What is mutual fund and its types pdf

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what is mutual fund and its types pdf

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Learn More. They are generally a safer investment, but with a lower potential return then other types of mutual funds. These funds buy investments that pay a fixed rate of return like government bonds, investment-grade corporate bonds and high-yield corporate bonds. They aim to have money coming into the fund on a regular basis, mostly through interest that the fund earns.

7 common types of mutual funds

Prepared by: Gurmeet Singh Contact No. A Mutual Fund is a trust that pools together the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The mutual fund industry in India started in with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank.

The history of mutual funds in India can be broadly divided into four distinct phases:. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India.

At the end of UTI had Rs. In was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. With the entry of private sector funds in , a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families.

The flow chart below describes the working of a mutual fund: by: Gurmeet Singh. An open-ended Mutual fund is one that is available for subscription and repurchase on a continuous basis. These Funds do not have a fixed maturity period.

The fund is open for subscription only during a specified period at the time of launch of the scheme. A mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity period.

A scheme can also be classified as growth fund, income fund, or balanced fund considering its investment objective. The aim of growth funds is to provide capital appreciation over the medium to long- term.

Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc.

Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents.

These schemes invest exclusively in safer short-term instruments such as treasury bills, commercial paper and government securities, etc. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods. These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income.

Index Funds This schemes invest in the securities in the same weightage comprising of an index. This schemes would rise or fall in accordance with the rise or fall in the index. These funds invest exclusively in government securities. Government securities have no default risk.

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Jump to Page. Search inside document. Such funds are less risky compared to equity schemes by: Gurmeet Singh The aim of income funds is to provide regular and steady income to investors. Balanced Fund These are appropriate for investors looking for moderate growth. Money Market These schemes invest exclusively in safer short-term instruments such as treasury bills, commercial paper and government securities, etc.

Gilt Funds Index Funds This schemes invest in the securities in the same weightage comprising of an index. This schemes would rise or fall in accordance with the rise or fall in the index by: Gurmeet Singh These funds invest exclusively in government securities. Documents Similar To Mutual Fund and its types. Shah Anjum Alam. Tajinder Pal Saini. Atulesh Singh. Winston Wong. Gaurav Jaiswal. Ashish Pere. Ramkumar Yadav. Parshva Doshi. Fahad Javaid.

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mutual Funds.pdf

Savings and investments have evolved over the years, from hidden shelves in cupboards and piggy banks to savings accounts, fixed deposits FDs and recurring deposit RDs to equities and funds. Equities have always been a lucrative investment option, but the risk involved has always been a deterrent to many. Besides, there is a lot of research and knowledge required to successfully invest directly in equities and make profits. On the other hand, some people want the security offered by bank deposits and are okay with getting lower returns than equities. Hence, there is a large variety of mutual funds types available that address these specific concerns of investors. You may buy and sell units at any point while investing in open-ended mutual funds.

Advertiser Disclosure: The credit card and banking offers that appear on this site are from credit card companies and banks from which MoneyCrashers. This compensation may impact how and where products appear on this site, including, for example, the order in which they appear on category pages. Advertiser partners include American Express, Chase, U. Bank, and Barclaycard, among others. Many investors want to diversify their holdings in order to limit their exposure to risk. However, most individual investors cannot afford the fees and commissions necessary to take large positions in a number of individual securities.


Income/ Debt Oriented Funds: Such schemes generally invest in debt securities like Treasury Bills, Government Securities, Bonds and Debentures etc. They are considered less risky than equity schemes, but also offer lower returns. Gilt Funds: These funds invest exclusively in Government securities.


What Are the Different Types of Mutual Funds?

Prepared by: Gurmeet Singh Contact No. A Mutual Fund is a trust that pools together the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities.

Once a very small player in the financial market, mutual funds now play a large and decisive role in the valuation of tradable assets such as stocks and bonds.

Based on Structure

Updated on Mar 08, - PM. Products IT. About us Help Center. Log In Sign Up. Then it is of utmost importance to understand the various mutual fund types and the benefits they offer. Mutual fund types can be classified based on the following characteristics.

Mutual funds are one of the most popular ways Americans invest, thanks to their ease of use and built-in diversity. Less easy for new investors may be sifting through the thousands of mutual funds on the market. Generally speaking, there are four broad types of mutual funds: those that invest in stocks equity funds , bonds fixed-income funds , short-term debt money market funds or both stocks and bonds balanced or hybrid funds. Every mutual fund is designed to spread around risk while capturing wider market gains. Some types of funds carry a higher amount of risk than others, but also higher potential rewards.

What are the Different Mutual Fund Types And Their Benefits?

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