Mutual Funds

Friday, December 14, 2007 | Labels: | |

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.

Mutual Fund Companies offer various schemes. Investors can choose any particular Fund/Scheme or mix of Funds/Schemes depending upon their perception towards risk. Investment is done on the basis of prevailing Net Asset Values of various schemes.

Mutual Funds Investments are subject to Market Risks.

Types of Funds Sold

  • Debt : Liquid schemes, Income schemes, G-sec schemes, Monthly Income Schemes etc.

  • Equity : Diversified Equity Schemes, Sector Schemes, Index Schemes etc.

  • Hybrid Funds : Balanced Schemes, Special Schemes - Pension Schemes, Child education Schemes etc.

Advantages of Investing in Mutual Funds

  • Professional Money Management & Research
    Mutual funds are managed by professional fund managers who regularly monitor market trends and economic trends for taking investment decisions. They also have dedicated research professionals working with them who make an in depth study of the investment option to take an informed decision.

  • Risk Diversification
    Diversification reduces risk contained in a portfolio by spreading it. It is about not putting all your eggs in one basket. As mutual funds have huge corpuses to invest in, one can be part of a large and well-diversified portfolio with very little investment.

  • Convenience
    With features like dematerialized account statements, easy subscription and redemption processes, availability of NAVs and performance details through journals, newspapers and updates and lot more; Mutual Funds are sure a convenient way of investing.

  • Liquidity
    One of the greatest advantages of Mutual Fund investment is liquidity. Open-ended funds

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