Theme: Organizational aspects and procedure of mutual funds

Types of Mutual Funds Schemes

The purpose of investment funds is to provide liquidity and high returns to investors with optimal security at minimum risk. Based on these objectives, various types of mutual fund schemes have evolved over time.

Mutual funds schemes on the basis of structure, investment objective & others criteria

Detail classification of Mutual funds schemes on basis of investment objectives

A mutual fund is an investment vehicle that pools money from different investors and uses the pooled money to invest in the stock market. Assets such as stocks, bonds, and other financial instruments are examples of what mutual funds invest in. Mutual funds can be actively managed funds or passively managed funds. In actively managed funds, the fund manager conducts market research to match the portfolio to the fund's objective. Passively managed funds track an index or benchmark. For example, an exchange traded fund (ETF) and an index fund.

The investment objective of a mutual fund determines the type of securities in which the pooled money will be invested. For example, if a mutual fund aims to create long-term wealth for its investors. The Fund's investments consist primarily of stocks of large, stable corporations (commonly known as large-cap funds) that consistently provide reasonable returns year after year. For diversified investors, mutual funds are the type of investment that best suits their requirements.

Today, there are many mutual funds in the market tailored to the different requirements of investors. Depending on the income level and financial goals, one can choose to invest in a fund that meets their specific requirements.

Investing in mutual funds is one of the easiest ways to participate in the stock market while managing risk wisely. Understanding how mutual funds work is a great way to plan for a financially secure future.

Now that we have covered what mutual funds are, let's learn more about how mutual funds work in India.