Mutual Funds
A mutual fund is a type of financial vehicle made up of a pool of money collected from many investors to invest in securities like stocks, bonds, money market instruments, and other assets. Mutual funds are operated by professional money managers, who allocate the fund’s assets and attempt to produce capital gains or income for the fund’s investors. A mutual fund’s portfolio is structured and maintained to match the investment objectives stated in its prospectus.
Mutual funds give small or individual investors access to professionally managed portfolios of equities, bonds, and other securities. Each shareholder, therefore, participates proportionally in the gains or losses of the fund. Mutual funds invest in a vast number of securities, and performance is usually tracked as the change in the total market cap of the fund—derived by the aggregating performance of the underlying investments.
Features & Benefits
- Equity Mutual Funds: Predominantly investing in equity and equity-related instruments (diversified)
- Sector Funds: Technically called Thematic Funds, investing in particular sectors
- Index Funds: Investing in exchange traded stocks, managing the funds passively
- Fund of funds: Investing in the best performing mutual funds
- Tax Saver Mutual Funds: Section 80C benefits, where the invested amount is locked for three years
- Debt Mutual Funds: Investing in fixed income/government-related instruments
- Monthly Income Plans: Where the monthly dividend is paid back to the investor
- Liquid Funds: Investing in money market funds with high liquidity
- Floating Rate Short Term Funds: Invests in debt securities, money market instruments & floating rate instruments with maturity profile of three months and up to 2 years
- Gilt Funds: Investing in government-related securities
- Fixed Maturity Plans: Fixed returns up to the maturity period
- Gold Exchange Traded Funds: Predominantly investing in gold commodity stocks