A Mutual Fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds). Mutual funds are one of the best investments ever created because they are very cost efficient and very easy to invest in (you don’t have to figure out which stocks or bonds to buy).
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A mutual fund is a collection of stocks, bonds, or other securities owned by a group of investors and managed by a professional investment company. For an individual investor, having a diversified portfolio is difficult. Mutual funds helps the individual investors to invest in equity and debt securities simultaneously. When investors invest a particular amount in mutual funds, he becomes the unit holder of corresponding units. In turn, mutual funds invest unit holders’ money in stocks, bonds or other securities that earn interest or dividend. This money is distributed to the unit holders. If the fund gets money by selling some stocks at higher price the unit holders are liable to get the capital gains.
Advantages ofMutual Funds
Economies of Scale
Classification ofMutual Funds
|Equity Schemes||Debt Schemes||Hybrid Schemes||Solution Oriented||Other Schemes|
|Large Cap Fund||Overnight Fund**||Conservative Hybrid Fund||Retirement Fund||Index Funds/ETFs|
|Large & Mid Cap||Liquid Fund||Balanced Hybrid Fund||Children’s Fund||FoFs (Overseas/Domestic|
|Mid Cap Fund||Ultra Short Duration Fund||Aggressive Hybrid Fund|
|Small-cap Fund||Low Duration Fund||Dynamic Asset Allocation/ Balanced Advantage|
|Value Fund*||Money Market Fund||Multi-Asset Allocation|
|Contra Fund*||Short Duration Fund||Arbitrage Fund Scheme|
|Focused Fund||Medium Duration Fund||Equity Savings|
|Sectoral/ Thematic||Medium to Long Duration Fund|
|ELSS||Long Duration Fund|
|Corporate Bond Fund|
|Credit Risk Fund|
|Banking and PSU Fund|
|Gilt Fund with 10-year constant duration|