Introduction
In the current scenario, one of the next investment options in the financial market is mutual funds. The special characteristics of mutual funds are: easy availability, risk containment, liquidity, transparency, professional management and decent returns, these above characteristics attract small investors mainly middle class, investors play a safer game compared to the rises and falls of shares. market.
Many private financial organizations like ING VYSA Bank, Standard Chartered Mutual Fund, etc. are good examples, allowing investors to start with just Rs 500. Investors seem to have accepted the importance of mutual funds and know that they are ready to invest under various mutual fund schemes.
Adequacy of Funds
The mutual fund suits all kinds of investors who are interested in raising their personal funds. Investments are based on the risk factor of the investor, if the risk is higher, the return is also high, similarly, if the risk is low, the return of a particular investment will also be low.
If the risk is slightly adverse, the investor should prefer a balanced fund, investing in stocks only up to 60-70%. If the investor wants to be more risk averse, stick with growth funds. If the investor wants regular returns, then the investor should look for income funds, with average risk but the risk is less than the equity fund. Mutual fund managers make fund decisions based on the investor’s investment objective. They may opt for liquid funds such as cash funds or short-term floating rate funds. They can also opt for funds based on when you want your funds back. For the investor who wants a quick, short-term return, a short-term bond fund would be fine since the return will be within three to six months. An income fund or a stock fund would fit if the investor willing to pay for the fund would leave it with the fund manager for more than a year.
Even within each category, you can pick and choose, that is, in equity funds, for example, you have a variety of options: blue-chip funds, mid-cap funds, contrarian funds, opportunity funds, performance funds of dividends, sector funds that invest specifically in select business segments, etc. Share-linked savings plans allow you to earn taxable profits of up to Rs 1 lakh (Rs 100,000) per year.
Many equity funds offer the option of a systematic investment plan (SIP) that allows you to invest a certain amount each month or each quarter. This amount is fixed for each installment to be paid. In this way, not only does he discipline his investments, but to a large extent, an investor can protect himself against the vagaries of the market.
Debt funds are not lacking in luster either. The investor can choose between medium-term debt funds, short-term bond funds, floating rate funds, dynamic bond funds, and cash funds. If an investor wants an aggressive debt fund, he can opt for gold funds. If the preference is a mix of equity and debt, MIPs or balanced funds would be fine.
Fair and transparent dealings
A mutual fund is nothing more than a collective savings fund. Various investors have come together to invest in stocks, bonds, or both. However, mutual funds are strictly regulated. They have to declare their portfolios from time to time. Almost all funds declare their portfolios every month.
A fund’s Net Asset Value (NAV), which indicates how much a unit of the fund is worth on a particular day, is reported every business day. You know where your money is going and how it is performing in the market.
Easy access and availability in the market:
A few years ago, even if you wanted to buy a mutual fund, it wasn’t easy. Few distributors, most of them small, sold mutual funds. The quality of his advice often left a lot to be desired. But today, you can buy mutual funds in more than 60 cities or towns, either through their own offices or through banks.
All private sector banks now sell mutual funds at most branch windows. Some public sector banks have also begun to market mutual funds through selected branches.
professionally managed
When you buy a mutual fund, you hand over the job of investing to a qualified and probably more knowledgeable fund manager, who gets paid to find the right opportunities for you. The service standards set by mutual fund companies are better compared to other funding sources. Like other sources of fundraising, they are riskier than mutual funds, since their investors have to make direct deals. As for example, most fund distributors will come to your residence or office and explain the features of the product and also cash your check.
If you want to sell your fund, you can do that pretty quickly too, mostly within a business day or two. There is no paperwork to fear. For example, for some income funds, the money will be credited directly to your bank account if the account is held at select banks.
In the case of systematic investment plans, you can also do it with automatic debits. Each month, on a day of your choosing, your bank account will be debited with a particular amount and specific units of available mutual funds will be purchased for that amount. No more hassle of issuing post-dated checks.
Despite all these facilities, it is possible that you have an infinite number of doubts and queries. Mutual funds offer toll-free lines at more than 200 locations. For example, toll-free telephone line, you can find out valuations, request account statements and even redeem your investments without any personal identification number.
Conclusion
Mutual fund investing is better than other fund raisers and will prove to be the best source of investors in the coming years. If past collection numbers are any testimony, investors seem to have taken notice. Both public mutual funds and private mutual funds are doing better. The result is moving in the upward curve of the financial market. In short, mutual funds offer the investor wide options of various schemes with special features and can be chosen as per the investor’s requirements.
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References
1. Mc. Donald, Objectives and Performance of Mutual Funds, 1991-Pg33-35.
2. RAR Reddy, Mutual Fund Industry, 2002, pg220-226
3. K.Ashwathtappa-Growth and Development of Mutual Funds, 2006, 3rd Edition, pp. 12-19.
4. Journal of Financial and Quantitative Analysis, 311-333.
5. “Portfolio Performance”-The ICFAI Journal, 2002.
6. Portfolio Organizer-Growth in demand for Mutual Funds, 2007.