Mutual funds are a means of investment and can be viewed as a financial trust in which many
investors pool their funds keeping in mind a predetermined objective of
investment.
The funds are pooled together and they are invested in various instruments of the capital market like securities,bonds, shares and debentures and other money market instruments.
These funds are managed and watched over by a financial expert who studies the market conditions and invests the money accordingly.
The profits earned on the investments are shared between the investors according to the number of units of shares held by them.
Types of Mutual Fund Schemes
Open - ended schemes are all about liquidity and are generally available throughout the year, they are bought and sold on demand at their net asset value, or NAV, which is based on the value of the funds securities and is generally calculated at the close of every trading day.
Investors buy shares directly from a fund. they do not have a fixed date of maturity and can be bought and sold as per their requirements.
Close - ended schemes is a fund with a pre-determined maturity period and investors can directly invest the open ended scheme during the initial issue.
There are two types of exit options in this kind of schemes depending on the type of the scheme and it raises a fixed amount of capital through an initial public offering (IPO).
The fund is then structured, listed and traded like a stock on a stock exchange.
Interval Schemes are a combination of both open-ended and close-ended schemes and one can trade the units directly or redeem them at the NAV related rates.
Currently investing in mutual funds is considered to be one of the most beneficial forms of investments available in comparison to the other investments instruments.
Mutual funds are comparatively cost efficient and also carry a low level of risk.
The biggest advantage of investing in mutual funds is that they are managed by qualified and professional expertise.
Investing in diverse group of mutual funds does not require the investor to buy individual bonds and stocks he purchases units of different mutual funds thereby distributing the amount of risk.
When investing in different assets the investor it reduces the risk factor and he is sure that if he incurs losses in any particular fund then he might gain from another investment and you can liquidate your investment as and when you like.
Investing in mutual funds is very easy and simple to understand and does not require large amounts of money to invest.
One must be careful while investing as mutual fund managers are not experienced enough and do not research all the available opportunities in the market.
When you purchase a unit of a mutual fund there is an entry load charge which is an extra cost and when exiting from the mutual fund you are again charged extra as an exit cost.
Since investors have their money spread across different assets the high returns earned can be diluted due to diversification and as result do not have an impact on your earnings.
Tax is something that is often ignored as the mutual fund manager sells a particular security it triggers the tax of the individual thereby making it useless as a tax savings investment.
The funds are pooled together and they are invested in various instruments of the capital market like securities,bonds, shares and debentures and other money market instruments.
These funds are managed and watched over by a financial expert who studies the market conditions and invests the money accordingly.
The profits earned on the investments are shared between the investors according to the number of units of shares held by them.
Types of Mutual Fund Schemes
Open - ended schemes are all about liquidity and are generally available throughout the year, they are bought and sold on demand at their net asset value, or NAV, which is based on the value of the funds securities and is generally calculated at the close of every trading day.
Investors buy shares directly from a fund. they do not have a fixed date of maturity and can be bought and sold as per their requirements.
Close - ended schemes is a fund with a pre-determined maturity period and investors can directly invest the open ended scheme during the initial issue.
There are two types of exit options in this kind of schemes depending on the type of the scheme and it raises a fixed amount of capital through an initial public offering (IPO).
The fund is then structured, listed and traded like a stock on a stock exchange.
Interval Schemes are a combination of both open-ended and close-ended schemes and one can trade the units directly or redeem them at the NAV related rates.
Currently investing in mutual funds is considered to be one of the most beneficial forms of investments available in comparison to the other investments instruments.
Mutual funds are comparatively cost efficient and also carry a low level of risk.
The biggest advantage of investing in mutual funds is that they are managed by qualified and professional expertise.
Investing in diverse group of mutual funds does not require the investor to buy individual bonds and stocks he purchases units of different mutual funds thereby distributing the amount of risk.
When investing in different assets the investor it reduces the risk factor and he is sure that if he incurs losses in any particular fund then he might gain from another investment and you can liquidate your investment as and when you like.
Investing in mutual funds is very easy and simple to understand and does not require large amounts of money to invest.
One must be careful while investing as mutual fund managers are not experienced enough and do not research all the available opportunities in the market.
When you purchase a unit of a mutual fund there is an entry load charge which is an extra cost and when exiting from the mutual fund you are again charged extra as an exit cost.
Since investors have their money spread across different assets the high returns earned can be diluted due to diversification and as result do not have an impact on your earnings.
Tax is something that is often ignored as the mutual fund manager sells a particular security it triggers the tax of the individual thereby making it useless as a tax savings investment.
No comments:
Post a Comment