Mutual Funds

Mutual Fund is basically small / large size of amount invested by large number of people pooled together which is managed by professional Fund Manager to give benchmark return as per fund selection.

In Mutual Fund you have good option to diversify your fund or distribute across different types of funds like Equities, Bonds, Money Market Instrument and other securities as per investors need.

Types of Mutual funds

Mutual funds are categorized based on their investment objectives, asset classes, and structure.

  • Based on asset class:

    • Equity Funds: Primarily invest in company stocks, aiming for capital growth. They are linked to market movements and carry a higher risk.

    • Debt Funds: Invest in fixed-income instruments like government and corporate bonds, focusing on stable returns and are considered less risky than equity funds.

    • Hybrid Funds: Offer a balanced approach by investing in a mix of both equity and debt securities.

  • Based on structure:

    • Open-ended funds: Allow investors to buy and sell units at any time at the prevailing NAV.

    • Close-ended funds: Have a fixed maturity period and investors can only buy units during the initial offer period.

Benefits of mutual funds

  • Professional Management: A key benefit is having an experienced fund manager handle investment decisions, which is especially helpful for those who lack the time or expertise to research the market.

  • Diversification: Mutual funds invest in a wide range of securities, which helps to spread risk across different assets. This diversification can reduce the impact of poor performance in any single investment.

  • Liquidity: Open-ended mutual funds generally offer good liquidity, allowing investors to buy or sell units on any business day at the fund's net asset value (NAV).

  • Affordability: Investors can start with a low initial investment and can also invest regularly through a Systematic Investment Plan (SIP).

  • Regulation: In India, mutual funds are regulated by the Securities and Exchange Board of India (SEBI), which ensures transparency and investor protection.


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