Know about mutual funds
Mutual funds are the financial funds that offer individual investors the opportunity to accumulate their money together and invest in stocks, bonds and other investments "mutually”. Being a mutual fund investor, anyone doesn't directly own the stock but share equally in the gains or losses of the fund’s total holdings.
Features of a mutual fund:
- The funds are run by professional finance managers who are responsible for the investment of the money in various securities with the purpose of earning best return from the investment.
- They are traded at their closing net asset value.
- Any investor is eligible to share all profit and loss from the mutual investment.
- They offer a systematic way with wide variety of investment styles.
There are two types of Mutual Funds:
- Open-Ended Mutual Fund
- Closed-Ended Mutual Fund
Open-Ended Mutual Fund
An open-ended mutual fund is the fund whose units are issued directly to investors based on the fund’s net asset value (NAV) that is calculated on daily basis. They have no fixed maturity date. Investors can easily purchase and sell the units with the fund management company of the transaction days NAV value. Open Ended mutual funds offer SIP (Systematic Investement Plan)
Close-Ended Mutual Fund
A Close-ended mutual fund is the fund that has a fixed maturity period and are traded in stock market. The maturity time of the funds is generally between 3-15 years. The share units of these mutual funds can be subscribed initially during the initial public offering and then can be bought and sold in stock exchange like other shares according to the demand and supply of the units.
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