Mutual Fund typically pool money of different investors and re-invest it into stocks, bonds and securities.
They’re a great option for those of us who find trading in the stock market difficult due to lack of knowledge or apprehension in investing into shares. The money collected in a fund is invested by individuals we call ‘Fund managers’. These Fund Managers have great financial investment expertise and keep track of the stock market.
Types of MF:
Open End Mutual Fund
- It is said to be Open at the time for Entry and Exit
- Meaning, invest anytime and get out anytime.
Close End Mutual Fund
- Specified entry time and exit time
- It has 3 durations – Large, Mid and Small Cap
Large Cap Mutual Funds
- Relates to investing in large cap companies with a long term record.
- They have less risk involved.
Mid Cap Mutual Funds
- Investing in middle sized companies.
- Risks involved but also more returns estimated as middle sized companies have potential to grow
Small Cap Mutual Funds
- Investing in small companies
- High risk involved with average return possibility
Equity Mutual Funds
It is when a company invests majority of its money into its own shares (equity).
Debt Mutual Fund
When a company invests into Government bonds, company bonds etc.
Balanced Mutual Fund
One where a company invests in both Equity and Debt equally or as per a ratio.