Live Market Watch
Mutual Funds

Fund Performance

Mutual funds are a type of certified managed combined investment schemes that gathers money from many investors to buy securities. There is no such accurate definition of mutual funds, however the term is most commonly used for collective investment schemes that are regulated and available to the general public and open-ended in nature. Hedge funds are not considered as any type of mutual funds.

Mutual funds are identified by their principal investments. They are the 4th largest category of funds that are also known as money market funds, bond or fixed income funds, stock or equity funds and hybrid funds. Funds are also categorized as index based or actively managed.

In a mutual fund, investors pay the funds expenditure. There is some element of doubt in these expenses. A single mutual fund may give investors a choice of various combinations of these expenses by offering various different types of share combinations.

The fund manager is also known as the fund sponsor or fund management company. The buying and selling of the funds investments in accordance with the funds investment is the objective. A fund manager has to be a registered investment advisor. The same fund manager manages the funds and has the same brand name which is also known as a fund family or fund complex.

As long as mutual comply with requirements that are established in the internal revenue code, they will not be taxed on their income. Clearly, they must expand their investments, limit the ownership of voting securities, disperse most of their income to their investors annually and earn most of their income by investing in securities and currencies.

Mutual funds can pass taxable income to their investors every year. The type of income that they earn remains unchanged as it gets transferred to the shareholders. For e.g., mutual fund distributors of dividend income are described as dividend income by the investor. There is an exception: net losses that are incurred by a mutual fund are not distributed or passed through fund investors.

Mutual funds invest in various kinds of securities. The various types of securities that a particular fund may invest in are mentioned in the funds prospectus, which explain the funds investments objective, its approach and the permitted investments. The objective of the investment describes the kind of income that the fund is looking for. For e.g., a "capital appreciation" fund generally looks to earn most of its returns from the increase in prices of the securities it holds rather than from a dividend or the interest income. The approach of the investment describes the criteria that the fund manager may have used to select the investments for the fund.

The investment portfolio of a mutual funds investment is continuously monitored by the funds portfolio manager or managers who are either employed by the funds manager or the sponsor.

Advantages of Mutual funds are:

1) Increase in diversification.

2) Liquidity on a daily basis.

3) Professional investment management.

4) Capacity to participate in investments that may be available only for larger investors.

5) Convenience as well as service.

6) Government oversight.

7) Easier comparison

like its advantages, the Mutual funds have disadvantages too. Here are some of them:

1) High fees.

2) Less control over timing of recognition of gains.

3) Much lesser predictable income.

4) No opportunity for customization.

There are different types of Mutual funds as well. Here are some of them.

Open-end funds

In open-end mutual funds, one must be willing to buy back their shares from investors at the end of every business day at the net asset value that is calculated for that day. Most of the open-end funds also sell shares to the public on every business day. These shares are also priced at a particular net asset value. A professional investment manager will oversee the portfolio, while buying or selling securities whichever is appropriate. The total investment in the funds will be variably based on share buying, share redemptions and fluctuation in the market variation. There are also no legal limits on the number of shares that can be issued.

Close-end funds

Close-end funds generally issue shares to the public just once, when they are created via an initial public offering. These shares are then listed for trading on a stock exchange. Investors, who dont wish any longer to invest in the funds, cannot sell their shares back to the funds. Instead, they must sell their shares to another investor in the market as the price they may receive may be hugely different from its net asset value. It may be at a premium to net asset value (higher than the net asset value) or more commonly at a lesser to net asset value (lower than the net asset value). A professional investment manager will oversee the portfolio, in buying or selling securities whichever is appropriate.

Unit Investment Trusts

UIT or Unit Investment Trusts issue shares to the public just once when they are created. The investors in turn can cash in on the shares directly with the fund or they may also sell their shares in the market. UITs do not have any professional investment managers. Their portfolio of securities is established by the creation of the UITs and does not undergo any changes. UITs in general have a limited life span, which is limited at their creation.

 

Schedule a Meeting With Us

Latest News


Suresh KP If you are long term investors and worried about highly volatile markets you can invest in these mutual fund schemes.
Thu, 22 Feb 2018 15:12:40 +0530


How to accomplish your financial goals through twin strategy of SIP and SWP It’s advisable to adopt the twin strategy of Systematic Investment Plan (SIP) and Systematic Withdrawal Plan (SWP) to meet financial goals.
Fri, 16 Feb 2018 10:12:01 +0530


Direct plans of mutual funds: Why do they suit everyone Product awareness campaigns by market participants and sustained backing from the regulator would motivate more retail investors to embrace direct plans.
Fri, 09 Feb 2018 10:35:25 +0530


S Naren Investors had forgotten the word ‘risk’ and now they will be more careful, said investors had forgotten the word ‘risk’ and now they will be more careful.
Wed, 07 Feb 2018 11:31:14 +0530


Dr.Renu Pothen GOI has decided to introduce a 10% tax on long term capital gains on equities and equity oriented mutual funds exceeding INR 1 lakh.
Fri, 02 Feb 2018 15:21:35 +0530


Lalit Nambiar Watch the interview of Lalit Nambiar of UTI MF with Prashant Nair and Ekta Batra of CNBC-TV18, where he shared his readings and outlook on the fundamentals of the market, and specific stocks and sectors.
Tue, 23 Jan 2018 12:04:32 +0530


Harsha Upadhyaya The expert believes that it would be prudent to tilt the portfolio towards largecaps, where valuations are slightly better.
Mon, 22 Jan 2018 11:01:26 +0530


Sunil Subramaniam In an interview with CNBC-TV18, Sunil Subramaniam, CEO of Sundaram Mutual Fund discussed the mutual fund (MF) industry wish-list and their expectations from Budget 2018.
Thu, 18 Jan 2018 14:56:59 +0530