The document provides an overview of mutual funds, explaining their functions as investment vehicles that pool money from investors to invest in securities according to specific objectives. It details the various types of mutual funds, including open-ended, close-ended, interval, equity, debt, balanced, and gold funds, each with distinct features and risk profiles. The document also highlights the advantages of mutual funds such as professional management, tax benefits, diversification, and affordability.

1. Mutual Funds

2. Overview
• What are mutual funds
• How mutual funds work
• Types of Mutual Fund
• Advantages of Mutual Funds

3. What are Mutual Funds
• Mutual fund is a financial instrument that pools funds from investors and
invest it into securities in accordance with stated set of objectives and distributes
the generated income amongst investors/unit holders in proportion of the
number of units held by them.
• Mutual funds units are issued and redeemed by Asset Management Company
based on fund’s Net Assets Value (NAV) which is determined at the end of each
trading session by deducting expenses from the total value of assets.
Total
Asset
Value
Expenses
Net
Asset
Value

4. How Mutual Funds work?
INVESTORS
FUND
MANAGER
SECURITIES
RETURNS
Pool their
money with
Generates Invest in
Passed back
to

5. Types of Mutual Funds
Mutual Funds
Structure
Open-ended Fund
Close-ended Fund
Interval Funds
Investment
Objective
Equity Fund
Diversified Funds
Sector Funds
Index Funds
Equity Linked
Saving Schemes
(ELSS)
Debt/Income
Funds
Money Market
Funds/ Liquid
Funds
Gilt Funds
Fixed Maturity
Plans
Balanced Funds Gold Funds

6. Types of Mutual Funds
Mutual funds are divided into various schemes based on its
structure and investment objective.
Structure of the Fund pertains to the accessibility of the subscription and
redemption of the funds.
• An Open-ended Fund is one that is available for subscription and repurchase
on a continuous basis without a fixed maturity period.
• A Closed-ended Fund is one that is open for a specific period of time during
the launch of the scheme. They have a stipulated maturity period e.g. 5-7 years.
• An Interval Fund is a combination fund which may be traded on the stock
exchange or may be open for sale or redemption during pre-determined intervals
at NAV-related prices.

7. • An Equity Fund invests a major part of its corpus in equities. Such schemes
might have high-risk and are more suitable for investors with a medium to
long term outlook, seeking appreciation over a period of time. Equity Funds is
further classified into:
• Diversified Funds: Investments made across sectors, industries and
market capitalizations.
• Sector Funds: Investments made in sector specific industries
• Index Funds: Investments made in stocks that represent the index
• Equity Linked Saving Schemes (ELSS): Investments made in diversified
equity schemes.

8. Investment objective of the Fund is the pre-defined objective mentioned in
the offer document.
• A Debt Fund invests majorly debt instruments like government securities,
bonds among others. Debt funds ensure low risk and provide investors a
stable income. Debt Funds is further classified into:
• Money Market/Liquid Fund: makes short-term investments in treasury
bills, certificates of deposit, commercial paper, government securities
and others.
• Gilt Fund: makes investments only in government securities generally
preferred by risk-averse and conservative investors.
• Fixed Maturity Plans: makes investments in debt instruments with
maturity period between 30 days to 5 years with lower level of risk.

9. • Balanced funds, as the name suggests are a mix of both equity and debt
funds. They invest in equity and fixed income securities with pre-defined
investment objective. The ratio of debt and equity can vary as per choice.
Equity part gives growth and debt provides stability.
• Gold funds invest in gold, gold related securities, gold producing
companies or gold bullion. The performance of these funds is based on the
underlying asset, i.e. gold.

10. Advantages of Mutual Funds
Advantages
of Investing
in Mutual
Funds
Professional
Management
by Fund
Manager
Tax Benefits
under section
88 of Income
Tax Act
Diversification
of investment
with small
values
Investment
Strategies
Well
regulated and
transparent
Affordable
Investment
with high
liquidity
Simplicity of
Investment
Economies of
scale with low
transaction
cost

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