Mutual Funds
What is Mutual Funds?
A mutual fund is a collective fund made up of money collected from various investors. Money from this fund is used to invest in stocks, bonds, money market instruments and other securities. A fund manager is appointed to manage the asset allocation of the fund.
Investing Your Money Right
As mutual funds have a diverse asset allocation, they are excellent investment vehicles to diversify your portfolio. This mitigates the concentration risk. In addition to this, investors do not have to research various stocks, bonds and other securities before investing in the fund as it is managed professionally by a team of experts.
Why should you have it?
Equity Funds
A mutual fund is classified as an equity fund if at least 65% of its portfolio is allocated to investing in equity shares of companies across different market capitalization. The returns are, thus, dependent on market movements which are in turn influenced by economic and geo-political factors.
Debt Mutual Funds
Debt mutual funds invest mostly in debt, fixed income and money market instruments such as treasury bills, government bonds, deposits, etc. Returns provided by debt funds are often very predictable.
Balanced Or Hybrid Mutual Funds
Balanced or Hybrid mutual funds have assets allocated to both equity and debt instruments. The objective of this type of fund is to balance the risk-reward ratio.
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