Mutual Funds

Mutual Funds Invests

For investing in a Mutual Fund, you need to understand the various types of Mutual Funds that are available to you.

  • Equity Funds are invested only in the stocks of domestic companies listed on stock exchanges. They fall into the category of high-risk funds.
  • Money Market Mutual Funds are mainly meant for investors who are looking for easy liquidity and returns in the short term. These funds are invested in money market instruments like Treasury bills (T-Bills), Repurchase Agreements (Repo), Commercial Papers (CPs) and government securities.
  • Fixed Income Mutual Funds are considered an alternative to Fixed Deposits. They are invested in fixed-income securities. Debt funds are the fixed income mutual funds carrying a low risk.
  • Balanced Mutual Funds are invested in both fixed-income securities (debt) and stocks (equities). So they offer a balanced portfolio to investors.

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Mutual Fund's Benefits

 

  • Mutual funds enable investors to diversify unsystematic risks by investing in a diversified portfolio of stocks across various sectors. So the risk in mutual funds is much lower than individual funds.
  • They work on the basis of pooling of money. Mutual fund investors can have ownership of a diversified portfolio of stocks with a much smaller capital outlay.
  • Mutual funds are managed by professional fund managers having expertise and experience in picking right stocks for getting the best risk adjustment returns. So investors need not research and analyse investments themselves.
  • They provide investors a variety of products to suit their different risk profiles, investment requirements and objectives.
  • Mutual funds also provide flexibility to investors in terms of modes of investment and withdrawal.