Mutual Funds Have become quite popular these days and you might have also seen Mutual Fund Sahi hai Campaign on various Platforms.
Let's Dive into Knowing more about Mutual Funds and their types.
A Mutual Fund is a organisation or company that gathers money from several people and invests that collected money in securities like stocks,bonds and other assets.
Mutual Funds are managed and operated by Professional Fund Managers who strategically Invest the Collected Money in securities to meet the Objectives of that particular Fund.
Mutual Funds mainly invests in Equities, Debt or in a Mixture of Both.
Further More Any mutual fund will be one of the two:
Open Ended mutual Funds are Open from both the ends as the name suggests.
In an Open Ended Mutual Fund any investor can invest at anytime and can Exit the fund at any time whenever they wish to.
Close Ended Mutual Funds are closed from the both ends as the name suggests meaning you can only Enter and Exit the mutual fund at a specified period of time.
In a close Ended mutual fund you can only invest in these funds during the NFO(New Fund Offer) period and the investment are automatically redeemed on the maturity date.
1. Equity
Equity Funds invests the gathered money in the Stock Market, hence these Funds are also called as Stock Funds. These are High Risk High Return Funds.
2. Debt Fund
Debt mutual funds invest in fixed income schemes like Government and Corporate Bonds, Money Market Instruments etc.
This type of Fund is best for investor who is looking for Fixed and Regular Income.
These are Low Risk and Low return.
3. Liquid Mutual Funds
Liquid Funds are type of Debt Funds that invests in securities that have maturity period of upto 91 days.
Liquid Mutual Funds invests in securities like treasury bills, commercial papers and etc.
4. Hybrid Mutual Funds
Hybrid Funds are mixture of Stocks and Bonds.
It can also be said that it is a mixture of Equity and Debt classes.