Who should read this: Well, this article is for all new invester’s who want to invest in Mutual fund but have no clarity about this investment product. In this article I shall try to cover basic information required for all invester’s to know befoe investing. If you have any further questions please feel free to comment below.
What is Mutual Fund: Mutual funds are investment products available for investors through which they can invest in any asset class of their choice i.e. quity, debt, gold and real estate. There are multiple entities involved in Mutual fund business, and all these entities are ragulated by SEBI.
Who manages the Fund: An Asset Management Company (AMC) is appointed to manage all activities related to Mutual fund i.e. launching a new fund, managing the fund, marketing the fund, collecting the funds from investors etc. The investment activities i.e. evaluating and selecting the securities, creating and managing portfolios done by professional fund managers for a fee.
What is NAV: We often hear the term NAV, Net Asset Value. The NAV is the net asset per unit of a schemes calculated as net asset/Number of outstanding units of the Scheme. All transactions happens based on the current NAV of the scheme.
The money thus collected is then invested in capital market instruments such as shares, debts, debentures and other securities. A mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity period. An open ended scheme allowes investors to invest in additional units and redeem investment continuously at current NAV. A closed ended scheme is for a fixed period, it offers units to investors only during the New Fund Offer (NFO). SEBI registered mutual funds are listed and available for trading in the capital market segment of the Exchange.
There are different type of Mutual Funds available in the market today. Below we have listed down different types of Mutual funds.
Any investor can check these respective Funds from a long list of fund families.
|Fund Type||Sectorial Fund||Mixed Fund||Other Type||Debt Fund|
|Equity Diversified||Equity – FMCG||Equity diversified||Monthly Income Plan||Short Term|
|Equity Tax Saving||Equity – Tech||Balanced Fund||Debt Specialty||Long Term|
|Equity Index||Equity – Pharma||Hybrid Fund||Money Market||Floating Rate|
|Equity Institutional||Equity – Banking||Gold Fund||Money Market Instrument||Institutional|
|Equity – MNC||Fixed Maturity|
All mutual funds performance history is available in NSE website.
Regulatory : Apart from SEBI, other regulator i.e. RBI who is involved in aeas of foreign exchange, AMFI (Association of Mutual Funds of India) is the governing body who oversees the functioning of industry recommended best practice.