Investment funds can be classified according to the areas of investment it follows to achieve its goals as the following:
- Money Market Funds: are funds that invest in the monetary market. They are characterized with high liquidity, short-term securities and low risk rates compared to other investment funds. Although Money Market Funds are classified as low risk but these funds are not risk free; the invested amount might decrease or fluctuate significantly due to several factors.
- Debt Instruments Funds with Fixed Income: are funds that invest in a company’s debt instruments such as bonds and others that are issued by companies, government, semi government entities or any other entity that is allowed to issue any kind of debt instruments. The prices of debt instruments are affected by several risk factors such as, and not limited to: the interest rate, the bond’s rating by rating companies and the risk of periodic payments disruption.
- Equity Funds: are funds that invest mainly in companies’ equity whether it was local, regional or international stocks. A lot of kinds fall within equity funds according to the fund’s objectives as the following:
- Income funds: it aims to achieve an income by investing mainly in the stocks of companies with a distinguished record of distribution returns.
- Growth Equity Funds: seeks to develop its capital by investing in companies that are expected to have higher market value. The fund depends on capital gains as its primary goal, with its distribution income not as a primary factor.
- Income and Growth Equity Funds: it seeks to achieve profit by combining capital growth and income.
- International Stock Funds: seeks to invest in stocks of international companies and limit its work in the stock market of one specific country or more.
- Global Stock Funds: it invests in the stock markets of several countries around the world.
- Sector Funds: they invest in one area of industry such as: agriculture, petrochemicals or other specified industries.
- Balanced Funds: are investment funds that combine between bonds and stocks. It sets aside a part of its investments to short-term financial instruments.
