A Quick Intro to Mutual Funds

What is an Equity Fund?

A mutual fund is a corporate body that collects the investment of a number of people and invests them in a variety of different stocks. The most common point with a mutual fund is for fund managers to invest in businesses that are likely to grow, therefore providing profits to the investors.
In India, according to SEBI Mutual Fund guidelines, an equity mutual fund scheme must invest 65% of its assets in equities and equity-related stocks.

Equity funds can be either Active or Passive. In active investment, a fund manager decides which stock to invest in, that will give maximum returns. In passive investment, the fund manager builds a portfolio of popular market stocks (like Nifty and Sensex) and invests in it. Passive investment is less risky but Active investment can provide quick returns.

Mutual Funds Basics

Why invest in Mutual funds instead of stocks?

Mutual funds help investors lower these risks by investing in a diversified portfolio of stocks in different sectors through fund managers who have sufficient experience and expertise in picking correct stocks. In this way, mutual funds are subject to lower company and sector risk. A clear understanding on mutual funds basics is vital.

Investors can invest in units of a variety of equity funds with as low as Rs.5000. In ELSS investments, you can get tax benefits only up to Rs.1.5 lakh in a financial year.

What are the different types of mutual funds?

Mutual funds can be classified based on a lot of different criteria. The most common type of mutual funds in India are:
• Equity Funds: A mutual fund that invests at least 65% of its assets in equities
• Debt Funds: A mutual fund that invests less than 65% of its assets in equity stocks.
• Hybrid Funds: A mutual fund that invests in two asset classes: equity and debt.

How to Buy Mutual Funds?

Mutual Funds can be:
• Bought online: You can invest in mutual funds by visiting our website MFSH and then opt for the mutual fund scheme most suitable for you.
• Download forms: You can select the appropriate mutual fund, then download the form and fill it up.
• Order Manual Forms: You can select the best funds that suit your needs or you can use apps that help in asset allocation and picking the best stocks for you.