What is a Type A Mutual Fund? What are the types?
Type A mutual fund is a stock-oriented investment instrument. These funds are funds that invest at least 51% of their portfolio in stocks. Type A mutual funds offer high return potential due to stock market fluctuations, but also carry high risk. Type A investment funds provide various advantages to investors. Some of these are those:
- Investors have easy access to stocks selected and monitored by professional portfolio managers.
- Investors have a portfolio distributed across different sectors and companies, without being tied to a single stock.
- Investors can benefit from tax advantages. Earnings from type A investment funds are exempt from income tax when held for 1 year or more.
Type A investment funds are divided into different subtypes. Risk and return profiles of funds also vary depending on these types. The main types of type A investment funds are:
- Stock Fund: These are funds that invest almost all of their portfolio in stocks. They have the highest risk and return potential.
- Mixed Fund: Funds that invest a certain proportion of their portfolio in stocks and the rest in fixed-income securities such as bills and bonds or liquid instruments such as reverse repo. Risk and return levels are moderate.
- Sector Fund: Funds that invest all or most of their portfolio in stocks operating in a specific sector. They can offer high risk and return depending on the performance of the sector.
- Index Fund: These are funds whose portfolio consists of stocks that follow a certain index. They move in parallel with the performance of the index. They charge low management fees.
- Variable Fund: These are funds that can change their portfolio distribution according to market conditions. Equity rates can range from 25% to 90%. They have a flexible structure.
Type A investment funds may be a suitable option for investors who want to accumulate long-term savings and are ready to take risks. However, before investing in these funds, it is necessary to obtain detailed information about the fund's features, risk and return expectations, costs and performance.