I want to start investing and want to learn about mutual funds.Asked
A mutual fund is an investment instrument, basically collection of stocks and/or bonds, managed by professionals of an asset management company. Investors will put their money in different types of mutual fund units depending on their risk appetite and duration of investment.
There are different 3 major types of mutual funds in India:
1. Equity mutual funds: Invest most of the money gather from investors into stock market. The risk level in equity mutual funds are quite high and investors are advice to invest in these funds as per their risk appetite.
2. Debt mutual funds: Invest most of the money gather from investors into debt instruments like corporate bonds, government bonds, bonds issued by banks etc. These mutual funds are best for investors who are risk averse.
3. Balanced mutual funds: Invest the money gather into both debt and equity. These are diversified mutual funds having perfect balance between risk and returns on investment, and are most popular mutual funds these days.
All the mutual funds are registered with securities governing body SEBI to protect the interests of the investors. As an investor, one can buy these mutual fund ‘units’ at fund’s current Net Asset Value (NAV), which is calculated at the end of every day, taking into account of closing market prices of the securities in its portfolio and keep on fluctuating as per the fund’s holdings.
Following are the commonly used mutual fund terminologies-
New investors must note that this list is not exhaustive and only contains a few necessary but not sufficient list of terminology that could help an investor in the world of mutual funds.
You can learn more about mutual funds here.
Mutual fund is nothing but collection of stocks or bonds that a professional Fund Manager buys on behalf of you. Fund Manager decides which stock or bond to buy and how much. A mutual fund then distributes the entire investment amount in small units (called units). Investors can buy these units instead of buying stocks directly.
You can check-out this blog to understand more about mutual funds: https://groww.in/beginners-guide-mutual-funds/