Mutual Fund

What Does Mutual Fund Mean?

An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money managers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus.

Why mutual fund?

Mutual funds are one of the most low cost products in the Indian financial industry available today. There are all types of mutual funds for all types of investors.
Some types of mutual funds?

  1. Indian Equity funds – Invest in shares of Indian companies. Large cap, mid cap and small cap.
  2. International equity funds – Invest in shares of Indian as well as shares in countries around the world depending on the theme. E.g. if theme is India and China then the shares would be from Indian and Chinese companies
  3. Balanced funds – Invests in Balance of equity and debt.
  4. Debt funds – Invests in government securities, commercial papers, short term and long term debt.
  5. Gold funds – Invests in gold or gold mining companies as per the theme chosen.
  6. Asset allocation funds – Invests in mix of equity , debt and also gold.
  7. Liquid funds – Invests in money market securities. Very liquid.
  8. Monthly income plans- Gives monthly dividend which is tax free. Debt 70 to 95% depending on nature of scheme.
  9. ELSS funds – Invests in equity of Indian companies but get deduction u/s 80C. Lock-in of 3 years from investment.
  10. Capital Protection Oriented Fund – Invests in debt and equity. Keeps debt more as per maturity term for trying to ensure capital protection.
  11. Fixed Maturity Plans – Debt with fixed maturity.