Mutual Fund

What is Mutual Funds ?

A mutual fund is a company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt. The combined holdings of the mutual fund are known as its portfolio.

Benefits

• Professional Management. The fund managers do the research for you. They select the securities and monitor the performance.
• Diversification or “Don’t put all your eggs in one basket.” Mutual funds typically invest in a range of companies and industries. This helps to lower your risk if one company fails.
• Liquidity. Mutual fund investors can easily redeem their units at any time, for the current net asset value NAV.
• Choice: A wide variety of schemes allow investors to pick up those which suit their risk / return profile.

Types of Mutual Funds

Equity Mututal Funds:
An equity mutual fund invests largely in the stocks of various companies to generate returns. Equity fund investments are linked to higher risk as compared to other types of mutual funds. Moreover, equity funds are ‘not one size fits all’. There are a variety of equity funds classified by their investment objective that need to be mapped to your risk profile.

• Diversified equity funds
• Large Cap funds
• Multi Cap funds
• Mid-cap funds
• Small cap funds
• Sector specific funds
• Tax savings funds (ELSS)
• International Funds
• Flexi Cap Funds

Debt Mutual Funds:
A debt fund is a Mutual Fund scheme that invests in fixed income instruments, such as Corporate and Government Bonds, corporate debt securities, and money market instruments etc. that offer capital appreciation.

• Income funds
• Short term plans
• Liquid funds
• Arbitrage funds
• Dynamic bond funds

Hybrid Funds:
A hybrid fund is an investment fund that is characterized by diversification among two or more asset classes. These funds typically invest in a mix of stocks and bonds. They may also be known as asset allocation funds.

• Aggressive hybrid funds
• Balanced hybrid funds
• Conservative hybrid funds
• Dynamic asset allocation or Balanced advanced funds

Different ways to invest

• Lumpsum
• Systematic Investment Plan ( SIP )
• Systematic Transfer Plan ( STP )
• Systematic Withdrawal Plan ( SWP )