What is a Mutual Fund?
A mutual fund is a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. Over the past 20 years, mutual funds have become increasingly popular and are now a key part of everyday investing for many people.
Advantages of Mutual Funds
- Professional Management: Managed by expert fund managers.
- Diversification: Your risk is spread across different securities.
- Economies of Scale: Lower transaction costs for large pooled investments.
- Liquidity: Easy conversion to cash whenever needed.
- Simplicity: Easy to invest with often small minimum amounts.
Types of Mutual Funds
- Open Ended
- Close Ended
Classification
| Debt Mutual Fund | Hybrid Mutual Fund | Equity Mutual Fund |
|---|---|---|
| Liquid Fund | Equity Orient Balanced Fund | Diversified Growth Fund |
| Gilt Fund | Debt Orient Balance Fund | Sectoral Fund |
| Floating Rate Fund | Children Plan | Tax Saving Fund |