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SUMMARY ON MUTUAL FUNDS

A mutual fund is a pool of money managed by a professional Fund manager – it is actually a trust that collects money from a number of investors who share a common investment objective and invests the same in equities, bonds, money market instruments and other securities. The income/gain generated from this collective investment is distributed proportionately amongst the investors after deducting applicable expenses and levies by calculating the Net Asset Value of a scheme. Simply, putting the money pooled in, by a large number of investors is what makes up a Mutual Fund. The money collected in mutual funds is invested by professional fund managers in line with the scheme’s stated objective. In return, the fund house charges a small fee which is deducted from the investment. The fees charged by mutual funds are regulated and are subjected to certain limits specified by Securities and Exchange Board of India (SEBI)

Mutual funds offer multiple product choices for investment across the financial spectrum. As investment goals vary, post-retirement expenses, money for children’s education or marriage, house purchase etc – the products required to achieve these goals vary too. The industries of Mutual Fund, offer a plethora of schemes and caters to all types of investor needs. Mutual funds offer an excellent avenue for retail investors to participate and benefit from the uptrends in capital markets. While investing in mutual funds can be beneficial, selecting the right fund can also be very challenging. Hence, investors should go through proper diligence of the fund and take into consideration the risk-return trade-off and time horizon or consult a professional investment advisor. Further, in order to reap maximum benefits from mutual fund investments, it is important for investors to diversify across different categories of funds such as equity, debt and gold. While investors of all categories can invest in securities market on their own, a mutual fund is a better choice for the only reason that all benefits come in a package.