Money market funds invest in short-term debt instruments like treasury bills to provide a safe place for savings with low returns. Bond funds invest in government and corporate debt and aim to provide income but carry more risk than money market funds. Balanced funds contain a mix of bonds and stocks, typically 60% equity and 40% fixed income. Equity funds focus on long-term capital growth through stock investments. International and global funds invest overseas to provide currency and geographic diversification to portfolios. Specialty funds target specific sectors, regions, or socially responsible criteria. Index funds replicate the performance of broad market indices.

1. Presented by –
Rehan Akhtar

2.  Money Market Funds
◦ The money market consists of short-term debt instruments,
mostly Treasury bills. This is a safe place to park your money. You
won't get great returns, but you won't have to worry about losing
your principal.
 Bond/Income Funds
◦ Income funds are named appropriately: their purpose is to provide
current income on a steady basis. When referring to mutual funds,
the terms "fixed-income," "bond," and "income" are synonymous.
These terms denote funds that invest primarily in government and
corporate debt.
◦ Bond funds are likely to pay higher returns than certificates of
deposit and money market investments, but bond funds aren't
without risk. Because there are many different types of bonds,
bond funds can vary dramatically depending on where they invest

3.  Balanced Funds
◦ The objective of these funds is to provide a
balanced mixture of safety, income and capital
appreciation. The strategy of balanced funds is to
invest in a combination of fixed income and
equities. A typical balanced fund might have a
weighting of 60% equity and 40% fixed income.
 Equity Funds
◦ Funds that invest in stocks represent the largest
category of mutual funds. Generally, the investment
objective of this class of funds is long-term capital
growth with some income

4.  Global/International Funds
◦ An international fund (or foreign fund) invests only outside your
home country. Global funds invest anywhere around the
world, including your home country.
 Specialty Funds
◦ This classification of mutual funds is more of an all-encompassing
category that consists of funds that have proved to be popular but
don't necessarily belong to the categories we've described so far.
This type of mutual fund forgoes broad diversification to
concentrate on a certain segment of the economy.
 Sector fund are targeted at specific sectors of the economy such as
financial, technology, health, etc. Sector funds are extremely volatile.
 Regional funds make it easier to focus on a specific area of the world.
 Socially-responsible funds (or ethical funds) invest only in companies
that meet the criteria of certain guidelines or beliefs

5.  Index Funds
◦ The last but certainly not the least important are
index funds. This type of mutual fund replicates the
performance of a broad market index

6.  A mutual fund that invests predominantly or
exclusively in securities issued in foreign
countries.
 An international fund does not necessarily
concentrate on any single country, but it does
not invest in securities from the country in which
it operates.
 An international fund should not be confused
with a global fund, which invests in both
domestic and foreign securities.

7.  Currency Exchange
◦ When you put money into an international mutual fund,
you will have to convert your dollars into another
currency.
◦ While the money is in the fund, it will earn returns on
your investment.
◦ Then, when you cash out your mutual fund shares, they
will pay you in the foreign currency.
◦ If the dollar has declined in value while you were
investing, you will actually be able to come out ahead on
the exchange rate. You will be able to get more dollars
for the foreign currency that you are trading.
◦ This gives you profit from the investment and profit
from the currency exchange as well.

8.  Diversification
◦ When the United States dollar falls in value, it has a lot to
do with the economy of the United States.
◦ This happens when the economy is down and things are
going poorly for a lot of people financially.
◦ When the economy is down, many investments also
perform poorly. The companies that trade on the stock
exchange depend on consumers to spend money with
them.
◦ When no one is spending money, it has a negative effect
on these investments. If you have all of your money in
domestic mutual funds and domestic stocks, it can
significantly hurt your portfolio during these times.
◦ By putting money into some international mutual funds,
you will still be able to earn decent returns even if the
domestic economy is down.

9.  Emerging Markets
◦ Another benefit that you can realize with many of these
funds is that you can invest into emerging markets.
◦ There are many areas across the globe that are
considered to be underdeveloped by United States
standards.
◦ Many of these areas are starting to develop slowly and
build the necessary infrastructure to become a modern
society.
◦ During these times, there is a phenomenal potential for
investors to realize a return.
◦ All of the different types of businesses that can grow in
these markets gives investors a great opportunity to
profit.

11.  The Risks of Foreign Investing
◦ While international diversification may help to reduce overall
portfolio risk over time, there are important differences between
domestic and foreign investing that can affect the day-to-day
volatility of international holdings:
 Political or economic instability in foreign countries could negatively
affect foreign investments, especially in emerging markets such as
 Differing regulatory environments,
 Trading days,
 Accounting standards, and
 Higher transaction costs
 Fluctuating foreign exchange rates can increase or decrease the dollar
value of an investment even if the security’s price remains unchanged.
 Financial information about specific companies in emerging markets can
be difficult to obtain
 Subject to abrupt and severe price declines, and should be regarded as
speculative.