Mutual Fund

A mutual fund is a fund that pools money from many investors to purchase securities, bonds, and portfolios of stock. It is managed by the Fund Manager to get the maximum return on the invested amount.

Simply we can say it is a Trust that collects money from the investor and invests the same in equities, bonds, money market instruments, and other securities.

Mutual Funds in India are registered under Indian Trust Act, 1982 in accordance with SEBI Mutual Fund Regulation 1986.

Mutual Fund

Working of Mutual Fund

It is not easy for Investor to review the fund’s performance every time that market fall or jumps up. For actively managed scheme Investor invest for around 15 to 24 month for the fund to generate return in portfolio. It issues unit against the invested amount as prevailing NAV.

Mutual Fund ideality

It ideal for the investor who has lack of knowledge and experience in stock market, want to grow their wealth but do not have time to research in stock market, want to invest small amount.

Object to invest in Mutual Fund

The investment goals differ from investor to investor – post-retirement expenses, money for children’s education or marriage, house purchase, and other purpose – the investment products required to achieve these objectives. Mutual funds help to achieve certain distinct advantages over investing in individual securities. Mutual funds offer multiple options for investment across equity shares, corporate bonds, government securities, and money market instruments, providing an excellent avenue for retail investors to participate and benefit from the uptrends in capital markets. The main advantages are that you can invest in a variety of securities for a relatively low cost and leave the investment decisions to a professional manager.

Types of Mutual Fund Schemes

Mutual funds are designed to achieve the goals of Investor need. Mutual funds can be broadly classified based on:-

  • Organization Structure – Open ended, Close ended, Interval
  • Management of Portfolio – Actively or Passively
  • Investment Objective – Growth, Income, Liquidity
  • Underlying Portfolio – Equity, Debt, Hybrid, Money market instruments, Multi Asset
  • Thematic / solution oriented – Tax saving, Retirement benefit, Child welfare, Arbitrage
  • Exchange Traded Funds
  • Overseas funds
  • Fund of funds

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