Mutual Funds- Types and Features

Types and features of Mutual funds
There are many investment options are available. But When investing You must have to know What successful people do? Also, We when buying a mobile or anything, What we do? When something buys we are comparing one thing to other things and also bargaining with a price. But as a time of investment, we waste our valuable money as to think our money is safe? Our money Will safe when we investment with proper understanding. Otherwise, we earn with first time and lose second time because this happens with many people.
 
When investing in the stock market, Mutual Funds, Reality sector etc. We first have to understand where we investing and what is the growth of the industry. Here you can learn about what type of mutual funds are available So you can understand and invest as per your goal. This post will help you to understand, how many types of mutual funds and what benefits and features of the Mutual Funds.

 

features of mutual funds, mutual funds types,
 

What is Mutual Fund?

A Mutual fund is a pool of money managed by a highly experienced team of financial experts, known as Asset Management company. They invest our money in the Stock market, bonds etc. Many banks also providing Mutual fund Investment facilities like ICICI Bank, HDFC Bank, SBI Bank, Axis Bank etc.
The objective of the fund and risk level are outlined in a document called a Prospectus. The prospectus provides detailed guidelines for the types of investment criteria the manager can buy.

 

Types of Mutual  Funds

Dependent on the Objective of the Investment, mutual funds have Following types:

1. Equity Funds

The fund manager mainly invests in the Stock market. These funds give high returns but its also its have high risk. So if you are willing to take high return you should aware the volatility of the stock market. In Equity funds, Its have the following types: Income funds, index funds, Blue-chip funds, Growth funds, value funds, Cyclical funds, Sector funds.

2. Balanced Funds/ Hybrid Funds

These funds invest both in fixed income instruments and shares. Its main point to balance growth and profit and generate regular income. Its have a moderate risk, in comparison with Equity, it’s better. It’s ideal to invest for medium to long term.

3. Gilt funds

These funds invest mainly in central and state government securities. These funds receive fixed interest from investments and also Invested in government securities so there is no risk for return and default. This money goes towards government expenses and infrastructure buildings. 

4. Exchange Traded Funds (ETFs)

Exchange Traded Funds (ETFs) track a commodity, an Index or a basket of assets trade like a share on stock exchanges. Most ETFs track stock indexes, There are also ETFs that invest in Bonds, Currencies, Commodity Market and other assets classes. ETFs, give you the flexibility to buy and sell units throughout the day, on the stock exchanges.
 

5. Debt Funds/ Fixed Income Funds

Debt fund is mostly preferred by individuals who are not willing to invest in High volatile equity markets. A debt fund provides a steady but low income as compared with equity. These funds invest in such securities that give fixed income on the investment. They invest in corporate bonds, government securities, debentures,  commercial papers, and other money market instruments, short term plans (STPs), monthly income plans (MIPs), Fixed maturity plans (FMPs).

6. Index Funds

Index funds invest in the share of companies that make up and index, For example, The nifty and The Sensex. The value of the index funds varies in the proportions to the Benchmark indexes. You don’t require monitor stock aggressively. 

7. Global Funds

These funds invest in the assets outside of India. They most usually invest in U.S. companies. A global funds Search to identify the best investments from global securities. They can be a focus on single asset class and multiple asset classes. 
Global Funds have the following types: Global funds that invest directly, Indirect Global Funds, Region-Specific Global Funds, Region-Specific Global funds.

8. Sector Funds

Sector funds invest in a particular industry Example of the Sector funds: Technology Sector, Pharma Sector, Banking sectors. The whole level of the amount invested in one particular sector, so it has also a high level of risk. Because there are no diversifications in the Stocks. 

9. Diversified Funds

These funds provide you the benefit of diversification by investing in sectors wise money and market capitalization. Investment is diversified in many sectors so there are the moderate risk and return capacity of the fund also be average. 

10. Tax Saving Funds

These funds are for who seek to tax rebate and long term growth, These funds offer tax benefits to investors under the income tax Act,1961.

11. Liquid Funds/ Money market funds

Investors who are want to return in the short term, they can invest in Liquid Funds. Because these funds invest in high liquidity money market instrument. The period of investment in these funds is short as a day. These funds invest in securities with a residual maturity of up to 91 days. The liquid funds do not have not a lock-in period because they are not tied-up for invest Long term. They invest in commercial papers, treasury bills, certificate of deposits etc. The main focus of this fund is to protect the capital rather than ensuring high returns. 

12. Ultra short term fund

These funds are as the same as Liquid Funds. These funds have more liquidity than other funds. According to the rules set by the Securities Exchange Board of India (SEBI) for liquid funds, Such funds can only invest in this type That maturity date is up to 91 days. But in the case of  Ultra funds, this rule does not apply. These funds can invest in such securities whether it’s mature before 91 days or after 91 days period.

 

 

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1 Response

  1. April 2, 2019

    […] You may have heard from many people, low NAV is good for investing in mutual funds because they get many quantities. So here it is not so important how many units you are getting. It’s mainly important how many amounts you are investing in the stock market. NAV stands for Net asset value. It’s represented a fund’s per unit market value. For example, you have 20 units at RS. 50 or 100 units at Rs. 10. So not favorable for buying more quantity for investment, because you want to get more quantity, investing the main purpose is not relevant to quantity it is relevant to quality, therefore you can get handsome profit from investment easily. If you really like this post then share and subscribe so you can get more information. Know more about these topics:1.    Investing books for New investors2.10 important tips when Investing in the stock market3.How many Mutual funds types and their features. […]

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