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​​An Insight to Mutual Funds

The concept of mutual funds in India is not new but in the past decade or two, it certainly has gained much popularity. Aiding people a better way to manage their wealth, mutual funds in India is a successful collective investment vehicle. It basically brings together the money of a group of people who wish to invest in securities. These securities are tradable assets that are broadly classified basis their investment objective and fall under the category of equity funds​, debt funds, diversified funds, money market funds​, sector specific funds,Index funds, tax saving funds​, large​, mid or low cap funds​ to name a few. Other factor of choice amongst these funds can be basis their time of closure and can be open ended or close ended schemes. Also, periodicity of the payout can further allow you to opt between dividend paying and growth option.

Keeping your money at home is just a traditional way of saving it, but this idle cash would reap you no growth. At the same time, to match with the times of rising costs, it is necessary to invest for your future and financial goals. Thus mutual funds come as a lucrative choice of investment, which is also cost effective for investors who wish to invest in stock markets and reap market linked returns. However, when choosing to invest your money in mutual funds one must do so cleverly and systematically. Foremost, it is important to know the different types of mutual fund schemes available. How much funds you have at your disposal? What is the span you wish to invest your funds for? What is your risk taking ability? What are your financial goals and your profit as well as loss bearing capacity?

Having decided on the basics, you then need a professional in this domain to further manage your funds, basis extensive research and sound knowledge of the money market. These professionals known as Fund/Money Managers constitute to the entities that are engrossed in offering many such mutual fund management services and are better known as Asset Management Companies (AMCs) or simply Mutual Fund companies. These Mutual Fund companies in India are regulated by Securities Exchange Board of India (SEBI).

If you think mutual funds are all about bearing a risk, then no there are several advantages to it as well. Some being as follows:

  • Mutual funds in India are easy to invest, in terms of the process.
  • Investments can be diversified, this helps maintains a profit and loss balance for an investor to undertake. Thus minimizing the risk involved.
  • There’s liquidity to your investment, especially in open ended policies.
  • Regular information of your investments allows you transparency.

Summary: Mutual fund is a great collective investment vehicle, aiding people a better way to manage their investments. It’s a money management concept that brings together the money of people who wish to invest in tradable assets, which can be classified into several categories basis principal investment, time of closure and periodicity of payout. Thought these funds have risk involved, but also there are several advantages to it too and can be rewarding if your funds are managed well.

The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. Certain factual and statistical information (historical as well as projected) pertaining to Industry and markets have been obtained from independent third-party sources, which are deemed to be reliable. It may be noted that since NAM INDIA (Formerly known as Reliance Nippon Life Asset Management Limited) has not independently verified the accuracy or authenticity of such information or data, or for that matter the reasonableness of the assumptions upon which such data and information has been processed or arrived at; NAM INDIA (Formerly known as Reliance Nippon Life Asset Management Limited) does not in any manner assures the accuracy or authenticity of such data and information. Some of the statements & assertions contained in these materials may reflect NAM INDIA’s (Formerly known as Reliance Nippon Life Asset Management Limited)views or opinions, which in turn may have been formed on the basis of such data or information.

Before making any investments, the readers are advised to seek independent professional advice, verify the contents in order to arrive at an informed investment decision. None of the Sponsor, the Investment Manager, the Trustee, their respective directors, employees, affiliates or representatives shall be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of lost profits arising from the information contained in this material.

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


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