Understanding mutual funds

Mutual funds pool money from many investors to invest in a diversified portfolio of stocks, bonds, or other securities. Managed by professional fund managers, they offer diversification and professional management, allowing investors to share in the fund’s gains or losses based on their share ownership.

Here's a step-by-step breakdown of how mutual funds operate:

● Mutual funds collect money from a large number of investors and use the pooled funds to purchase securities.

● Mutual funds spread their investments across a wide range of assets, such as stocks, bonds, or a combination of both. Diversification helps in reducing the risk associated with individual securities.

● Investors can buy or sell mutual fund shares at the mutual fund NAV price at the end of the trading day.

● The NAV is the per-share market value of all the securities held by a mutual fund. It is calculated daily after the market closes and reflects the fund's overall performance.

Different types of mutual funds

Explore various types of mutual funds, including equity, debt, and hybrid funds. Learn about the different types of mutual funds and invest in the one that suits your requirements the most.

Equity funds

The equity funds primarily invest in stocks. They can focus on various sectors and market capitalizations such as large-cap, mid-cap, or small-cap. Equity funds offer the potential for relatively better returns but come with higher volatility.

Debt funds

Debt funds allocate the corpus of money in fixed-income securities such as bonds, securities, and treasury bills. They invest in various fixed-income instruments such as fixed maturity plans (FMPs), gilt funds, liquid funds, short-term plans, long-term bonds, and monthly income plans, among others.

hybrid fund

These funds invest in a mix of stocks and bonds to provide a balanced approach to risk and return. They are suitable for investors looking for a middle ground between equities and fixed income.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.