In the previous article, a strong mutual fund is defined and described. In Philippines, there are four basic types of mutual funds:
Stock/Equity - it is more commonly know as stocks wherein funds are either cash or stocks. In this type of mutual fund, dividends and interest are the sources of revenue. Its goal is for long term growth.
Bond - a bond is regarded as a loan. The borrower is called the issuer. While the bond holder is the lender. The issuer owes a debt to the holder and is required to repay the principal and interest at its maturity date.
Balanced - this is also called the hybrid fund. Its objective is to provide income and growth. This can be achieved by investing in both stocks and bond.
Money market - this kind of fund has low risk compared to other kinds of mutual funds. Basically, money market funds invest in government securities. Oftentimes, this is regarded as a good choice for investors.