Skip to main content

Know more about Mutual Funds

A mutual fund is an investment that pools together money from various investors, which are further managed and invested by a professional with a view to achieve more competitive returns. The money collected by the fund manager is thus, invested in different instruments such as shares, debentures and other debt instruments based on the stated objective of the fund. The capital generated from these investments is shared by the holders on the basis of the investments made by them.

Mutual fund investment is the most suitable instrument for most people as it provides an opportunity to invest in a diversified fund through a professional at a relatively low cost. An individual usually finds it difficult to keep a track of his investments, therefore a professionally qualified and experienced fund manager makes the task easy.

The mutual funds industry in India provide investors with a number of products which aim towards shares, debentures, fixed interest securities and many more.

Types of Funds

  • Open and Closed ended funds


An open ended fund does not have a fixed maturity and is always available for subscription. The distinct feature of an open-ended fund is liquidity where an investor can buy and sell units at net asset value (price of a unit of a fund) related prices.
A close ended fund on the other hand is a fixed maturity period, usually ranging from 3-15 years and the fund is open only during a specific period for subscription. The unit capital in this scheme is fixed.

  • Load Funds and No-Load Funds


Load funds refer to the funds that levy charges at the time of entry or exit to the fund from the investor; whereas a no-load fund as the name suggests does not charge anything from the investor at the time of entry or exit to the fund. Entry load is the load charged at the time of entering into the fund by deducting a specific amount of money from the initial contribution towards a scheme. There are a few funds, charging a management fee, where the initial expenses are borne by the Asset management Company/Fund Manager. Here the individual enters or exits depending upon the NAV (net asset value) of the fund.

  • Debt Funds


Debt funds are fixed interest funds which can invest in long-term or short-term bonds. The main objective of investing in a debt fund is to preserve the investment while getting the best interest available. These funds invest in fixed return investments like bonds. Therefore, the risk borne by the investor is lower than any other equity fund.
Debt funds can be classified into three types which are income/bonds, liquid/money market and gilts schemes. Income/bond schemes are the ones that invest in long and medium term instruments like corporate bonds, fixed deposits, etc. Liquid/money market schemes invest in short-term instruments like treasury bills and commercial paper, whereas Gilt funds invests in papers issued by the government. The maturity in these schemes are either long or medium term depending upon the objectives of the scheme.

  • Equity Funds


Equity fund also known as a stock fund, usually invests in equities of listed companies. They principally invest in the securities in share markets which can be either domestic or worldwide markets. It allows the investor to access a diversified portfolio managed by a professional.

There are different types of equity funds in the market, therefore the level of risk in each fund is different depending upon the fund:

  • Balanced Funds


A fund that has a stock as well as a bond component in a single portfolio.. It targets to provide the investor with growth as well as regular income. A unique feature of such funds is that, they manage the downturns in the stock market without much loss to the investor. But, at the same time, they increase less even in a booming market.
Balanced funds, also sometimes known as hybrid funds, invests in various tools thus avoiding excessive risk.

Benefits of Mutual Funds

  • Diversification

A unique feature of Mutual funds is diversification where there is an option of investing into various schemes depending upon the market situation which keeps the finances safe. The value of all funds keep fluctuating but does not go low at the same time, thus reducing the risk.

  • Liquidity

In an open-ended fund, one can get the money back instantly according to the net asset value of the fund. Also, units in a close-ended fund can be sold at the prevailing market prices on a stock exchange. Thus, providing liquidity to the investor.

  • Choice of Schemes

Mutual Funds provide the investor with a stock of schemes to choose from depending upon the investors needs.

  • Professional Management of Funds

Allows professional management where an experienced professional tracks the investors money along with the performance of various funds. The fund manager also guides the investor to invest in the funds, keeping in view the objectives of each scheme.

  • Affordable
An investor can start investing in mutual funds with as low as Rs.1000. Thus, making it affordable for anyone.
 

Popular posts from this blog

How much to invest in gold ?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India) Let your motivation dictate the share of the yellow metal in your portfolio Enough has been said and written about gold as an investment option. The latest argument is that the craze for gold among Indian households is endangering our country's balance of payments. The policymakers are busy trying to find ways of discouraging investment in gold, but if households keep the common good in mind, they would be paying the market price for gas cylinders as they do for, say, their mobile phone bills. After all, private decisions are driven by private motives. So, how should a household look at gold from its own perspective? Gold is primarily acquired for its merit as a store of value. Even if the worst crisis hits a family, the gold that it holds could be put to use anywhere in th...
Read more

Mirae Asset Ultra Short Term Bond Fund and Mirae Asset Tax Saver Fund

Mirae Asset Mutual Fund   has renamed   Mirae Asset Ultra Short Term Bond Fund , an open ended debt scheme, to   Mirae Asset Tax Saver Fund   with effect from October 18, 2016. Also, Mr. Sumit Agrawal, the co-fund manager of Mirae Asset India Opportunities Fund (MAIOF) and Mirae Asset Great Consumer Fund (MAGCF) ceases to be the fund manager with effect from October 1, 2016. Consequently, MAIOF shall now be solely managed by Mr . Neelesh Surana while MAGCF shall continue to be co-managed by Mr. Neelesh Surana and Ms. Bharti Sawant. ------------------------------ ----------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in India for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Religare Tax Plan 4. DSP BlackRock Tax Saver Fund 5. Franklin India TaxShield 6. ICICI Prudential Long Term Equity Fund 7. ID...
Read more

Good Loan

Why Is It A Good Loan?: Loans against gold are cheaper and better than personal loans as the former are available at lower interest rates. In contrast, the interest rates on personal loans are not standardised and can vary from bank to bank. Also, a personal loan depends on a host of factors including, the borrower's salary, profession and the purpose for which the loan is being taken.      For instance, the interest rate on a personal loan of 5 lakh falls in a wide range of 15-30%. But loans against gold are available for as low as 11%. Secured borrowing such as a loan against gold, investments or property is cheaper because it is backed by some assets, which command a good value at any point of time. If the borrower defaults on the loan, the banks can liquidate the assets to settle the loan account.    Being a secured loan, the risk of default and credit losses is significantly lower in this loan compared to other forms of loan for personal use. Given the lower risk, gold loa...
Read more

Save Tax With Mutual Funds

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300       Mutual funds are ideal as long term investment avenues for retail investors. To encourage investments in this avenue, the Government of India offers investors a spate of tax benefits thus ensuring maximum benefit from mutual funds held beyond a year. Sample some of the key benefits and refer to the table for a detailed list of tax rates for different types of schemes ·        Avail deductions under Sec 80C of the Income Tax Act by investing up to a maximum of Rs. 1 lakh in designated Equity Linked Savings Schemes (ELSS). Such investments have a compulsory lock in period of 3 years. ·        First time retail investors in equity with a gross total income of up to Rs. 12 lakh can invest up to Rs. 50,000 in specific MF schemes un...
Read more

Diversification is key to gain more

Even those who prefer debt for its safety are looking at more options    It is not often that you find more than a couple of asset classes producing good returns at the same time. Invariably, assets such as gold and equity don't perform in tandem, and hence it was easier to allocate to them in line with the risk profile of the investors. In the last couple of quarters, however, more than one asset has turned attractive - gold, debt and equity. In line with the trend, you even have monthly income plans with a combination of more than two assets.    In the past, those who stuck to debt were a different class of investors who didn't wish to take risk with their money. The changing lifecycles and the growing integration of investment markets across the globe have pushed even individual investors to embrace the concept of asset allocation. Hence, you have individuals who were using debt to park profits being prepared to take advantage of other assets.    For instance, when the...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now