Mutual Fund

Advantages of Investing in Mutual Funds:

• Mutual Funds provide higher returns that can beat inflation to grow your money in the long run
• Mutual Fund investment decisions are taken by expert fund managers based on the intensive research         and analysis of the companies that the funds are invested in.
• Indian Mutual Fund industry has very strict regulations and guidelines laid by SEBI.
• Investments can be done in diversified industries hence they provide safer returns
• Maintenance of mutual funds is cheaper since they do not require any demat account.
• Money is liquid as payments are made by cheques or credited directly to the bank account.
• Some of the mutual funds ELSS (Equity Linked Savings Schemes) provide tax benefits under Sec 80C.

Classifications of Mutual Funds

1. Open Ended Schemes
    They can be bought or sold at any time at the prevailing NAV and do not have any fixed tenure.

2. Close Ended Schemess
    They have a fixed tenure with a fixed corpus available during a specified period of time with a defined           maturity date.

Based on Asset class, Mutual Funds are divided into
1. Equity Funds
Equity Funds are sub-classified depending upon their investment objective, as follows:
    • Diversified Equity Funds
    • Sector Specific Funds
    • Large Cap Funds
    • Mid Cap Funds
    • Small Cap Funds
    • Multi Cap Funds
Equity investments are meant for a longer time horizon, thus Equity funds rank high on the risk-return matrix.

2. Debt Funds
A debt fund may invest in short-term or long-term bonds, securitized products, money market instruments or floating rate debt.

3. Hybrid Funds
They are invested partially in stocks and partially in money market

4. Real Funds
They are invested in commodities