What type of investments are mutual funds required to invest in?

Mutual funds are required to invest primarily in liquid investments that tend to be lower in risk than other types of investments. This is due to the nature of mutual funds, which pool money from many investors to purchase a diversified portfolio of assets. Low-risk, liquid investments are essential for maintaining a level of capital preservation and allowing easy access to funds for investors looking to redeem their shares.

Mutual funds are designed to provide investors with allocation strategies that balance risk and returns according to their investment objectives. By focusing on low-risk liquid assets, they ensure that investors have the opportunity to liquidate their shares without facing significant market disruptions, which could occur if the fund were investing heavily in illiquid or high-volatility assets.

The other options involve investment categories that may carry higher risks or liquidity concerns. High-risk equities can lead to substantial gains but also significant losses, which may not align with the average investor's risk tolerance in a mutual fund context. Real estate properties, while offering potential yields, often involve complexities and illiquidity issues that make them unrealistic as core investments for mutual funds. Commodities and futures can also be highly volatile and are not suitable for all investors. Thus, focusing on low-risk liquid investments makes mutual funds a more secure investment vehicle for a