the two forms of investment mentioned above are balanced funds which are also known as hybrid funds in English, invest in various asset classes in order to obtain a risk profile and performance midway between those of the equity funds and bond funds quoted.

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