MUTUAL FUNDS and Its TypesPosted by sandeep on November 1st, 2019 Concept of Mutual Funds When an asset management company collects money from the different type of investors with common risk taking capacity, invest that amount in a single pool (fund) and manage that fund is called Mutual funds. In other words, Mutual fund is a medium of earning profit by which small investor can also get good return in long term.
Types of Mutual Funds There are different types of mutual fund are as follows:
In open-ended funds, any investor can invest or withdraw their money from the fund whenever they want. There is no fixed maturity date is defined. 2. Close-ended Fund: In close ended funds there is an fixed maturity date is defined. These type of funds cannot be purchase at any time. Investors can invest in close ended fund only during its New fund offer. 3. Interval fund: Interval funds include both the features of open ended and close ended funds. On can invest in these kind of fund whenever fund is open for investment for a fixed time interval, otherwise investment in these kind of fund is closed. 4. Actively managed Fund: This type of funds is managed in a flexible way by the fund manager. These constituents of these funds are bought and sold in a very frequently, so these funds are managed actively. For example: KPIT technologies has provide better results so fund manager purchased the KPIT technologies shares. After 10 days, Hindalco company's result came and it’s result are way better than KPIT , so fund manager sold out KPIT and purchased hindalco stock. In the above example, the way in which fund is managed that’s why it is called actively managed funds. Index funds are example of actively managed fund. 5. Passive Fund: In Passive funds, investors invested on those funds whose performance seeks to track the higher return on the market. The investors purchase the funds and hold it until they get good return from it. 6. Equity Fund: Those types of scheme whose motive/objective is to invest in equity shares or equity related investments like convertible debentures. These type of funds seeks capital appreciation through the investments of the investors. Sub-Types of Equity funds:
For example: The funds of banking sector will invest only in banking companies. Gold sector funds will invest only in gold related companies or securities.
For example: Infrastructure sector will invest in the shares of the companies comes under infrastructure construction like cement, telecom, etc.
7. Debt fund: Those funds which are limited to invest in debt securities like treasury bills, government securities, bonds or debentures, commercial papers are called Debt funds.
Sub-Types of Debt fund:
8. Hybrid Fund: Those funds which provide the investment charter to invest in both equity and debt funds. Hybrid fund include the features of both the fund equity and debt. Some of the investors invest in gold with either equity or debt or both.
Sub-Types of Hybrid Funds:
9. Gold Fund: Those funds which invested in gold or gold related securities are called Gold fund. Gold funds is divided into 2 category:
10. Real estate funds/ Real estate investment fund: Those funds which invest in real estate related stocks are known as real estate funds. There are some funds which make things possible to the small investors to take exposure of fund of real estate like an asset class. Like it? Share it!More by this author |