MUTUAL FUNDS

Mutual Funds

Mutual funds are the pool of savings of large number of investors and then reinvest those funds for earning profits and this profit is distributed among the investors.

                      Every mutual fund launches different schemes, with specific objectives. Investors who share the same objectives invests in that particular scheme. Each Mutual fund scheme is managed by a Fund manager and its team.

• The mutual funds usually invest their funds in equities bonds, debentures, call money, gold or other asset,s classes etc.
• NAV (Net Asset value):- NAV on a particular day reflects the realizable value that the investor will get for each unit if the scheme is liquidated on that date.

                 it is the indicator of the investment performance and keeps on changing with the changes in the market rates of equity and bonds.

Types of MF 

1. According to Type of Investment:-   Each MF need to declare the instrument in which it going to invest. Thus various MF can be categorized on the basis of investment:-

• Equity funds/scheme
• Sector Specific funds
• Debt funds/Income funds
• Money market funds/scheme
• GICT funds
• Index funds
• Diversified/Balanced funds   

• According to the time of closure of scheme: There are two types of MF based on period of time:

1. Open Ended Schemes: open ended funds are allowed to issue and redeem units any time during the life of the schemes, therefore unit capital of open ended scheme fluctuate on daily basis.
2. Close Ended Schemes: Close ended funds can not issue new units except in case of bonus or right issue.

• According to Tax incentive Scheme:   Some MF also allow reduction of tax. Therefore, sometimes the schems are classified according to this also:

1. Tax saving funds
2. Not Tax saving funds/other funds

• According to the time of payout:  

1. Dividend paying schemes
2. Reinvestment schemes