Overview of Mutual Funds Through Mutual Fund Investment Guide

Enter your text here ...Mutual fund is to an investment pool that collects money from different individuals sharing a common objective to trade in shares and bonds. The biggest advantage that mutual fund enjoy is because of diversification. Mutual funds do not put all their investments in one basket instead, put in a range of securities so that even if one asset does not perform, the others are able to compensate its losses. However, for the first timers, it is important to understand the basic concepts of mutual funds so that their investment becomes effective are able to earn maximum amount from their investment. These basic concepts can be learnt through mutual fund investment guide. It is a document that guides individual through the investing process so that individuals become prudent with respect to their investments. So, let us understand some of the areas covered in mutual fund investment guide.

What is a mutual fund?

This is the most common topics that is found in the introduction to mutual funds. It is an investment avenue that pools money from people to trade in shares and stocks. Mutual Funds are run by Asset Management Companies (AMCs) or mutual fund companies. In India, mutual fund companies are regulated by Securities and Exchange Board of India (SEBI). Association of Mutual Funds in India (AMFI) is another entity that owns the responsibility of developing the mutual fund industry.

How to Invest in Mutual Funds?

Another area that is covered in the mutual fund investment guide is how to invest in mutual funds. There are various channels available for mutual fund investment in India. One of the channels is directly by visiting the AMCs office. By visiting the office individuals need to fill the form, attach the required documents and pay the required amount to invest in mutual funds. They can even invest by visiting the broker, mutual fund distributors, etc.

Another mode of investment in mutual funds is MFOnline or mutual fund online. While resorting to this channel, individuals can invest in mutual fund through online mode. Here, they can visit the company's website or any independent portal to invest in mutual funds. The advantage of these websites is that individuals can invest in mutual funds anywhere and at any time. These websites also do not charge transaction charges. Therefore, individuals can earn the entire redemption proceeds.

Types of Mutual Funds:

Mutual fund investment guide also covers one section about the type of mutual funds. Mutual funds are divided into categories based on the preferences of investors. Some of them include:

Equity Funds: Equity funds invest a considerable proportion of their investment in equity shares. The returns on equity funds is never constant as its performance is dependent on the performance of the underlying equity shares. Some of the categories of equity funds include large-cap equity funds, small-cap equity funds, sectoral funds, and thematic funds. Investors who are risk seeker prefer to invest in equity fundsDebt Funds: Debt funds is a category of mutual funds that invests its major proportion of the corpus in fixed income securities. These funds are considered to be less risky than equity funds. The various types of debt funds include short-term debt funds, liquid funds, gilt funds, long-term debt funds, and so on. These funds generate fixed returns. Hybrid Funds: Hybrid funds are another category of mutual funds that invest in both debt and equity instruments in a pre-fixed proportion. These funds are considered to provide growth as well as constant returns. Fund of Funds: In this category of mutual funds the investment money is invested into various other mutual fund schemes. These funds offer a higher level of diversification with a lower ticket size.
Thus, mutual fund investment guide helps individuals to understand the concept of mutual funds along with the various types. However, investors need to decide which fund they need to choose depending on their investment objective and the return they are expecting from the returns.