A mutual fund is a professionally-managed investment scheme, run by an Asset Management Company that brings together a group of people and invests their money in Stocks, Bonds and other securities, at a low cost.
An investor buys unit of holdings in a particular scheme of Mutual Fund in the form of 'units’. These units can be purchased or redeemed as needed at the scheme's current NAV (Net Asset Value). These NAV's keep changing, according to change in value of the fund's holdings. So, each investor participates proportionally in the gain or loss of the fund.
It is common knowledge that investing in Mutual Funds is better way to put your money to work towards fulfilling your Financial Goals/ Life Goals rather than simply letting your cash waste away in a savings account.
The money is managed by dedicated resources who are the professional Fund Managers and have the expertise and financial market knowledge.
As Mutual Funds manage large sum of money, they are able to spread the invested amount in various securities and in various sectors thereby reducing risk of being exposed to a few single securities/ sectors and benefit from optimum diversification.
Mutual Funds investments are easy to liquidate, any number of units can be redeemed any time as required and you get your money in your bank account in one to three working days from the date of redemption.
Mutual Funds are required to disclose their portfolio, where the investors money is invested, of every month end in the first 10-15 days of the successive month.
Mutual Funds are very tightly regulated and closely monitored by SEBI and have to adhere and follow the rules made by SEBI for each and every aspect of Mutual Funds.
An investor can invest in any open ended Mutual Fund scheme either through Lump sum or through SIP (Systematic Investment Plan) on a regular basis. Similarly an investor can also redeem his invested amount either fully or partially at any time from the open ended scheme.
Mutual Funds achieve economies of scale as they collect and invest large sums of money. The cost of running a Mutual Fund is divided between a larger pool of money and hence Mutual Funds are able to offer you a lower cost alternative of managing your funds.
An investor gets a choice of investing in various asset classes through Mutual Funds, like Equities, Debt and Gold.
All Mutual Fund schemes have a benchmark and one of the mandate given to the Fund Managers is to generate returns that beat the respective Benchmark within the risk parameters of the scheme.
Historically Equity and Equity oriented funds have generally given inflation beating returns as Equity asset class has given good returns in the past and mutual fund schemes have mostly outperformed their respective benchmarks.
There are certain Mutual Funds Schemes which are Goal oriented and can be used by investors for achievement of their financial goals or desired outcomes. These funds help the investors to stay focussed on the goal, and allocate the amount on lump sum/ regular basis for achievement of the goals. Some examples of goal oriented funds are as follows:
Mutual Fund is a vehicle that enables a collective group of individuals to:
Investing in a mutual fund is like an investment made by a collective. An individual as a single investor is likely to have lesser amount of money at disposal than say, a group of friends put together. Now, let’s assume that this group of individuals is a novice in investing and so the group turns over the pooled funds to an expert to make their money work for them. This is what a professional Asset Management Company does for mutual funds. The AMC invests the investors’ money on their behalf into various assets towards a common investment objective.
Hence, technically speaking, a mutual fund is an investment vehicle which pools investors’ money and invests the same for and on behalf of investors into stocks, bonds, money market instruments and other assets. The money is received by the AMC with a promise that it will be invested in a particular manner by professional managers (commonly known as fund managers). The fund managers are expected to honour this promise. The SEBI and the Board of Trustees ensure that this actually happens.
022-35654270
+91 9819338777
A-709, Neelkanth Business Park,
Nathani Road, Vidyavihar (West),
Mumbai: 400086
Near Vidyavihar Station & Bus Depot
Copyright © Kothari Investments All rights reserved.