Mutual Funds are one of the most popular options these days. It is a mutual instrument that forms when an asset management company (AMC) or fund house pools from multiple individuals and institutional investors with a common mutual objective.
A fund manager, a financial expert, manages pooled funding who buys securities such as stocks and bonds in line with mutual mandates.
Mutual Funds are a great investment option for individual investors to access a portfolio managed by professionals.
In addition, asset allocation covers multiple products, so you can diversify your portfolio by investing in Funds.
Investors are assisting fund units based on their mutual amount. Therefore, each investor experiences a profit or loss that is directly proportional to the amount which is investing.
Furthermore, the main purpose of a manager is to provide investors with optimal returns and they invest in securities that are in sync with the purpose of the fund. The performance depends on the underlying asset.
Types of Mutual Funds
Indian investments are broadly categorizing into equity ,debt and balanced depending on asset allocation and equity exposure. Therefore, the risks and returns assumed by an investment plan depend on its type and following are:
Firstly, as the name implies, invest primarily in the stock of a company across all market capitalizations and has the potential to offer the highest returns of any class of investments.
Secondly, it invests primarily in debt, money markets, and other bonds.
For example – Treasury securities, government bonds, certificates of deposit etc.
Balanced or Hybrid
Lastly, Hybrid funds invest in both equity and debt products and the main purpose of it is to balance the risk-reward ratio by diversifying the portfolio.
Interested in learning about similar topics? Here are a few hand-picked blogs for you!