WHAT IS MUTUAL FUND?
Mutual fund is acknowledged as a popular investment option.It is one of the best investment tools for wealth creation. However, before you plan to invest with mutual funds, it is important to know what mutual funds are and why you must have them in your investing portfolio own them?
WHAT IS THE DEFINITION OF MUTUAL FUNDS?
Mutual Fund is an investment that allows an investor to pool his assets and create wealth with the experience and expertise of professional management. The portfolio manager invests these fund assets in a variety of mutual fund schemes to ensure low risk and high returns.
WHAT IS THE FEES OF MUTUAL FUNDS?
All mutual funds charge fees to operate and manage your funds. Certain funds charge the investors an upfront sales load when the investor first purchase the fund and at the time when the investor sell the fund. However, there are also no loadfunds available, which have no sales load or charges. However, the fee depends on the class of funds.
WHAT IS THE STRUCTURE OF MUTUAL FUNDS?
Technically, there are four basic types of investment companies, which include – open-end funds, closed-end funds, exchange-traded funds and unit investment trusts.The mutual funds are regulated under the Investment Company Act of 1940.
WHAT IS THE REGULATION OF MUTUAL FUNDS?
Mutual funds is supervised with a strict set of rules that are monitored by the Securities &Exchange Commission (SEC). The funds are monitored by SEC compliance with the Investment Company Act of 1940, as well as other federal rules and regulations.
WHAT IS DIVERSIFICATION OF MUTUAL FUNDS?
The best part of mutual fund is that you can start an investment with a few hundred rupees in a fund and obtain a quick access to a diversified portfolio. Otherwise, diversification of an investment portfolio requires you to buy individual securities, which might expose you to more risk and market volatility.
The diversification with a single fund, in mutual fund, decreases your risk and ensures high returns.
IS A MUTUAL FUND PROFESSIONALLY MANAGED?
As compared to investing in individual stocks, wherein an investor needs to do a thorough study and research of the companies they are planning to invest in, time the market and analyse the market trend mutual fund comes with a benefit of professional management. With no second thought, investing in individual stocks takes not only resources but also a lot amount of time. Unlike which, one can invest and diversify the investing portfolio with mutual funds conveniently. The portfolio managers invest their professional lives in constant researching and analysing the current holdings and potential holdings for the funds.
HOWIS VERSATILITY POSSIBLE WITH MUTUAL FUNDS?
Mutual funds come is a vast variety and style, including – sector funds, equity funds, bonds, money market funds and balanced funds. With mutual funds, you can start investing with minimum risk and cost whether you invest in actively managed funds or you invest in passively managed funds. The flexibility and wide availability of funds allow you to create a diversified portfolio at low cost.