Other Type of Investment Funds Information
Bond fund is also called fixed income fund because the purpose of bond fund is to provide steady income through interest payment. There is negative relationship between interest rate and value of bond. If interest rate increases, the value of bond will decrease and fund¡¯s value will also decrease. On the other hand, if interest rate decreases, the value of bond will increase and fund¡¯s value will also increase. The bond fund may invest in corporate as well as government debt.
Money market fund will invest in short-term debt instruments. Money market fund has lowest risk if compare to equity fund and bond fund. At the same time, historically the return of money market fund will be the lowest if compare to equity fund and bond fund. This is consistent with finance principle of low risk, low return.
Balanced fund will invest in equities and also bonds. The objective of balanced fund is to provide a balance between capital appreciation and regular income. In summary, it is a combination of equity fund and bond fund.
Global fund will invest globally while regional fund will invest in specific area of the world which may outside of the individual country. For example, Far East fund will invest in Asia Pacific and China Fund will invest in China. This type of fund provides a convenient and cost effective way for individual investors to invest in foreign country. For example, an investor in Malaysia want to invest in China due to the booming economy of China may not know how to start. In addition, there are different investment rules and regulation in foreign country. By investing in China fund, the investor can invest indirectly in China.
Sector fund will invest in specific area of economy. For example, property and resort fund will invest in property and hotel sector.
Islamic fund will invest according to the Shariah principle. Interest / riba and gambling are prohibited. Therefore, Islamic fund will not invest in securities issued by conventional bank, conventional insurance company, gambling company and so on. Although its name is Islamic fund, the fund is open for Muslim and non-Muslim investors.
Investment Principle Information & Understanding
Which type of funds will provide highest return? It is very hard to say. There is an important finance principle to be remembered:
The higher the potential return, the higher the risk of loss. Therefore, a professional & experienced public mutual investment consultant is needed for delivery a clear and understandable investment information to investor.
And, a proper diversify investment planning is important to reduce the investment risk and for better return.
The inflation rate will impact on your personal living style from time to time with or without your notification.
It is important for everybody knows about how to overcome it by generating higher returns through proper investment either by cash (bank saving or fix deposit) or through EPF members investment scheme.
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