A mutual fund is an equity pooling entity managed by an asset management company (AMC) professionally. It takes a group of investors together and invests their cash in stocks, bonds and other avenues. You are allocated mutual fund units as a mutual fund investor that show your contribution to a specific plan. At the prevailing net asset value (NAV) of the fund, you can buy or redeem these units as needed.
Usually, a mutual fund's NAV shifts every day depending on the fund's underlying resources. Mutual funds are secure investment havens as they are registered and operated in compulsory compliance with SEBI regulations. The primary advantage of investing through a mutual fund is that at a comparatively tiny quantity of investment you get access to skilled fund management and diverse portfolios.
Mutual fund types can be classified based on the following characteristics.
Based on Asset Class
- Equity Funds
- Debt Funds
- Money Market Funds
- Hybrid Funds
Based on Structure
- Open-ended Funds
- Closed-ended Funds
- Interval Funds
Based on Investment Goals
- Growth Funds
- Income Funds
- Liquid Funds
- Tax-Saving Funds
Based on Risk
- Very Low-Risk Funds
- Low-Risk Funds
- Medium Risk Funds
- High-Risk Funds
Specialized Mutual Funds
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