Features of mutual funds | Fusion - WeRIndia

Features of mutual funds

Features of mutual funds

Nowadays, many young Indians are interested in investing in mutual funds due to their attractive yield. However, not all funds would yield good returns and as the warning says they are associated with market risk.

If you do not know which one is the right fund and what is the right time to invest, then you may not make a good investment decision. As a result, it might not serve your financial goals.

Normally people invest in a fund which had a good track record in the past. But it is not always a good decision.

There are many other things to consider while investing.

Before investing in mutual funds, it is apt to know about the features which are explained below:

  • A mutual fund is a type of financial investment tool. The money collected from investors in mutual funds is invested in securities like equities, bonds, and other related assets etc.
  • Professional money managers operate these mutual funds to improve the gains of the investors.
  • Mutual funds help investors diversify their investment at a minimum price.
  • Investors will have to pay an annual fee on these funds. It is also known as expense ratio or commission which significantly affects the overall return of the funds.
  • Different types of mutual funds are available in the market based on their structure, nature of scheme and investment objective.
  • As you may have known, the higher the risk, the higher the returns. This applies to mutual funds as well.
  • Diversification of investment and asset allocation play an important role in controlling the risk.
  • Investors can choose their choice of funds among various asset classes as per their risk-taking ability.
  • In order to get the best yield out of your investments, you shall have to choose a mix of equity (risky assets) and debt instruments (non-risky assets).

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