Mutual fund is a type of investment that pools together a group of investors who share a common objective with regards to investing their money. If you want to compare mutual funds, the first thing you need to do is to learn the basics. Once you have gained good knowledge of mutual funds, you can now turn to the world wide web to search and compare mutual funds in just a few clicks. There are several “compare mutual funds” tools available on the internet that investors can readily use.

Before you compare mutual funds, make sure you recognize that mutual funds have several schemes such as open-ended schemes, closed-ended schemes, and interval schemes. Open-ended schemes are schemes that do not have fixed maturity and can easily be liquidated. Here, investors can buy and sell units continuously at Net Asset Value (NAV) related prices to shareholders. Schemes which have a pre-specified maturity period, usually ranging from two to fifteen years, are called closed-ended schemes. Funds in closed-ended schemes are usually traded on the stock market by investor demand. Interval schemes are a combination of open-ended and closed-ended schemes which means that funds are open for sale and redemption at NAV related prices at predetermined intervals.

After knowing the schemes, the next important thing to understand is the different types of mutual funds. Among the most popular types of mutual funds available are equity funds, money market funds, balanced funds, and income funds. Equity funds, otherwise known as stock funds, are mutual funds that invest in stocks of companies. Money market funds, however, are mutual funds that invest with the objective of maintaining a stable net asset value (NAV) of one dollar per share. This allows shareholders to invest in easily accessible assets such as cash equivalents. Balanced funds are a type of mutual fund that combines stocks, bonds, and money market funds in a single portfolio. And lastly, incomes funds are a type of mutual fund which puts emphasis on the investor’s current income and is popular to retirees and investors who want a steady cash flow with very little risk.

After knowing the basics of mutual funds, you’re practically ready to compare mutual funds using the tools available on the internet. Compare mutual funds online tools, in general, will ask you to key in the scheme and type of mutual fund that you’re looking for, and the tools will show you a list of mutual funds that complement your search.