Mutual Fund

Mutual Fund

Who can invest
Resident Indian Individuals / HUF
Indian Companies / Partnership Firms
Trusts/Charitable Institutions/PF
Banks/FIs/NBFCs
Insurance Company
NRI/FII
Characteristics of a Mutual Fund

Investors own the mutual fund.
Professional managers manage the affairs for a fee.
The funds are invested in a portfolio of marketable
securities, reflecting the investment objective.
Value of the portfolio and investors’ holdings, alters with
change in market value of investments
Pros and Cons of Mutual Funds

Portfolio diversification
Professional management
Reduction in risk
Reduction in transaction cost
Liquidity
Convenience and flexibility
No control over costs
No tailor-made portfolios
Issues relating to management of a portfolio of mutual funds
Types of Funds classified by nature of Investments


EQUITY FUNDS
Pre-dominantly invest in equity markets
Diversified portfolio of equity shares
Select set based on some criterion
Diversified equity funds(ELSS as a special case), Capitalisation based funds, Index funds, Sectoral funds, Value Funds, Equity Income or Dividend Yield Funds, Aggressive Growth Funds, Growth Funds etc

DEBT FUNDS
Predominantly invest in the debt markets
Diversified debt funds
Select set based on some criterion Income funds or diversified debt funds, Gilt funds,Liquid and money market funds,Serial plans or fixed term plans, High Yield Debt Funds etc

BALANCED FUNDS
Growth & Income Funds( strike a balance between capital appreciation & income for the investor)
Investment in more than one asset class
Debt and equity in comparable proportions
Pre-dominantly debt with some exposure to equity
Pre-dominantly equity with some exposure to debt

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