Open-ended funds: This scheme is open for both subscriptions and redemption on a constant basis. Investors can follow the process of buying and selling units at Net Asset Value on a day-to-day basis. Close-ended funds: The fund comes with a maturity period and its duration varies from months to years. The fund is available for a particular period of time for investment and thereafter it can be sold or purchased. Interval funds: This fund is a mixture of open-ended and close-ended funds but with little difference. Exchange Traded Funds: This fund is listed and traded on the stock exchange as stocks. Fund of Funds: Under this scheme, Funds are invested under other mutual funds.
MUTUAL FUND
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What is Mutual Fund?
It is a trust that accumulates funds in form of money from various investors who share a common investment motive. Then, the funds are invested in the equity market, bonds, money market, and other securities. A mutual fund is basically a pool where various investors invest their money according to their capability and receive profit proportionate to the share of the fund invested by them after the deduction of definite expenses.
The benefit of a Mutual Fund is that as it pools out money from various investors it becomes easy for each investor to lend money in small proportions according to their share which will aid in buying stocks or bonds which was not possible through direct investment. Mutual funds are regulated by experts who are specialized in formulating funds for different heads and as a layman, an individual has to just invest his or her money in a mutual fund. It is to be noted that Mutual Funds are subjected to market risk.
Classification of Mutual Fund
Classifications of Mutual Fund are based on the objective of the investment.
Equity Fund: This fund is invested under equity and funds are invested for an extended period of time which is aimed to achieve a higher return.
Debt Fund: Funds are invested in bonds and other debt securities. This type of mutual fund pays higher dividends than the money market fund and is aimed at achieving capital appreciation.
Liquid Fund: This fund is invested for a shorter period of time and also bears less risk in comparison to other funds but is more flexible than other schemes.
Hybrid Fund: This fund is a variety of more than two or more assets and funds that are invested in a mixture of bonds and stocks.
Gold ETF: This fund is an exchange-traded fund that grants investors to invest in virtual gold i.e. online rather than investing in physical gold. The benefit is that there is no need to check the purity of gold.
.F.A.Q
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WHAT ARE THE TYPES OF MUTUAL FUND SCHEMES?
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WHAT ARE THE INVESTMENT PLANS AND OPTIONS?
•Direct plan •Regular plan •Growth options. •Dividend payout option. •Dividend Re-investment option.
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WHAT ARE THE BENEFITS OF MUTUAL FUNDS?
•Funds are managed by skilled management. •Helps in economies of scale of funds. •Diversification of Funds. •Easily convertible in cash. •Flexible in nature. •Good administration of funds. •Convenient and Transparent in nature.