Definition of Fund
Fund is simply a source of money that is allocated to someone for special purpose or project. The complete process of arranging and injecting money in a business is called fundraising.
Businesses need money to run and sometimes funds are required to keep them going on.
- Individuals, business and even Governments raise funds to arrange money.
- Government needs funds to build roads or public center, businesses like academics need funds for scholarship and constructions and research etc.
- Fund in finance means investing pool of money belonging to different and numerous investors for profit purpose while each of individual retains it’s legal right on the capital.
- Investors can be individuals and businesses and the goal is to earn extra money in return.
- Mutual funds are mainly managed by the companies to achieve this goal.
Brief Explanation of Funds
TYPES OF FUNDS
FIXED INCOME FUNDS: These pay back fixed rate for example Government bonds
MONEY MARKET FUND: These are short term funds usually up to one year or even less. Investor can withdraw their money anytime within this time period which makes them highly liquid.
BALANCED FUNDS: In this type of fund, investment is made in a mix format i.e. in equity and bonds. The ratio of mix is decided and managed by the portfolio manager and the aim is to balance the risk and reward of both the investment methods.
CORPORATE FUND: These are the funds issued by numerous corporations. These are higher return bonds than what the Government fund offer.
BOND FUNDS: These are the simple investment made in bonds only. The aim is to preserve the initial capital and earn a constant stream of income.