Mutual Funds indeed a good investment option for you if you want to invest your money in a group of stocks by a professional investor. A mutual fund is a collective investment run by a fund manager who invests the money of many investors in buying stocks, bonds, short-term money market instruments and other securities.
Do you think a mutual fund is an alternative option to stocks and bonds? No, it isn’t. Pooling money from several investors it invests money in stocks, and in other types of securities. Where the funds will invest there would be a clear picture in the fund’s prospectus. To monitor the fund’s investment portfolio the fund manager or sponsor employs a portfolio manager.
The mutual funds are classified in accordance with the principal investments such as money market funds, bond or fixed income funds, stock or equity funds and hybrid funds. These can be classified as either index funds or actively managed funds.
How does a Mutual Fund Work?
A company which runs a mutual fund is called an Asset Management Company (AMC) which may have lots of mutual fund schemes or investment objectives. The AMC employs a professional money manager or investor who takes responsibilities to buy and sell the securities abiding the objectives of the fund. All AMC`s are regulated by Securities and Exchange Board of India (SEBI) and the funds are governed by the board of directors who represent the shareholder’s interests.
All the mutual funds have specific objectives mentioned clearly in the prospectus. If the objective of the fund is equity growth, the fund will invest in stocks only. For the debt (income), it invests only in fixed income securities, for money market, it invests in short term money market instruments and government securities, and if the objective is balanced, it invests partly in stocks and partly in fixed-income securities.
Let your money invest in stocks or securities by a professional fund manager or investor. As it is run by a professional investor you can drive away your mind. Consult an expert of mantra4money to select the fund and which would provide you high returns.