Mutual fund is an entity that pools money of large number of investors to invest in different securities. This money is then managed by a professional Fund Manager on behalf of the unit-holders, to invest it in various financial instruments.
Flexibility: Mutual Fund investments offer you a lot of flexibility with features such as systematic investment plans,
systematic withdrawal plans & dividend reinvestment. Affordability: They are available in units so this makes it very affordable. Because of the large corpus, even a small
investor can benefit from its investment strategy. Liquidity : In open ended schemes, you have the option of
withdrawing or redeeming your money at any point of time at the
current NAV.
Potential of return: The fund managers who take care of your Mutual Fund have access to information and statistics from
leading economists and analysts around the world. Because of this, they are in a better position than individual investors
to identify opportunities for your investments to flourish.
Funds that invest in equity shares are called equity funds. They carry the principal objective of capital appreciation of the investment over a medium to long-term investment horizon. Equity Funds are high risk funds and their returns are linked to the stock markets. They are best suited for investors who are seeking long term growth. There are different types of equity funds such as Diversified funds, Sector specific funds and Index based funds.
These Funds invest predominantly in rated debt / fixed income securities like corporate bonds, debentures, government securities, commercial papers and other money market instruments. They are best suited for the medium to long-term investors who are averse to risk and seeking regular and steady income. They are less risky when compared with equity funds.
These funds invest in highly liquid money market instruments and provide easy liquidity. The period of investment in these funds could be as short as a day. They are ideal for Corporates, institutional investors and business houses who invest their funds for very short periods.
These funds invest both in equity shares and debt (fixed income) instruments and strive to provide both growth and regular income. They are ideal for medium- to long-term investors willing to take moderate risks.
Hybrid Schemes or balanced schemes bridge the gap between equity and debt schemes. This category is characterized by a portfolio that is made up of a mix of equity stocks and bonds and will suit investors looking for debt plus returns with higher levels of risk than fixed income schemes.
