A Mutual fund is a type of financial vehicle made up of a pool of money collected from many investors to invest in securities like stocks, bonds, money market instruments, and other assets. Mutual funds are operated by professional money managers, who allocate the fund's assets and attempt to produce capital gains or income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus.
Mutual funds give small or individual investors access to professionally managed portfolios of equities, bonds, and other securities. Each shareholder, therefore, participates proportionally in the gains or losses of the fund. Mutual funds invest in a vast number of securities, and performance is usually tracked as the change in the total market cap of the fund—derived by the aggregating performance of the underlying investments.
Bonds are commonly referred to as fixed income securities and are one
of three asset classes individual investors are usually familiar with, along with stocks (equities) and
cash equivalents. There are different Categories of Bonds :
(a) Corporate bonds are issued by companies.
(b) Municipal bonds are issued by states and municipalities.
(c) Government bonds such as those issued by the Treasury.
(d) Agency bonds are those issued by government-affiliated organizations.
A Diversified Portfolio
The primary benefit of investing in a mutual fund is that you get exposure to a variety of shares or fixed income instruments.
There’s a Fund for Everyone
There are over 2,000 currently active schemes -- a lot to choose from. You can find funds that match your risk appetite, investment horizons, and personal financial goals.
Benefit from High Liquidity
If you invest in open-ended mutual funds (which most funds are), you can buy and sell your units at any time.
Invest in a Lump sum or through a SIP
One of the advantages of mutual funds is flexibility. You can either make a lump sum investment or put in small amounts over some time through a SIP (Systematic Investment Plan).
You can invest in Small Amounts
You can begin a SIP with as little as ₹500 a month.
Investing through mutual funds is quite cost-efficient.
Mutual fund managers and analysts wake up each morning with one goal – to research, analyze and study current and potential holdings for their mutual fund.