4. Equity Income Funds

Dividend income earned through an investment in stocks or equity is known as Equity Income Fund. It is another type of mutual fund which invests in high quality companies with a consistent history of dividend payments and growth in the dividend rate. These funds are apt for income investors who seek higher yields and are ready to take higher risk. Their assets consist both of common and/or preferred stocks, as well as real estate.

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5. Bond Funds

A bond fund is a fund invested mostly in bonds and is a debt fund by nature. The literal type of debt the fund invests in depends on its focus, whereas the investment may include government, corporate, municipal and convertible bonds, along with other debt securities.

This is a most appropriate type of fund for conservative investors who have less appetite for risk. Conservative investors have an intention to earn more than possible returns from their avenue. Government Treasury and its agencies and various companies to finance their operations, expansion activities issue these bonds.

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