Mutual fund :
A mutual fund is a pool of money, collected from investors, and is invested according to certain investment objectives.
A mutual fund is a pool of money, collected from investors, and is invested according to certain investment objectives.
Characteristics of mutual fund :
Ownership of the MF is in the hands of the of the
Ownership of the MF is in the hands of the of the
investors MF managed by investment professionals The value of portfolio is updated every day
Advantage of MF to investors :
Portfolio diversification Professional management Reduction in risk Reduction of transaction casts Liquidity Convenience and flexibility
Portfolio diversification Professional management Reduction in risk Reduction of transaction casts Liquidity Convenience and flexibility
Net asset value :
The value of one unit of investment is called as the Net Asset Value
The value of one unit of investment is called as the Net Asset Value
Open-ended fund :
Open ended funds means investors can buy and sell units of fund, at NAV related prices at any time, directly from the fund this is called open ended fund. For ex; unit 64
Open ended funds means investors can buy and sell units of fund, at NAV related prices at any time, directly from the fund this is called open ended fund. For ex; unit 64
Close ended funds :
Close ended funds means it is open for sale to investors for a specific period, after which further sales are closed. Any further transaction for buying the units or repurchasing them, happen, in the secondary markets.
Close ended funds means it is open for sale to investors for a specific period, after which further sales are closed. Any further transaction for buying the units or repurchasing them, happen, in the secondary markets.
Dividend option :
Investors who choose a dividend on their investments, will receive dividends from the MF, as when such dividends are declared.
Investors who choose a dividend on their investments, will receive dividends from the MF, as when such dividends are declared.
Growth option :
Investors who do not require periodic income distributions can be choose the growth option.
Investors who do not require periodic income distributions can be choose the growth option.
Equity funds :
Equity funds are those that invest pre-dominantly in equity shares of company.
Equity funds are those that invest pre-dominantly in equity shares of company.
Types of equity funds :
Simple equity funds Primary market funds Sectoral funds Index funds
Simple equity funds Primary market funds Sectoral funds Index funds
Sectoral funds :
Sectoral funds choose to invest in one or more chosen sectors of the equity markets.
Sectoral funds choose to invest in one or more chosen sectors of the equity markets.
Index funds :
The fund manager takes a view on companies that are expected to perform well, and invests in these companies
The fund manager takes a view on companies that are expected to perform well, and invests in these companies
Debt funds :
The debt funds are those that are pre-dominantly invest in debt securities.
The debt funds are those that are pre-dominantly invest in debt securities.
Liquid funds :
The debt funds invest only in instruments with maturities less than one year.
The debt funds invest only in instruments with maturities less than one year.
Gilt funds :
Gilt funds invests only in securities that are issued by the GOVT. and therefore
Gilt funds invests only in securities that are issued by the GOVT. and therefore
does not carry any credit risk.
Balanced funds :
Funds that invest both in debt and equity markets are called balanced funds.
Funds that invest both in debt and equity markets are called balanced funds.
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