- Personal Finance»
- Investing in Stocks, Bonds, Real Estate, More
Mutual Fund :: Facts and Falses
What is mutual fund? Classification of Mutual Fund? Equity Fund, Balanced Fund, Debt Fund and Liquid Fund
Most people in India is not really understands the function and structure of a mutual fund. They thinks it is a complex subject too hard to understand. I too was one among them till 2007- 08. Till that time, my mind is interested only in literary subjects, especially poems in Malayalam language. At that time, i started to study about stock market. I started some investments. Almost are ended in loss. But I don't close my efforts. I trying to understands about stock related subjects. It is really another poem. Yes, some up and downs of emotions. Stock related subjects are suitable to me. I am continuing in my travel to study about stock market. Here I am going to share my learning to you too.
Mutual fund is really a Fund managed by a Fund Manager under a Fund House or Asset Management Company. This fund house will be under the control of a governmental institution. In India HDFC, UTI, SBI, Reliance etc are famous fund houses. These fund houses are under the control of the Indian Governmental Institution- Security Exchange Board of India (SEBI). There are more than thousands of mutual funds are managed under these fund houses.
Types of Funds
Equity, Balanced, Debt and Liquid Funds are various kind of mutual funds. Function of these mutual funds are essentially different. Equity funds are more popular, but Liquid funds are more secure. Debt funds are bonds of different companies which are more secure than equity funds but less secure than Liquid Funds. Balanced funds are really the mixture of the above said funds. A new type of fund now come to the scenario recently is Gold fund. The net asset value of gold fund rises when the value of gold rises in the market.
Equity funds are different types. Blue chip funds invest in Large cap stocks. Volatility of these funds may be a little. Another type is Mid cap funds. These funds invest in mid cap stocks. Small cap funds invest in small cap stocks. Multi cap funds invest in large, mid and small cap stocks proportionally. Sectorial Equity funds invest only in certain sector like pharma, power, information technology etc. A diversified equity fund invest in all sector, it should balance the risks of all sectors.
Exchange Traded Funds
Another type of Mutual Fund is known as Exchange Traded Funds which are now available in important Stock Exchanges in the world.They have dual nature like a mutual fund and like a share. Most of them are based on Indexes like Nifty, Shanghai, Junior Nifty, Sensex etc. They are more easy to trade than mutual fund. In India Goldman Sachs Asset Management Company Limited mainly concentrated in this field. I will write another hub based on Exchange Traded Funds.
Role of a Fund manager
If you invested your money in a best mutual fund managed by a dedicated and skilled fund manager, you can be get relaxed without any tension about your money. He will care selling and buying of proper stocks in proper times. But if you invest in a worst funds, your money will not grow and it may be diminished after a long period and your fund value may also decreased due to inflation. An investor should realize about good funds. He should switch the money from worst funds to best mutual funds in every year. In such a way, every investor has a good role in the growth of his money. A fund manager is not a magician or superman. His performance may worst in some periods. I am trying here to reveal some facts and falses regarding the mutual funds.
I write some points above are briefly. My aim is to give a basic knowledge to whom do not know nothing about mutual fund. It is my first hub and I expect your reception to me in this field. Also I am from Kerala, situates in the southern tip of Indian Sub Continent. MalayalaM is my mother tongue. I try here to express my ideas in English. I am still studying this foreign language. Because English is a global and a Universal language.I am improving in it day by day. Thank You for reading my first hub....!
Can the Fund Managers, usually, protect the interest and safety of investors ?
- A MODEL PORTFOLIO
I am introducing here a Model Portfolio to investors. You can select this model, if you can able to face the risk of the investment. Remember, all type of investment are not profitable at all times. Some may lose and some may gain. Do not expect...