They usually provide a better return than savings accounts and can be considered as a short-term investment or for the cash portion of an investor's portfolio. These are mostly invested in residential mortgages. The mortgage investments held within these types of funds tend to offer maturities of one to five years. They can potentially offer moderate growth potential in a declining interest rate environment. They offer low to moderate risk and generally better income returns than most term deposits.
Bond funds are, for the most part, invested in government and corporate bonds and debentures.
Bonds funds tend to hold securities of varying maturities. These funds are considered low to moderate risk investments, and their prices tend to rise when interest rates fall, and drop when interest rates rise. They can potentially offer moderate growth potential in a declining interest rate environment. Equity funds are invested primarily in the common and preferred shares of corporations. They can offer high growth potential, but must be chosen wisely taking into account your objectives and tolerance for risk.