If you're looking to invest in a mutual fund, it's important to know about the different types of mutual funds available. Here are 4 of the most common types of mutual funds:

·         Index funds

·         Actively managed funds

·         Target-date funds, &

·         Money market funds

 

Index funds are a type of mutual fund that track a specific market index, such as the S&P 500. Index funds can typically be a good choice for the average investor because they have a lower expense ratios than actively managed funds.

Among the 4 types of mutual funds , balanced funds are a type of mutual fund that invest in a mix of stocks, bonds, and other securities in an attempt to achieve a balanced portfolio.

Actively managed funds are a type of mutual fund that are actively managed by a team of professional investors. The goal of actively managed funds is to outperform the market benchmarks.

Target-date funds are a type of mutual fund that invest in a mix of stocks, bonds, and other securities based on a target date. For example, a target-date fund for someone retiring in 2025 would invest differently than a target-date fund for someone retiring in 2030.

Money market funds invests in short-term debt instruments, for e.g. Treasury bills and commercial paper. Money market funds are typically used as a cash management tool.