Do mutual funds invest only in stocks?

Do mutual funds invest only in stocks?

Mutual funds invest in stocks, but certain types also invest in government and corporate bonds. Stocks are subject to the whims of the market and thus offer a higher return potential than bonds, but they also present more risk. 

A mutual fund's investment profile depends on the type of fund. There are three main types of funds: equity, fixed-income, and balanced.

  • Equity Funds: These funds invest solely in common stocks, offering higher returns and risk. Despite the risk, they're less risky than investing in individual stocks due to diversification.
  • Fixed-Income Funds: These funds invest in government or corporate bonds with fixed returns, offering lower risk but typically lower returns than equity funds.
  • Balanced Funds: These funds mix equity and fixed-income investments, balancing return potential and risk.

5paisa provides access to various mutual fund options, including equity, fixed-income, and balanced funds, catering to various risk appetites and investment objectives. With the 5paisa app or website, investors can easily browse and invest in mutual funds, streamlining the investment process.



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