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