What is a Mutual Fund?
A Mutual Fund is a professionally managed investment fund that pools money from many investors to
purchase securities.
Benefits of Investing in Mutual Funds
- 📌 Small Investments – Diversified portfolio even with
small
amounts.
- 📌 Professionally Managed – Managed by experienced fund
managers.
- 📌 Spreading Risk – Reduces investment risk by
diversification.
- 📌 Variety of Choices – Different schemes suit different
risk appetites.
- 📌 Regulated by SEBI – Ensures transparency and investor
protection.
Mutual Fund Classification
- 📊 By Structure – Closed-Ended, Open-Ended, and Interval
Funds.
- 🏦 By Nature – Equity, Debt, Balanced, or Hybrid Funds.
- 📈 By Investment Objective – Growth, Income, Balanced,
and
Index Funds.
Types of Equity Mutual Funds
- 📌 Diversified Equity Funds
- 📌 Mid-cap & Small-cap Funds
- 📌 Large-cap Funds
- 📌 Sector-Specific Funds
- 📌 Thematic Funds
- 📌 Tax-Saving Funds (ELSS)
Types of Debt Mutual Funds
- 📌 Gilt Funds
- 📌 Income Funds
- 📌 Accrual Debt Funds
- 📌 MIPs
- 📌 Short Term Funds
- 📌 Liquid Funds
- 📌 Fixed Maturity Plan (FMP)
Why Invest in Mutual Funds?
- ✅ Diversification – Reduces overall investment risk.
- ✅ Liquidity – Easily redeemable compared to fixed
deposits.
- ✅ Tax Efficiency – Capital gains taxation is beneficial.
- ✅ Flexibility – Choose from different schemes based on
needs.
Balanced & Dynamic Funds
A balanced fund maintains a mix of equity and debt to provide stability.
- 💡 Dynamic Equity Fund – Adjusts asset allocation based
on
market conditions.
- 💡 Dynamic Balanced Fund – Strikes a balance between risk
and returns.
- 💡 Arbitrage Fund – Leverages price differences for
profit.
Mutual Fund vs Fixed Deposits
Fixed Deposits offer stable returns but lack flexibility, while mutual funds provide higher
potential returns and liquidity.
- 💰 Liquidity – Mutual funds are more liquid than FDs.
- 💰 Tax Benefits – Long-term mutual funds have tax
advantages.
- 💰 Returns – Mutual funds often yield higher returns than
FDs.
