Who can invest
- Resident Indian Individuals / HUF
- Indian Companies / Partnership Firms
- Trusts/Charitable Institutions/PF
- Banks/FIs/NBFCs
- Insurance Company
- NRI/FII
Characteristics of a Mutual Fund
- Investors own the mutual fund.
- Professional managers manage the affairs for a fee.
- The funds are invested in a portfolio of marketable
- securities, reflecting the investment objective.
- Value of the portfolio and investors’ holdings, alters with
- change in market value of investments
Pros and Cons of Mutual Funds
- Portfolio diversification
- Professional management
- Reduction in risk
- Reduction in transaction cost
- Liquidity
- Convenience and flexibility
- No control over costs
- No tailor-made portfolios
- Issues relating to management of a portfolio of mutual funds
Types of Funds classified by nature of Investments
EQUITY FUNDS
Pre-dominantly invest in equity markets
Diversified portfolio of equity shares
Select set based on some criterion
Diversified equity funds(ELSS as a special case), Capitalisation based funds, Index funds, Sectoral funds, Value Funds, Equity Income or Dividend Yield Funds, Aggressive Growth Funds, Growth Funds etc
DEBT FUNDS
Predominantly invest in the debt markets
Diversified debt funds
Select set based on some criterion Income funds or diversified debt funds, Gilt funds,Liquid and money market funds,Serial plans or fixed term plans, High Yield Debt Funds etc
BALANCED FUNDS
Growth & Income Funds( strike a balance between capital appreciation & income for the investor)
Investment in more than one asset class
Debt and equity in comparable proportions
Pre-dominantly debt with some exposure to equity
Pre-dominantly equity with some exposure to debt
