Mutual Funds
Mutual Fund is a potential financial instrument that pools the money from various people and invests in different financial securities like bonds and stocks. Etc. Every mutual fund investor will own the fund units that represent a portion of the mutual fund holdings.
The Mutual fund industry provides a plethora of schemes to cater to the different needs of different investors. The choice of Mutual Funds differ based on the financial goals like child education, marriage, post-retirement or asset purchase.
Types of Mutual Funds
Open-Ended
An open-end mutual fund is a scheme that is redeemed or subscribed throughout the year. An open-ended fund scheme does not have any maturity period and is perpetual.
Close Ended
A closed-end fund is accessible for subscription only during the starting period and has a confident tenor and fixed maturity date. The close-ended funds can be redeemed only on maturity.
The below funds fall under the open-ended category
Equity Funds :
The equity funds usually invest in stocks and the prime objective is long-term capital. The fund can further be classified as large, medium or small based on the company.
Balanced Funds :
Balanced funds maintain a certain percentage of both fixed income and equities. In general, the funds will support the distribution of 40% fixed income and 60% equity.
Debt Funds :
Debt Funds are comparatively safe and provide fixed returns. The funds are invested in government bonds, company bonds, fixed income assets, etc.
Divided Fund :
Dividend funds invest in the stock of companies that pay dividends, which are profits that a company shares with its stakeholders.
In general, investors have little or no idea about the market trends, fund’s performance, long-term compounding, inflation, or risk. A professional distributor assists investors in making significant decisions. Besides, the key benefit of opting for a professional distributor is prompt and honest service. If the stock market goes down, it will be communicated promptly, and all the risks and other relevant information.
1. All investors are given information about the STP and SIP, which will help bring down unpredictable risk.
2. Investors can get insights into the outcome that may come in the next 5 to 7 years.
3. An expert suggests the ideal plan for investment after analysing the investor’s age, liabilities, financial status and other factors.
4. A professional mutual fund distributor can send the performance of funds and may help in identifying the non-performing funds in the portfolio. Besides, investors also get insights on weeding out the non-performing mutual funds and replacing them with suitable ones.