Mutual funds are known for the highly rewarding means of investment opportunity they offer. In simple words, mutual fund is a pool of money contributed by people and invested in the way the shareholders' want or as per the common objective of the investors. It is advisable to have basic knowledge about this investment procedure before you begin.
To customize this investment process, the market offers investors with different kinds of mutual funds. They can be classified as per the maturity period and investment objective parameter.
Let's take a look at the classification under maturity period –
-Open-Ended Fund/Scheme;
This fund is constantly available for subscription and repurchase; also it has no fixed maturity period. So investors can easily buy and sell units at Net Asset Value (NAV) related prices that are declared on a daily basis. Liquidity is a primary feature of open ended schemes.
-Close-Ended Fund/Scheme;
Close ended funds come with a prescribed maturity period of 5-7 years. You can subscribe for them only for a specified period at the time of launch. The investors can avail the scheme at the time of public issue. They can later on buy or sell the units of the scheme on the stock exchanges where the units are listed. These funds also feature an exit route that lets you sell back the units to the fund itself through periodic repurchase at NAV related prices. Their NAV is disclosed on a weekly basis.
Mutual funds based on Investment objective parameter –
-Growth-/Equity-Oriented Scheme;
This category provides the investor with great returns over a medium to long term investment period. A major part of the investment is laid in equities and carries high risk. The investor also has the facility to avail options like dividend option, capital appreciation, etc. Also the plan gives you the flexibility to change your preference later. If you are looking for long term investment then this scheme will benefit you.
-Income-/Debt-Oriented Scheme;
This fund is designed to offer investors with a regular, steady income. It invests in fixed income securities such as bonds, corporate debentures, government securities and money market instruments. This risk entailed in investing in this kind of plan is less risky as compared to equity oriented funds. These funds remain unaffected by markets fluctuations, but there is less scope of growth as compared to equity oriented funds. The only way in which these funds are affected is when there is change in interest rates in the country. Fall in the interest rate results in increase in the NAV in the short run and vice-versa.
-Balance funds;
These mutual funds are made to provide growth and regular income funds to the investors. The fund makes this possible by investing in equities and fixed income securities in pre-defined proportions as indicated in the offer do[censored] ents. Normally, the proportioned followed is 40-60% in equity and debt instruments. As a portion of the money is invested in equities, these funds do get affected with market fluctuation. However, their NAV is less volatile as compared to pure equity funds.
-Money Market or Liquid Fund;
These mutual funds provide easy liquidity, preservation of capital and moderate income. Under this fund, investment is done in safer short-term instruments only like treasury bills, certificates of deposit, commercial paper and inter-bank call money, government securities, etc. There is less fluctuation of returns with this scheme as compared to other funds.
-Index Funds;
These mutual funds imitate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc. The securities they choose to invest in have the same weightage of an index.
-Gilt Fund;
Under these mutual funds your money is only invested in government securities and has no default risks. But the NAV may fluctuate in case of change in interest rates and other economic factors.
Source: http://www.squidoo.com/before-investing-know-the-different-kinds-of-mutual-funds-in-the-market
http://articles.bestpcfixer.net/
Read More:,To Tax or Not to Tax - This is the Question,Shopping For Affordable Children's Clothes,Compact and Folding Reading Glasses: Easy to Carry, Easy to Read,Nocturnal Emission, Nightfall or Wet Dreams Causes and Symptoms,How to Make Money Easily With Affiliate Marketing
To customize this investment process, the market offers investors with different kinds of mutual funds. They can be classified as per the maturity period and investment objective parameter.
Let's take a look at the classification under maturity period –
-Open-Ended Fund/Scheme;
This fund is constantly available for subscription and repurchase; also it has no fixed maturity period. So investors can easily buy and sell units at Net Asset Value (NAV) related prices that are declared on a daily basis. Liquidity is a primary feature of open ended schemes.
-Close-Ended Fund/Scheme;
Close ended funds come with a prescribed maturity period of 5-7 years. You can subscribe for them only for a specified period at the time of launch. The investors can avail the scheme at the time of public issue. They can later on buy or sell the units of the scheme on the stock exchanges where the units are listed. These funds also feature an exit route that lets you sell back the units to the fund itself through periodic repurchase at NAV related prices. Their NAV is disclosed on a weekly basis.
Mutual funds based on Investment objective parameter –
-Growth-/Equity-Oriented Scheme;
This category provides the investor with great returns over a medium to long term investment period. A major part of the investment is laid in equities and carries high risk. The investor also has the facility to avail options like dividend option, capital appreciation, etc. Also the plan gives you the flexibility to change your preference later. If you are looking for long term investment then this scheme will benefit you.
-Income-/Debt-Oriented Scheme;
This fund is designed to offer investors with a regular, steady income. It invests in fixed income securities such as bonds, corporate debentures, government securities and money market instruments. This risk entailed in investing in this kind of plan is less risky as compared to equity oriented funds. These funds remain unaffected by markets fluctuations, but there is less scope of growth as compared to equity oriented funds. The only way in which these funds are affected is when there is change in interest rates in the country. Fall in the interest rate results in increase in the NAV in the short run and vice-versa.
-Balance funds;
These mutual funds are made to provide growth and regular income funds to the investors. The fund makes this possible by investing in equities and fixed income securities in pre-defined proportions as indicated in the offer do[censored] ents. Normally, the proportioned followed is 40-60% in equity and debt instruments. As a portion of the money is invested in equities, these funds do get affected with market fluctuation. However, their NAV is less volatile as compared to pure equity funds.
-Money Market or Liquid Fund;
These mutual funds provide easy liquidity, preservation of capital and moderate income. Under this fund, investment is done in safer short-term instruments only like treasury bills, certificates of deposit, commercial paper and inter-bank call money, government securities, etc. There is less fluctuation of returns with this scheme as compared to other funds.
-Index Funds;
These mutual funds imitate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc. The securities they choose to invest in have the same weightage of an index.
-Gilt Fund;
Under these mutual funds your money is only invested in government securities and has no default risks. But the NAV may fluctuate in case of change in interest rates and other economic factors.
Source: http://www.squidoo.com/before-investing-know-the-different-kinds-of-mutual-funds-in-the-market
http://articles.bestpcfixer.net/
Read More:,To Tax or Not to Tax - This is the Question,Shopping For Affordable Children's Clothes,Compact and Folding Reading Glasses: Easy to Carry, Easy to Read,Nocturnal Emission, Nightfall or Wet Dreams Causes and Symptoms,How to Make Money Easily With Affiliate Marketing
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