Mutual Funds

Who can invest

  1. Resident Indian Individuals / HUF
  2. Indian Companies / Partnership Firms
  3. Trusts/Charitable Institutions/PF
  4. Banks/FIs/NBFCs
  5. Insurance Company
  6. NRI/FII

Characteristics of a Mutual Fund

  1. Investors own the mutual fund.
  2. Professional managers manage the affairs for a fee.
  3. The funds are invested in a portfolio of marketable
  4. securities, reflecting the investment objective.
  5. Value of the portfolio and investors’ holdings, alters with
  6. change in market value of investments

Pros and Cons of Mutual Funds

  1. Portfolio diversification
  2. Professional management
  3. Reduction in risk
  4. Reduction in transaction cost
  5. Liquidity
  6. Convenience and flexibility
  7. No control over costs
  8. No tailor-made portfolios
  9. Issues relating to management of a portfolio of mutual funds

Types of Funds classified by nature of Investments

    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


    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


    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