What is Mutual Fund?| Mutual Fund full information in English | Mutual Fund types in English.

What is Mutual Fund? / Mutual Fund full information in english 2022.

Mutual Fund full information in english

Mutual Fund full information in English 2022: The amount of money deposited by a large number of investors is called Mutual Fund which is put in one fund. In simple words, we can say that mutual fund is a fund made up of money of many people or groups, which is divided into pieces by the fund manager and invested in various financial instruments using his investment management skills. Mutual Funds are invested in many ways, which determine their risk and return.

Mutual fund is better for the person who does not have much knowledge of stock market and wants to invest in stock market. Because in mutual funds there is a fund manager who is an expert in his field. The fund manager invests the money invested by the people in mutual funds in different types of stocks with his understanding so that better returns can be given to the investors.

Types of Mutual Funds 

Let us tell you that mutual funds are mainly divided into two categories – open ended and closed ended.

Open Ended Mutual Fund

In an open ended scheme, the investor can buy or sell units at any time during the plan period. It has no maturity period! You can redeem your investment as and when required i.e. liquidity in open ended scheme. Some open ended funds have a lock in period such as ELSS schemes. You cannot redeem your units during the lock-in period. The following types of funds come under the open ended category.

Debt Fund

Investors who invest in debt funds, their money is mostly invested in debentures, government securities, etc. by the fund manager, where the risk of risk is very less! Debt funds can prove to be a better option for the person who wants less risk with a fixed return on his investment.

Equity Fund

Investors who invest in equity funds, their money is invested in most of the shares by the fund manager. If you invest for a long period (at least 5 years) in equity funds, then it can give you good returns. The same investment made for a second and shorter duration can be risky! Because with high returns in this fund, the risk is also high. If you want good returns and want to invest for a long period, then equity funds are a better option for you. There are some categories of equity funds such as index fund, ELSS fund, small cap fund, mid cap small cap fund, diversified fund etc. All of them have their own risk and profit potential.

Liquid Fund

Liquid funds are a good option if you want to invest for a very short period of time with low risk. Liquid Funds invest in Short Term Debt Instruments i.e. short term debt instruments. This fund provides you a safe investment option with very low charges.

Balanced Fund

This fund is a good option for the investors who want better returns with less risk. The ratio of investment in Balanced Fund is pre-determined. In this, some percent of the fund is invested in equities and some percent in securities, which will increase your profit and reduce the risk.

Closed Ended Fund

You can invest in this fund only when NFO i.e. New Fund Offer is issued. Under this scheme, you cannot withdraw your money before the maturity period, that is, you can withdraw your money only after the completion of the maturity period. There are mainly two types of funds in this scheme.

Capital Protection Fund

The purpose of investing in this fund is to earn profit while keeping the invested amount safe. In this scheme, some part of the fund is invested in securities and some part in equity. This fund has the pressure of keeping the capital safe as it is a closed ended scheme hence the investment is made only for a fixed time period. Therefore, there is no possibility of taking more risk with the fund manager.

Fixed Maturity Plan

As the name suggests, maturity period is fixed in this plan and such funds are invested in debt funds. Where the investment will be done in this scheme, it is already determined, so there is no need for the fund manager to do much in it! In this type of fund the charges are also less.

Apart from all this, there are many types of funds in mutual funds, but these are the most widely used funds.

How to invest in Mutual Fund?

Investing in Mutual Funds seems like a very big and difficult task for a new investor. Often people keep thinking that they will invest in mutual funds, but due to lack of sufficient information, people are not able to invest in it. They have many doubts in the terminology of Mutual Funds such as Balanced Fund, Equity Fund Debt Fund etc. So let us tell you how to invest in mutual funds?

First complete the KYC details

To invest in mutual funds, first you have to complete the KYC details. For this you can use e-KYC form. By filling this form, photo, copy of PAN card and copy of Aadhar card, passport, electricity bill or bank statement can be given as address proof. You have to submit the first investment form to Register Bill or Mutual Fund Office. Some mutual funds or distributors also do e-KYC on the platform before investing in mutual funds.

