Mutual Funds

A mutual fund is an alternative investment option direct investment, rather it pools the money of several investors and invests this in stocks, bonds, money market instruments and other types of securities. Buying a mutual fund is like buying a small slice of a growing business. The owner of a mutual fund unit gets a proportional share of the fund's gains, losses, income and expenses. It should be everybody's part of long term or short term asset, it should be something as we buy landed property, gold or keep money in bank as FD.

Each mutual fund has a specific stated objective. The fund's objective is laid out in the fund's prospectus, which is the legal document that contains information about the fund, its history, fund managers and its performance in comparison to comparable index.

Some popular objectives of a mutual fund are -

  • Equity (Growth): Only in stocks
  • Debt (Income): Only in fixed-income securities
  • Money Market (including Gilt): In short-term money market instruments (including government securities) Partly in stocks and partly in fixed-income
  • Balanced:Securities, in order to maintain a 'balance' in returns and risk

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