Mutual Funds are today considered as an integral part of an investment portfolio, as they offer investors a bouquet of benefits...
» Expertise of professional fund management.
» Access to a diversified investment portfolio through a small investment sum.
» Tax exemptions on investment and returns in some cases.
» Easy liquidity.
» Easy of investing.
» Periodical disclosure of all information pertaining to the schemes (e.g.portfolio, etc.)
» Investment can be made with a small sum. you do not need to wait to accumulate a significant investible surplus.
» Since scheme corpus usually runs into hundreds of crores of Rupees, economics of scale are enjoyed while investing a small sum.
Mutual fund Classification
Mutual Funds can be classified on two parameters - structure and investment objective.
Mutual funds schemes can be either open-ended, close-ended or intervel schemes.
Mutual funds can invest in various investments ranging from treasury bills to companies listed overseas. Based on the underlying portfolio, mutual fund schemes can be broadly classified as:
Portfolio Based Schemes
Equity oriented schemes can be further classified...
Debt Based Schemes
Debt oriented schemes can be further classified...
A quick comparison..
|Mutual fund category||Investment Objective||Risk level||Returns potential|
|Debt Funds||To protect capital / provide income||Low||Low|
|Equity Funds||Capital growth||High||High|
|Hybrid Funds||Capital growth while striving to protect capital and provide income|