Mutual Funds

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Mutual Fund

There is a different companies who provide different schemes of mutual funds in India, which is categorized on the basis of investment objective, asset class, equities and structure.

mutual funds based on asset:

a.equity funds:

Equity funds are invested in equity stock or shares of companies. Depending on the scheme objective,investment could provide a higher result, that is the reason they are considered as high-risk funds.

b.Debt Funds:

Debts Funds are invested in the debt securities like government bonds, company debentures, and fixed income assets. As they provide fixed returns, they are known to be a safe investment instrument.Debts securities/funds are subject to lower risk and fully secured beacause goverment bonds/securities are fully secured.

c.Money Market Funds:

Money Market Funds are invested in liquid instruments, such as Commercial papres, tressury-Bills like goverment tressury bills,commercial papers of companies(e.g.public and private). They are considered to be safe investment option, as you get an immediate yet moderate return on your investment. They are a perfect option for investors who want to invest their excess funds.

d.Hybrid or Balanced Funds:

Hybrid or Balanced Funds is mix of equity fund and debt fund.The debt investments ensure a basic interest income,which the fund manager hopes to top up with capital gains on the equity portfolio.Hybrid or Balanced Funds is a mixture of stock and bonds schemes.The golden balance is 50:50 ratio between equity debts.Balanced funds/schemes of indian mutual funds tend to have at least 65% equity subjection

e.Sector Funds:

Sector funds, investment is a mix of equities that are recall across different sectors of the market. Sector Funds,on the other hands,are expected to invest in only on the specific sector/market.For instence, infrastructure fund investors make investments restricted to infrastructure companies or investment instruments offered by the infrastructure companies. Returns on an investment are directly proportionate to the performance of that particular sector. The risk factor associated with these schemes varies sector to sector.In india, on account of a mix of legal frameworks.the recent SEBI measures should address these issues.

f.Index Funds:

These funds are investment instruments that represent specific index on the exchange in order to replicates the returns and the movement of the index, viz. purchasing shares from the BSE Sensex.SEBI insists that 95% of the total assests should be in such replicating investment for index funds and exchange trade funds(ETFs).
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Why invest in mutual fund?
One should never invest in Mutual Funds, but should invest through them. To elaborate, we invest in various investment avenues based on our requirements, e.g. for capital growth - we invest in equity shares, for safety of capital and regular income - we buy fixed income products.
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Mutual Fund Investment Goals
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Faq / Frequently asked questions
What is a Mutual Fund?

Mutual is a vehicle, which pool the money of investor and make it profitable for the investor. In mutual fund your money could not be double in a particulars period but you get certain percentage of profits, According to the Net assets value (NAV). In a mutual fund various funds management related activities are Done. These are following:

a. Pooled vehicle: A mutual Fund is a vehicle to pool the investors money, with a expectation to give them best investment opportunity that will help them for making best decision. In mutual funds the funds of the investor are managed by well aware professional managers who provide the safety of your money. In India mutual funds are governed and regulated by Securities and Ex-change Board of India (SEBI).

b. Professional Management: A individual investor is lack of experience and knowledge to manage their own investment. Thus, Mutual Funds hand-over the work to Asset Management Company (AMC) that hires professional fund manager, who manage the fund invested by investor. The AMC manager manage the fund and make it profitable. In against the manager charge a fee from the investors. The fee charged by fund manager shall be payable whether investor earn profits or not.

What are the parities involved?

In a mutual fund there are many parties, who play there role in different role in a particular area.The parties are:

1.Investor: Investor is a person, who invest our money in mutual fund. They are individual, business man, farmer etc. They invest our money in behalf that his money is safe and give moderate rate of return.

2.Trustees: Trustees are the people who are responsible that in a mutual fund investor money is safe.

3.Assets Management Company (AMC): Every mutual fund hires AMC to manage its funds. The AMC then manage its fund by hiring professional, who are well knowledgeable and intelligence in managing a fund.

4. Distributers: Distributers are the person who bring the investor into the schemes. In behalf of it shall charge a commission. In other words, we can say that distributers are, the person who bring the customers (Investor) to the mutual fund company.

5. Registrar: A registrar is an individual who record all the holding in mutual fund schemes. They are known as scheme’s Registrar and Transfer Agent (RTA).

6. Custodian: The Custodian generally maintain the custody of the securities hold by investor.

What are the tax benefits in mutual funds?

There are many Tax benefits are available to the investor who are presently or prior dealing in mutual fund securities. The Tax benefits on mutual funds are changed time to time, according to financial years budgets or in other way. Currently few laws tax benefits are:

Tax free dividend, in case of equity mutual fund no dividend distribution tax, No long term gain tax. To take benefits under section 80C, you can also invest in Equity Linked Tax Saving Schemes of mutual fund.

There are many other Tax benefits are available to you after investing in mutual fund.