Mutual fund is a professionally managed investment fund that pools investment from various investors and invests in capital assets to match the investor’s financial goals.
A mutual fund is a collection of investments made by individual investors and used to purchase securities in the capital market. The best part about mutual funds is that a team of experts along with the fund manager picks all the investments to build a portfolio.
With wide availability of mutual funds schemes, it is easier for an investor to choose the most suited scheme for their financial goals.
Equity mutual funds invest at least 65% of their assets in listed companies across market capitalisations to earn higher returns than debt or hybrid mutual funds. These funds are suitable for investors having high to medium risk-appetite along with an investment horizon of more than 5 years.
Debt funds invest in fixed income generating instruments with lesser risk and lesser volatility like Certificate of deposit, Corporate Bonds, treasury bills, commercial paper, government securities. These funds are susceptible primarily to, credit, duration and interest rate risks. The idea investment duration for these funds is less than 5 years.
International funds, also known as overseas funds, invest in stocks of companies that are listed in international markets. These equity funds are risky but can provide exposure to the best companies in the world. They are suitable for investment duration of 7 years or more.
Hybrid funds are a type of mutual fund that offers diversification across asset classes. These funds invest in both equity and debt instruments. They can either be equity heavy or debt heavy depending on the type. They aim to offer a balance between equity based growth and debt based stability.
These are equity or debt oriented mutual funds that are designed to address specific needs such as retirement or child’s education and thus align to those specific goals. The may contain a mix of both equity and debt investments.
Being an investor planning must always be your very first step towards your investment journey. You can use our tools such as SIP calculator, Lumpsum Calculator, PPF Calculator etc and assess the investment option whether it meets your financial goals or not.
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You should go for mutual fund redemption process only when you have achieved your investment objective or there is a drastic change in the portfolio. In this article you would know how to redeem mutual funds online and offline
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