Mutual funds are one of the most prominent investment options out there and are increasing in popularity even more. So in today’s article, we will talk about Mutual funds, and mainly Debt mutual funds.
1] What are Mutual Funds? A Mutual Fund is a professionally managed fund, where money is pooled from several investors to invest in Securities. Mutual funds are usually distinguished based on their principal investment. Such as Money market funds, bonds or fixed-income funds, and equity funds. They may have a combination of some of them, which is known as a hybrid fund. Also, you get a wide variety of options while investing in mutual funds as there are Mutual funds based on an index known as an index fund, you also find mutual funds that are based on a certain sector. The person who manages the Mutual fund is known as the fund manager. The average return on mutual funds falls somewhere between 8-12%. But some may go as high as 30-35% if you’re lucky enough. The main advantages of the mutual fund include low risk, professional management, and diversification. A mutual fund is increasingly becoming a favoured choice of investors as it doesn’t require much time to research, you just have to find a good fund and you start with as low as ₹100 with SIP.
2] Types of Mutual Funds-
All mutual funds are categorized into 3 different types of funds-
1. Equity fund- This is the first type of mutual fund under this major portion of the fund Is invested into equity, about 60-70%. One can invest in these funds, but equity funds usually carry a higher risk as prices of stocks tend to fluctuate more, but the chances of earning a good return also increase.
2. Hybrid fund- This fund is a mixture of both, equity as well as debt. It is one of the most preferred funds as It provides you a safe option as well as a chance for higher returns. Also as the diversification is more, the risk is reduced and it’s a bit safer option, due to the component of debt.
3. Debt fund- Debt funds invest a major proportion of their fund in debt securities such as treasury bills, bonds, etc. They are a safer option as debt has less risk associated with them as compared to equity.
1] What are Mutual Funds? A Mutual Fund is a professionally managed fund, where money is pooled from several investors to invest in Securities. Mutual funds are usually distinguished based on their principal investment. Such as Money market funds, bonds or fixed-income funds, and equity funds. They may have a combination of some of them, which is known as a hybrid fund. Also, you get a wide variety of options while investing in mutual funds as there are Mutual funds based on an index known as an index fund, you also find mutual funds that are based on a certain sector. The person who manages the Mutual fund is known as the fund manager. The average return on mutual funds falls somewhere between 8-12%. But some may go as high as 30-35% if you’re lucky enough. The main advantages of the mutual fund include low risk, professional management, and diversification. A mutual fund is increasingly becoming a favoured choice of investors as it doesn’t require much time to research, you just have to find a good fund and you start with as low as ₹100 with SIP.
2] Types of Mutual Funds-
All mutual funds are categorized into 3 different types of funds-
1. Equity fund- This is the first type of mutual fund under this major portion of the fund Is invested into equity, about 60-70%. One can invest in these funds, but equity funds usually carry a higher risk as prices of stocks tend to fluctuate more, but the chances of earning a good return also increase.
2. Hybrid fund- This fund is a mixture of both, equity as well as debt. It is one of the most preferred funds as It provides you a safe option as well as a chance for higher returns. Also as the diversification is more, the risk is reduced and it’s a bit safer option, due to the component of debt.
3. Debt fund- Debt funds invest a major proportion of their fund in debt securities such as treasury bills, bonds, etc. They are a safer option as debt has less risk associated with them as compared to equity.
Conclusion –
In this above list, we have mentioned some of the best performing funds in each category, the classification is not only on the basis of returns they provide but also their rating also, they are funds for people with different risk appetites. Also, the returns given are for one year only and returns may vary over a period time, overall mutual fund is a great investment option.