MF is a trust that collects money from different investors who share a common investment objective. Fund Manager invest the corpus in different equities, bonds, money market instruments, gold and/or other securities based on investment objective and seek to provide potential returns. The gains (or losses) on the investment is distributed proportionately amongst the investors after deducting applicable expenses and levies, by calculating a scheme’s “Net Asset Value” or NAV. Simply put, the money pooled in by many investors is what makes up a Mutual Fund. 

Benefits of the mutual funds investment is that you have the opportunity to earn potential higher returns than traditional investments options like fixed deposits or other assured returns product. Mutual Funds investment are linked to market’s performance. If the market is on a bull run and it does exceedingly well on its performance and value of your mutual fund NAV. However reverse is also true in a poor performance in the market. Mutual Funds do not provide capital protection, as it is an integral part of assured returns product.   

While investing in mutual funds can be beneficial, selecting the right fund can be challenging. Hence, investors should do proper due diligence of the fund and take into consideration the risk-return trade-off and time horizon or consult a professional investment adviser. Further, in order to reap maximum benefit from mutual fund investments, it is important for investors to diversify across different categories of funds such as equity, debt and gold etc. 

MUTUAL FUND SCHEMES ON RISK / RETURN SCALE