Investment schemes which are professionally managed are known as mutual funds. There are many mutual fund companies in India. Further, only expert mutual fund managers manage these funds. The fund managers keep a record of the growth and performance of these funds. For performing funds well, they make required alterations so the investors receive the best possible returns.
Equity Funds: These funds invest money primarily in stocks.
Debt Funds: It invests in fixed income securities.
Diversified Funds: These funds allow you to invest your money in industries or diverse sectors.
Gilt Funds: These funds invest money in central and state government securities.
Index Funds: It invests money according to how stock market index functions.
Liquid Mutual Funds: These are investment plans that will assign funds primarily to money market instruments like term deposits, treasury bills, commercial papers etc.
Debt-Oriented Hybrid Funds: In these funds money invested in debt and equity.
Arbitrage Funds: These funds are used as equity plans for taxation purposes.
Dynamic Bond Funds: Money will be invested in money-market and Debt Instruments.
Every investor wants to end up with the best mutual fund. This process has guided by three points:
After considering one’s needs make an investment. Mutual funds have an investment objective which may match your goal. So, choose the fund which covers your financial plan and risk appetite. You can get all the information of mutual fund in information document which has strategy, goal and asset allocation.
Mutual funds which have long track record show the strength of the fund in the tough times. But, a newly launched fund may not perform well in the tough times. A good track record shows the accuracy of the mutual fund’s investment strategies.
Return go and risk hand in hand. Examine mutual funds risk-return potential before finalizing it. Financial ratios can help to do this easily. Alpha and Sharpe ratio are handy to indicate the relevant information.
Expense ratio is a measure which is used to analyze while selecting a mutual fund scheme. It is expressed in percentage and the fund manager charges for managing your account.
Performance fund manager
Fund manager plays an important role in the performance of the fund. With the help of the fund manager, we can know the track record. Generally, a fund which has given contained losses and consistent returns during the bear runs show robust fund management.
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