What is a mutual fund?
In the Mutual Fund, money is collected from us and a lot of people like you. The responsibility of managing this money is given to a fund manager. The fund manager uses his investment management skills to invest this money in various financial instruments. Mutual funds invest in various ways, which determines their risk and returns. The advantage of investing in a Direct Plan of a Mutual Fund is that you do not have to pay a commission. Therefore, your return to long-term investment increases very much.
What is the unit?
When many investors invest in a fund together, the fund is divided into equal parts called unit. In the beginning, you can buy a unit of mutual fund scheme for Rs. 10. For the first time at the beginning of the investment, the unit costs only 10 rupees. This period, with no change in price, is called NFO period (New fund offer Period). In this period, the Mutual Fund Company does not invest your money, i.e. does not apply to any stock. After finishing the NFO Period, your fund manager starts investing in pooled money. From here there is an increase or decrease in value of this total investment, according to your unit's price increases or decreases.
Types of Mutual Funds:
Open-end scheme:
- Debt Fund
- Liquid Fund
- Equity Fund
- Balanced Fund
Closed-end scheme:
- Capital protection fund
- Fixed Maturity Plan
Debt Fund Debt Fund
Most of the investment in debt funds is made in debentures, government securities, and other debt instruments. Debt funds can offer lower returns than equity funds, but with less risk, this fund can be able to give a certain benefit. This fund can be ideal for those seeking a steady income.
Liquid Fund Liquid Fund
For less time if you have money, you can invest them here. Liquid funds invest in Short Term Debt Instruments. Liquid funds offer a safe investment option with low charges.
Equity Fund
Equity funds invest in the stock market. This is the category where most investors invest in mutual funds. Although investing in short-term equity funds may be risky, but in the long term, you can expect good returns in these funds. Some of the main categories of equity funds are the Index Fund, Sectoral Fund, ELSS Fund, Mid Cap Small Cap Fund and Diversified Fund. All types of equity funds have different possibilities for their investment type, risk, and profit. Read here before knowing about investing in ELSS things to know about our site.
Balanced Fund Balanced Fund
These types of schemes are ideal for investors looking to gain more profit with less risk. Balanced funds invest in equities and fixed income securities in a predetermined ratio. The investment fund helps in accelerating equity inequity and moves the investment fund into safe growth in fixed income securities. These are also known as hybrid funds.
lost end scheme
Only then can you invest when NFO i.e. a new fund offer is issued at the beginning of the plan. In the closed-end scheme, a maturity date is already defined. Can not be excluded from the closing-ended plan before the maturity date, hence the closing-ended scheme does not have liquidity. Closed-ended schemes consist mainly of two types of fund: Capital Protection Fund and Fixed Maturity Plan.
Capital Protection Fund Capital Protection Fund
Capital investment funds are invested primarily to make profits while keeping the investment invested in the fund. In this scheme, mainly invested in fixed income securities, but a small portion is invested inequities. These funds are pressurized to keep the capital safe and because it is a closed-end scheme, therefore the only investment is made for a fixed period of time, so the fund manager does not have the possibility of getting more risk.
Fixed Maturity Plan Fixed Maturity Plan
Fixed maturity plans already have a fixed maturity schedule and are invested in debt instruments that are maturing with the fund's duration. In this type of fund, the charges are also low because the fund manager has to invest in prescribed instruments and there is no possibility to do more for fund management.
0 comments:
Post a Comment