Question

Describe the following types of funds:

1. Growth fund
2. Value fund
3. Equity-income fund
4. Balanced fund

Answer 1

1 .A growth fund is a type of mutual fund which is focused more upon the capital appreciation than any dividend appreciation.this kind of funds invest more into such companies which are highly growth oriented and which have a significant increase in return on equity, year on year and they are expected to continue the same for future.

2.value fund is a type of mutual fund which is inclined towards investment into such companies which are deemed to be undervalued according to their intrinsic method of valuation, and there is a wide gap between the prices and the value of such companies.such mutual funds tends to invest into such undervalued stocks and capitalise upon the difference between the price and value.

3.An equity income fund is a mutual fund which focuses on investment into such stocks which are regular dividend payable companies. These mutual funds seems to invest into such stocks whose dividend payout ratio is very high and they seem to generate an uniform stream of income for the shareholders.

4.A balanced fund is a type of mutual fund in which there is proper asset allocation between different type of securities and it is highly hedged because of its investment into different asset classes against adverse situation.