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What Are Genuine Mutual Funds for Extraordinary Premium?

Updated on May 10, 2020
PrateekJain24 profile image

Prateek is a qualified Depository Operation Officer certified by National Institute of Securities Market.

Introduction

Before investing in mutual funds various questions come to the mind of people. Such as what are high returns and stable mutual funds schemes that exist in the market? How much risk and return they involve? What is the standard time period for which funds must be invested? What is the investment mix of various funds in the market?

Every individual wishes to earn some extra money which they can save to meet their future expenses. Some common examples are marriage, medical bills, purchase of a house, paying off debts, education abroad etc. The invention of various kinds of mutual funds schemes evolved from these needs. Now there are more than 30 mutual funds schemes that provide attractive returns to their investors which allows them to accomplish their future plans.

Below are some most prevalent schemes that guide investors about various funds. And after reading them many confusion related to investment in diversified mutual fund schemes will be resolved.

Source

1. Liquid Funds

Under this scheme, the investment is made majorly in liquid instruments in the money market with the maturity of 91 days. Investors get higher returns in this scheme as compared to bank deposits. Therefore, investors can invest their funds for a few days to a few months. Withdrawal of funds under this scheme is restricted up to seven days from the date of investment made.

2. Money Market Funds

The investment made under this scheme is in capital market instruments whose maturity is up to 1 year. Investors usually get a reasonable return and good liquidity therein. Money market mutual funds schemes used to invest in money market instruments which are rated high quality and have precise structure.

3. Low interval funds

Low interval funds are also known as debt funds, that invest in short-term debt securities with maturity duration between six to twelve months. These are open-ended schemes suitable for investors who wish to park their funds for up to 1 year to generate decent returns.

4. Short Interval Funds

Short interval funds are also debt funds like Low duration funds that invest for a period of one to three years in open-ended debt schemes. Premium under this scheme mainly depends upon the market movement. Here investment should be made by intermediate level investors.

5. Medium Interval Funds

Medium interval funds occupy more risk as compared to short-duration funds. The high-interest rate being offered on debt securities has a great influence on returns in this scheme. Investments in this fund are pooled in medium-term open-ended debt schemes. The term of investment is for three or more years.

6. Long Interval Funds

Long Interval funds have a maturity period of 7-10 years and invest majorly in debt instruments. These are best suited for investors who have a high-risk appetite and skillfully understand the calculation of interest rate fluctuations. When the interest rate of these instruments increases it results in a lower return on investment. Hence high returns can only be expected when interest rates are slightly low.

7. Floater Funds

In the Floater fund, the investment is made in floating-rate instruments of approximately 65% of their total floater fund assets. Returns under these funds majorly depend on fluctuations in interest rate. Investment under these schemes is polled in open-ended debt securities, to generate good returns.

8. Gilt Funds

Gilt funds invest their 80% of funds into government securities. The risk level is moderate in these funds as the ownership and control of such companies are backed by the government. Moreover, government companies are considered safe for investment because they have strong financial support which makes them stable and reliable.

9. Corporate Bond Funds

Corporate bond fund managers strategically invest a major part of their funds in high rated corporate bonds. These bonds bear a low risk and are considered safer in view of investment in the security market. Investors who wish to invest a lump-sum amount of money generally prefer this scheme.

10. Credit Risk Funds

The investments made by credit risk fund managers are in below higher-rated commercial paper. These funds invest a minimum of 65% of their corpus below AA- rated papers. This scheme is considered risky because the investment is made below the high rated instruments which bear a substantial risk of default. Moreover, these investments have the capacity to deliver high returns after attaining their maturity.

Conclusion

Schemes are generally designed as per the investor's suitability. There are schemes for each and every type of investors who can invest according to their risk appetite and corpus. Anyone can earn some attractive returns on their funds by investing them smartly and carefully. Investors are advised to check past performance of the funds before investing in them and monitor the funds status on a regular basis. Hope this article is guided about various types of funds and their characteristics.

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

© 2020 Prateek Jain

Comments

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    • bhattuc profile image

      Umesh Chandra Bhatt 

      2 weeks ago from Kharghar, Navi Mumbai, India

      Well explained. Keep up your good work in HP.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      3 weeks ago from Madhya Pradesh, India

      Thank you Chitrangada mam for your wonderful comment. I am glad that you liked the article. I hope you got some useful information with it. Will surely writing more articles in upcoming period to explain more concept related to mutual fund investments. Thank you for your support and encouragement. Kee reading mam.

    • ChitrangadaSharan profile image

      Chitrangada Sharan 

      3 weeks ago from New Delhi, India

      Very well explained and informative article.

      I am sure many people will be benefitted by the simple way, you have explained the Mutual Funds, and how to invest in them.

      Thank you for sharing this useful information.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      4 weeks ago from Madhya Pradesh, India

      Thank you Simran for reading and commenting on the article. I also recommend you to invest in mutual funds by way of systematic investment plans. These are very safe and secure investment where the principal amount will be safe and you will get good returns over time. in case you need to know something more about the mutual fund investment you can contact me. Glad that you found this article valuable.

    • Simran Malhotra29 profile image

      Simran Malhotra 

      4 weeks ago from India

      Hi, just read your article, found it very useful for beginners in mutual funds. You have nicely explain in short about various schemes, their features as well as criteria to determine whether it will be fruitful to invest in those schemes or not. Thus helping investors to do short analysis about various schemes before taking any investment decisions. Thanks for guiding us on various schemes. Keep Writing, keep Sharing, Great Efforts dear.

    • Brenda Arledge profile image

      BRENDA ARLEDGE 

      5 weeks ago from Washington Court House

      Prateek,

      These are interesting.

      I don't think I would want money sitting around that I cannot touch during this trying time we are in right now.

      Maybe later a mutual fund. I hear there is a money market checking account at my bank that sounds appealing.

      Thanks for the share.

    • Suchismita pradhan profile image

      Suchismita Pradhan 

      5 weeks ago from India

      Money lying idle in the bank is an opportunity lost cost when we have so many other options available for increasing our hardearned saving.Gone are the days when we used to think investments on insurance,fd,rd and ppf.Now several schemes of mutual funds are here to rock the floor and serve us more.Thanks Mr.Prateek for such an informative fund filled article.Waiting for your next writeup.come up soon.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      5 weeks ago from Madhya Pradesh, India

      Thank you Swati mam for acknowledging my knowledge and expertise. I have been working in the finance sector since last 4 years, and before that I was also pursuing my master's degree in banking and finance. Therefore out of all that theoretical and practical approaches, I gained this much knowledge which i am sharing this to the peoples by my articles.

    • PrateekJain24 profile imageAUTHOR

      Prateek Jain 

      5 weeks ago from Madhya Pradesh, India

      Thank you Prantika mam for your wonderful comment and I am sure that as you said many people will be benefited by this article because as we all know that economy is very much fluctuating nowadays and people need to diversify their portfolio in order to sustain their profits. Hence these mutual funds will help them to maintain their financial growth at a growing phase.

    • Kh swati profile image

      Swati Khandelwal 

      5 weeks ago from Nainital

      Prateek you are a true expert of your field, I sometimes wonder how anyone can have such a great knowledge.wonderful write up.

    • Prantika Samanta profile image

      Prantika Samanta 

      5 weeks ago from Kolkata, India

      An informative article which will help many people know about the different funds and decide which fund they can choose for investing.

      Thank you for sharing the article during the lockdown period, as I have time to read about the funds and gain knowledge on them.

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