What is Mutual Fund? State types of mutual funds schemes.
Mutual Fund is an association which pools the savings of the investors who share common financial goals. The money collected by number of investors is invested in different types of financial instruments for the mutual benefit of its members. The income earned on these investments is then shared by the unit holders in proportion to the number of units held by them. A mutual fund has sponsor, trustees, asset Management Company and custodian. Mutual funds schemes are classified on the following basis:
- Maturity Period – Open ended and closed ended schemes.
- Investment Objective – Growth scheme, Income scheme, and balanced scheme.
- Other schemes – Liquid fund, Gilt fund Index fund, Sector fund and Tex saving fund.