You can also invest in any mutual fund by doing e-KYC through any app like – Paytm Money, Groww App or you can also do this with Demat account! The advantage of investing through these apps is that you can easily get mutual funds of all companies at one place. You can choose the best mutual fund by comparing according to your convenience.

Choose your mutual fund scheme according to you

A first time investor should choose a mutual fund scheme according to his goal, risk appetite and investment tenure. If you are not able to choose it, then you can also take help of financial planner for this. Investors can also create an asset allocation plan for themselves, which will guide them about the percentage of their money in which asset class they should invest in Equity, Debt or Gold.

Invest in these mutual fund schemes

If you want to invest for less than 3 years, then debt based funds should be chosen. Hybrid funds are good for three to five years. It has a mix of debt and equity. If the target is 5 to 10 years then one can invest in high risk products like Equity Mutual Funds.

Take a look at past performance

Before investing, the fund house and scheme should be selected carefully. The decision of the fund house and fund manager affects the performance of the scheme to a great extent. According to the financial planner, the investor should find out about the fund house and the past performance of the scheme. They should also take a look at the fund manager’s history, track record and achievements.

Choose a fund with good benchmark

The past performance in mutual funds does not depend on the upcoming performance, but according to the financial planner, the investor should look at the long term achievements of the scheme in 3, 5 and 10 years. They should choose such funds, which have consistently performed better than their benchmark! A scheme which consistently beats its benchmark for a long time indicates good fund management and efficient process of the fund house.

How does Mutual Fund work?

This question must have arisen in your mind, after all, how do mutual funds work? Investors who invest in mutual funds, mutual fund companies take money from them and reinvest in the stock market or safe government bonds etc. Whatever profit is made, the mutual fund company deducts its commission and returns it back to the investor. This is a short term plan in which more profit can be earned in less time. The special thing in this is that you can decide whether to invest your money in the stock market or not in a safe bond.

Why invest in mutual funds
Here are five reasons why you should invest in Mutual Funds!

  • Professional management, where to invest money and where not, the market experts know more than you! And when you put money in mutual fund, then your money goes in the hands of the expert of the company. Those experts are also called fund managers or portfolio managers. They give you tips on where to put your money! So stop worrying and invest money!
  • When investing in diversity, remember a saying, “Not all eggs should be laid in one nugget”! Yes, if you invest in mutual funds, then you get a chance to invest your money in different types of companies! There is less risk in this too!
  • Cheap and safe mutual funds are a good way to invest. You can start it even with 100 rupees in it! And the special thing is that it is a safer medium than the stock market.
  • You can buy and sell mutual funds anytime! Many banks have given this facility in online banking, in which you do not even need to open a de-mat account!
  • In Mutual Fund, you can choose the fund as per your wish. If you can take more risk then in that way you will also get schemes and if you want to take less risk then mutual funds are available to you accordingly.

Benefits of Mutual Funds in English.

  • Mutual Funds can protect your investment as well as help you meet your return objectives.
  • Offers different types of schemes to the investors with different requirements and low risk position.
  • Mutual Funds provide an opportunity to an investor to invest money in a variety of schemes, both debt and equity.
  • Mutual Funds provide an opportunity to the investors to withdraw money at any point of time or at a fixed time and on closure of the schemes.
  • Mutual fund investors are not required to pay tax on income, whereas in fixed deposits, you have to pay tax every year on your earnings.
  • You can invest in mutual funds both online and offline. You can buy and sell online as well as get all your updates online!
  • All mutual fund intermediary companies are managed by the Securities and Exchange Board of India (SEBI), which takes care of the activities of these companies. And the investor is able to troubleshoot the risk related problems.

Friends , through the article What Is Mutual Fund Information in English ,we have tried to give you all kinds of information about what is mutual funds! Still, if any information remains, any error remains, then you can inform us through comment! If you liked this Mutual Fund types, mutual fund benefit , mutual fund meaning, mutual fund information in english ,then please do share it with your friends!

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