What is Mutual Fund?

A mutual fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds). Mutual funds are one of the best investments ever created because they are very cost efficient and very easy to invest in (you don’t have to figure out which stocks or bonds to buy).

How it Works?

A mutual fund is a collection of stocks, bonds, or other securities owned by a group of investors and managed by a professional investment company. For an individual investor, having a diversified portfolio is difficult. Mutual funds helps the individual investors to invest in equity and debt securities simultaneously. When investors invest a particular amount in mutual funds, he becomes the unit holder of corresponding units. In turn, mutual funds invest unit holders’ money in stocks, bonds or other securities that earn interest or dividend. This money is distributed to the unit holders. If the fund gets money by selling some stocks at higher price the unit holders are liable to get the capital gains.

Advantages of Mutual Fund:

Professional Management: The primary advantage of funds is the professional management of your money. Investors purchase funds because they do not have the time or the expertise to manage their own portfolio. A mutual fund is a relatively inexpensive way for a small investor to get a full-time manager to make and monitor the investments.

Diversification: By owning “shares”(known as “units”) in a mutual fund instead of owning individual stocks or bonds, your risk is spread out. The idea behind diversification is to invest in a number of assets so that a loss in any particular investment is minimized by gains in others. In other words, the more stocks and bonds you own, the less any one of them can hurt you. Large mutual funds typically own hundreds of different stocks in many different industries. It wouldn’t be possible for a small investor to build this kind of portfolio with a small amount of money.

Economies of Scale: Because a mutual fund buys and sells large amounts of securities at a time, its transaction costs are lower than you as an individual would pay.

Liquidity: Just like an individual stock, a mutual fund allows you to sell the units at any time.

Simplicity: Buying a mutual fund is easy! The minimum investment is also very small. As little as Rs 500 can be invested on a monthly basis. Just contact us to know more.

History of Mutual Fund:

The origin of mutual fund industry in India was with the introduction of the concept of mutual fund by UTI in the year 1963. It accelerated from the year 1987 when non-UTI players entered the industry. In the past decade, Indian mutual fund industry had seen a dramatic imporvements, both qualitywise as well as quantitywise.

Types of Funds:

»  Open Ended
»  Close Ended

Classification of Funds:

Equity Schemes Debt Schemes Hybrid Schemes Solution Oriented Other Schemes
Large Cap Fund Overnight Fund** Conservative Hybrid Fund Retirement Fund Index Funds/ETFs
Large & Mid Cap Liquid Fund Balanced Hybrid Fund Children’s Fund FoFs (Overseas/Domestic
Mid Cap Fund Ultra Short Duration Fund Aggressive Hybrid Fund
Small-cap Fund Low Duration Fund Dynamic Asset Allocation/ Balanced Advantage
Value Fund* Money Market Fund Multi-Asset Allocation
Contra Fund* Short Duration Fund Arbitrage Fund Scheme
Focused Fund Medium Duration Fund Equity Savings
Sectoral/ Thematic Medium to Long Duration Fund
ELSS Long Duration Fund
Dynamic Bond
Corporate Bond Fund
Credit Risk Fund
Banking and PSU Fund
Gilt Fund
Gilt Fund with 10-year constant duration
Floater Fund

"Mutual Fund investments are subject to market risks, read all scheme related documents carefully. The NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market including the fluctuations in the interest rates. The past performance of the mutual funds is not necessarily indicative of future performance of the schemes. The Mutual Fund is not guaranteeing or assuring any dividend under any of the schemes and the same is subject to the availability and adequacy of distributable surplus. Investors are requested to review the prospectus carefully and obtain expert professional advice with regard to specific legal, tax and financial implications of the investment/participation in the scheme. While all efforts have been taken to make this web site as authentic as possible, please refer to the print versions, notified Gazette copies of Acts/Rules/Regulations for authentic version or for use before any authority. We will not be responsible for any loss to any person/entity caused by any short-coming, defect or inaccuracy inadvertently or otherwise crept in the Mutual Funds Sahi Hai web site."

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