Mutual Funds in India
Zonkerala Articles -> Types of Mutual funds and major mutual funds companies in India
Mutual Funds in India
Mutual Fund is a type of collective investment method by which many people pool their money in a fund and invest in various securities like stock, bonds or cash investments. Every mutual fund has a fund manager or investment advisor so it is also called as managed funds. In world’s top stock markets collective investments holds a major share because of its flexibility. Depends on the objective of the funds like long term growth and low risk factor or high income growth with high risk factor or low growth rate and stability of principal, fund manager invests in respective fields on behalf of shareholders. For individual investors it is very easy type of investment because someone else manage their funds, take care of accounts and invest money over many different available securities. Equity
Net Asset Value
This is per share amount of total fund’s value. To calculate the NAV first add current market values of all assets and divide it by the number of shares. In stocks prices change in every second but NAV is calculated in a daily basis.
Open Ended Scheme
In open ended scheme any time during the scheme period an investor can enter or exit the scheme by buying or selling at its present Net Asset Value (NAV).
Close Ended Scheme
In this scheme a fixed number of shares are sold during its initial public offer(IPO) and later the buying and selling or shares are possible only in secondary market.
Mutual funds invest in stock market are called equity funds or stock funds. Equity funds can again divided in to many categories
In this funds will be invested in companies with high growth potential for a long term capital appreciation. Growth funds are more volatile to market risks.
Invest in companies with high dividend payouts providing safety and regular income.
It is a mixture of Growth and Income funds to provide long term capital appreciation and current income. By risk-wise it is in between growth funds and income funds
Small-Cap, Mid-Cap and Large-Cap Funds
In stock market companies are divided in to many groups according to their market capitalization like large-cap, mid-cap and small-cap companies. Market Capitalization is one way of measuring the size of the company and is decided by the number of shares in the market and value per share. Mutual funds are also categorized like this based on the share they hold.
Equity Linked Saving Schems ELSS
This is equity linked saving schemes. It is a kind of diversified mutual fund in which fund manager invest in varies companies from varies industry so risk factor is low. Also in India there is a tax benefit in investing ELSS. These funds have a lock in period of three years but the return is better and plus you will get tax benefits.
There are many other types of mutual funds like money market funds, Leveraged Funds, Index Funds, Hedge Funds, Sector Funds, Specialized Funds etc
Mutual Fund Companies in India