MUTUAL FUND AND ITS TYPES

MUTUAL FUNDS
As its name suggest mutual means something together and mutual fund means to invest in group. It is a type of fund collected by small money holder to invest somewhere in profitable opportunities so that even small investor can get better return. The best part of mutual fund is that in a normal course the price of the securities is too high which is not affordable by small investor but through mutual funds an Investor having less saving can easily invest in any securities.
TYPES OF MUTUAL FUNDS ON THE BASIS OF EXECUTION AND OPERATION
1. Open ended mutual fund
2. Close ended mutual fund

ON THE BASIS OF YIELD AND INVESTMENT PATTERN
3. Income mutual fund
4. Growth mutual fund
5. Balance mutual fund
6. Specialized mutual fund
7. Money market mutual fund
8. Taxation mutual fund
Open ended mutual fund

It is a type of fund where the amount of fund and its duration is not predetermined. The investor is free to buy and sell at any point of time. The main objective of this fund is income generation not the capital appreciation. The investor is offered instant liquidity.
Close ended mutual fund
It is a type of fund where the amount of fund and its duration is predetermined in advance. Once the subscription reaches the predetermined level, the entry of investors is closed .After the expiry of fixed period the entire corpus is disinvested. The main objective of this fund is capital appreciation not the income generation.

Income mutual fund
This fund aims at generating and distributing regular income to the member on a periodical basis. More emphasis on assured distribution of regular income. It concerns itself with short run gains only.

Growth mutual fund
In growth mutual fund, it may be declaration of dividend but mainly focus on long run gains i.e., capital appreciation .It do not offer regular income.

Balance mutual fund
It is also called “income-cum-growth” fund. It is nothing but combination of both income and growth fund. It aims at regular income as well as capital appreciation.

Specialized mutual fund
It is special type of fund for specific categories of people and places like pensioners, widows and areas like Japan fund, South Korea fund. Also the foreign investor can invest in specialized mutual fund.

Money market mutual fund
These funds are basically open ended mutual funds and as such they have all features of open ended funds but they invest in highly liquid and safe securities like commercial paper, Treasury bills etc.
Taxation mutual fund
A taxation fund is basically growth fund but, it offers tax rebates to the investors in the domestic and foreign capital market.

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