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What is Mutual Fund? Types, Benefits & How to Invest?
An investor education & awareness initiative.
Mutual Funds are investment instruments that combine different instruments such as stocks or shares, bonds or both into a single product which is managed by an expert fund manager. How do they work? A number of investors with a common objective invest in a mutual fund product and their collectively pooled investment corpus is then invested into a desired combination of assets by a professional expert. While investing in a mutual fund, you must look at the where the fund invests, the time horizon of your investment, the risk profile of the product, consistent historical performance across time horizons and more importantly, if the fund’s investment objective aligns with yours. A fund manager (a professional expert) then invests the money according to that pre-defined investment objective such as capital appreciation (looking for high growth in companies) or income (looking for more predictable investments such as debt securities) or a combination of both. You can invest in mutual funds by making a one-time investment (lump sum) or via automated, periodic investments of fixed amounts (the highly popular Systematic Investment Plans). Let’s look at the wide range of mutual funds available today. Categories of mutual funds
Mutual fund schemes fall under two broad categories based on entry-exit restrictions: 1. Open-ended funds, in which the investor can buy and sell units at any point of time 2. Close-ended funds, which offer units to investors at the time of the initial launch only. Once the initial launch is over, the units are only listed on the stock exchange where investors can buy and sell them. They cannot be bought or sold directly from the asset management company after the initial launch period. Open-ended funds technically exist till perpetuity while close-ended funds exist for a fixed duration of time. In addition to being categorized as open-ended and close-ended, mutual funds are also generally categorized based on their underlying securities and investment objectives. Types of mutual funds There is a wide range of mutual funds that are suitable for different investors with differing needs and risk profiles.
The various types of debt funds include:
Benefits of mutual funds Mutual funds offer a number of benefits to investors:
How to invest? Investing in mutual funds is a simple process. The various ways through which you can invest in mutual funds include:
Key Takeaways
Disclaimer: All Mutual Fund investors have to go through a one-time KYC (Know Your Customer) process. Investors should deal only with Registered Mutual Funds (‘RMF’). For more info on KYC, RMF & procedure to lodge/redress complaints, visit dspim.com/IEID. This is an investor education & awareness initiative by DSP Mutual Fund.
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Investor Relations Officer, DSP Asset Managers Private Limited, Natraj, Office Premises No.302,3rd Floor, M V Road Junction. W. E. Highway, Andheri(East), Mumbai-400069, Tel.:022-67178000.
Mutual fund investments are subject to market risks, read all scheme related documents carefully. © DSPAM 2024.
Any information regarding securities offerings, or references to securities offerings, that are contained on these pages do not constitute or form part of any offer of securities for sale or the solicitation of an offer to purchase securities in the United States or in any other jurisdiction where such offer may be restricted. The information in the coming pages is not intended for, and is not to be made available to, persons in the United States (being persons resident in the US, corporations, partnerships or other entities created or organized in or under the laws of the US or any person falling within the definition of the term "US Person" under the US Securities Act of 1933, as amended), wherever located. Any information regarding securities offerings, or references to securities offerings, that are contained on these pages do not constitute or form part of any offer of securities for sale or the solicitation of an offer to purchase securities in the United States or in any other jurisdiction where such offer may be restricted. In no event shall DSP Mutual Fund and / or its affiliates or any of their directors, officers and employees be liable for any special direct, indirect, special, incidental or consequential damages arising out of the use of information / opinion herein. The site, texts, images, designs, pictures, sounds, photographs, animation, and videos together with their layout and more generally all the items contained on this website are the sole property of DSP Asset Managers Pvt. Ltd. This site and all of the elements on this site are protected by Indian Law and by International copyright agreements concerning intellectual property. The content of this website must not be copied, modified, reproduced, distributed, transferred, edited or made accessible to third parties for any purposes whatsoever without obtaining prior permission from the owners of this website. *No. of unique investors who had invested with DSP at any time. ^Includes domestic AUM only, as on Dec 31, 2023 @ copyright DSPAM All rights reserved.
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