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Mutual funds provide investors with an opportunity to benefit from diversified investments and professional management without needing to select individual stocks or bonds themselves.
Mutual funds are investment vehicles that pool money from multiple investors to invest in a diversified portfolio of securities such as stocks, bonds, or other assets.
It was managed by professional fund managers. Mutual funds provide investors with an opportunity to benefit from diversified investments and professional management without needing to select individual stocks or bonds themselves.
Types of Mutual Funds in India:
1. Equity Funds: These funds invest primarily in stocks. They aim for capital growth and are suitable for investors seeking higher returns over the long term. They can be further categorized into large-cap, mid-cap, and small-cap funds based on the size of the companies they invest in.
2. Debt Funds: These funds invest in fixed-income securities like bonds, government securities, and corporate debt. They offer stable returns and are less risky compared to equity funds, making them suitable for conservative investors seeking regular income.
3. Hybrid Funds: Combining both equity and debt investments, hybrid funds balance risk and reward. They offer moderate returns with a mix of growth and stability.
4. Index funds: These replicate the performance of a specific market index, such as the Nifty 50 or Sensex. They offer broad market exposure with lower management fees.
5. Sectoral/Thematic Funds: These focus on specific sectors (e.g., technology or healthcare) or themes (e.g., sustainable investing), aiming to capitalize on particular market trends.
6. ELSS (Equity Linked Savings Scheme): These are equity funds that offer tax benefits under Section 80C of the Income Tax Act, making them a popular choice for tax-saving investments.
Each type caters to different investment goals, risk appetites, and time horizons, allowing investors to choose according to their individual needs and preferences.
