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