MUTUAL FUNDS
Mutual Funds, or MF, can seem pretty intimidating to many keen investors, especially first-timers. However, in recent years, growing awareness and evolving technology have made the task of Mutual Funds investments rather easy. One just needs to complete their KYC the first time as a one-time process. It is one of the mandatory processes for Mutual Funds. The KYC process can be completed via an investment advisor or distributor. You can also complete the process of e-KYC online. Continue reading to know more about Mutual Funds.
What are Mutual Funds? 
Basically, a Mutual Fund consists of money invested by many investors that a funds manager manages.
A fund manager is an investment expert that a mutual fund house employs to assist the investors to wisely invest their funds.
It is like a trust collecting money from people with similar investment objectives. The professional
financial intermediary then invests these accumulated money in instruments, securities, bonds,
and equities.
Each investor owns a portion of the fund holdings. Certain expenses are deducted and then distributed
as per the proportion of each investorʼs holdings through the schemeʼs Net Asset Value (NAV).
Mutual Funds: Meaning, Types & Benefits of Investing In Mutual Fund
Benefits
01
Higher Liquidity
Mutual Funds come with flexible withdrawal schemes. It means that the investor seeks to redeem the MF units at any given time.
02
Less Volatility
Mutual Funds are considered the safest bet for diversification. The overall performance of the portfolio remains more or less constant because when one investment dives, the value of another investment improves. Thus, the risks of volatility are highly minimal in MFs. This is primarily because the typical MF portfolio comprises numerous securities.
03
Professional Management
Most investors do not have much information about how to go about investing their money. In the case of Mutual Funds, some experts manage the money. The expert uses their professional acumen to invest the money in various securities and allocate it accordingly so that the investors make meaningful gains.
04
Flexible investment
With Mutual Funds, there are no higher investment limits. The investor can start with a lower value and increase as per the cash flow conditions. For salaried people, MFs are a boon as they can invest through a SIP or Systematic Investment Plan.
05
Transparent
SEBI has a colour-coded scheme to denote all Mutual Funds. Investors can assess the risk levels, for example, blue denotes low-risk, whereas brown indicates a high-risk investment. Added to this, investors can now have th,e credentials of the fund manager verified to ensure credibility.
06
Tax Saving
Mutual Funds come with tax-saving choices. For example, ELSS MFs offer tax exemption under section 80C of the IT Act of India.
It is advisable for investors to read the Mutual Fund document before investing as
there are market risks associated with trading volumes, defaults, settlements, etc.
It is advisable for investors to read the Mutual Fund document before investing as
there are market risks associated with trading volumes, defaults, settlements, etc.
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