What are the most common types of underlying investment funds offered by the Insurance companies?
(1) Money market funds: These funds offer very low risk, balanced against low long term return. The underlying holdings will be a variety of short term debt instruments, including but not limited to government and treasury debt, wholesale money market and fixed interest securities offered by the private sector. (2) Bond funds. These invest in longer term debt securities of both national governments and the corporate sector. Thus the short term risk is greater than the infinitesimal risk of the money market, but returns are usually higher. The underlying Net Asset Value of the fund may fluctuate due to both interest rate risk and default of payment. Unlike individual bonds, most bond funds do not mature; they trade to maintain their stated future maturity. (3) Equity funds. These invest in common and/or preferred stocks or shares in publicly listed companies. Stocks usually have higher short term risk than bonds, but have historically produced the best long term returns. Equity funds of
