Mutual fund is a type of group investment. Groups of investors jointly invest in stocks, short-term investments or other securities. UTI AMC is the oldest mutual fund company in India.
A mutual fund has a fund manager who determines the fund’s investments and maintains profit and loss. In this way the profit and loss are shared among the investors.
Mutual funds are an accessible route for those who wish to invest even if there is not enough knowledge of the stock market.
The mutual fund operator (company) collects the investment amount of all the investors and has some facilities, then invests this amount in the market for them. One of the major advantage of investing in is that the investor does not have to worry about when you buy or sell the shares, as this is the concern of the fund manager. He is the person who maintains the investment.
Another benefit is that small investors can invest very small amount like Rs 100 per month. In such a situation, they have to get a systematic investment plan, in which these funds are transferred monthly from the bank directly to the fund.
Choose according to your requirements
Open ended and close ended fund
According to the unit issuance, there are two types – units can be issued or paid at any time during the lifetime of an open ended fund scheme. Close ended funds cannot issue any new units under the scheme except bonus or rights issue. For this reason, the open-ended scheme’s unit capital can fluctuate in the same way as shares, whereas in the case of close-ended, it does not.
An open-ended scheme can be entered or exited at any time. And many times they have a lock-in period, which cannot contain redemption, so they must be fixed at the time of entry. Subscriptions can be availed only once in the closed ended scheme and redemption can also be done at minimum fixed time limit intervals. In this way the liquidity of the closed ended scheme decreases.
Balanced funds are called hybrid funds. It is common stock, preferred stock, bonds and short-term bonds. These funds are beneficial because they also reduce the risk factor and to a large extent ensure the safety of capital.
Efforts are made to get maximum benefit with the help of Growth Fund. Investments in these are made in companies that make rapid progress in the market. Invest in these funds for greater profit and for this reason the risk is higher.
If an investor invests in a dividend fund, so the dividend paid by the companies from time to time is also available to the investor. This cash is deposited in the investor’s account.
These are funds that give priority to security. There is relatively little gain in them, but the probability of loss is very less.
Money market fund
Money markets are generally considered the safest funds. Their main objective is to protect the invested capital.
After you buy the Mutual fund
When any fund house in the market comes out with a new scheme, then all the rules, conditions and other things related to it are made mandatory by the Securities and Exchange Board of India (SEBI).
The offer document of the scheme is given by SEBI.
In this, sufficient information related to the purpose of investment, risk factors, load and other expenses are given. There are expenses in various items such as advisory, custodial, audit transfer agent and trustee fees and agent commission in operating a mutual fund, the expenditure in these items is given in the offer document.
Apart from this, it is also said that what are the charges that the investor will have to pay for investing in the scheme, such as entry load, exit load, switching charges, recurring expenses etc.
In a scheme where the expenses are less, the fund house will have more money for the investor and this will also give the expectation of higher returns.
Such schemes are more beneficial for investors. If more than 75 percent of the amount is to be invested in equity under any scheme, then such scheme is called equity scheme.
If the company is going to invest equal amount in equity and debt, then such scheme is covered under the balanced scheme.