A mutual fund is a professionally managed investment scheme that pools money from many investors to purchase securities like stocks, bonds, and money market instruments. There are various types of mutual fund schemes categorized by structure, investment objectives, and other special features. The main advantages of investing in mutual funds are affordability and diversification due to investing in a portfolio of assets, as well as professional management and transparency. However, there are also risks involved like market risk, credit risk, inflation risk, interest rate risk, and liquidity risk.

1. MUTUAL FUNDS
PRESENTED BY:-
USHED SHEIKH

2. WHAT ISAMUTUAL FUND?
A mutual fund is a professionally managed type of
collective investment scheme that pools money from
many investors to buy stocks, bonds, short-term money
market instruments, and/or other securities.

3. Types Of Mutual Fund Schemes:
Type of
Mutual Fund
Schemes
Structure
Investment
Objective
Special
Schemes
Open Ended
Funds
Close Ended
Funds
Interval Funds
Growth Funds
Income Funds
Balanced Funds
Money Market
Funds
IndustrySpecific
Schemes
Index
Schemes
Sectoral
Schemes

4.  BY STRUCTURE
 Open-Ended – anytime enter/exit
 Close-Ended Schemes – listed on exchange, redemption after period of
scheme is over.
 BY INVESTMENT OBJECTIVE
 Equity (Growth) – only in Stocks – Long Term (3 years or more)
 Debt (Income) – only in Fixed Income Securities (3-10 months)
 Liquid/Money Market (including gilt) – Short-term Money Market
(Govt.)
 Balanced/Hybrid – Stocks + Fixed Income Securities (1-3 years)
 SPECIAL SCHEMES
Funds based on Size of the Companies Invested:
 Large cap funds
 Mid cap funds
 Small cap funds


5. Advantages of investing in a Mutual
Fund
 Affordability
A mutual fund invests in a portfolio of assets, i.e. bonds,
shares, etc. depending upon the investment objective of the
scheme. An investor can buy in to a portfolio of equities,
which would otherwise be extremely expensive.
 Diversification
We must spread our investment across different securities
(stocks, bonds, money market instruments, real estate, fixed
deposits etc.) and different sectors (auto, textile, information
technology etc.).
 Variety
Mutual funds offer a tremendous variety of schemes.

6.  Professional Management
Qualified investment professionals who seek to maximize returns and
minimize risk monitor investor's money.
• Transparency
Being under a regulatory framework, mutual funds have to disclose their
holdings, investment pattern and all the information that can be considered
as material, before all investors. SEBI acts as a watchdog and safeguards
investors’ interests
• Liquidity
A distinct advantage of a mutual fund over other investments is that there is
always a market for its unit/ shares. It's easy to get one’s money out of a
mutual fund. Redemptions can be made by filling a form attached with the
account statement of an investor.

7. RISK FACTORS OF MUTUAL
FUNDS
THE RISK-RETURN TRADE-OFF: The most important
relationship to understand is the risk-return trade-off. Higher the risk
greater the returns/loss and lower the risk lesser the returns/loss.
MARKET RISK: Sometimes prices and yields of all securities rise
and fall. Broad outside influences affecting the market in general lead
to this.
CREDIT RISK: The debt servicing ability of a company through its
cash flows determines the Credit Risk faced by you.
INFLATION RISK: Inflation is the loss of purchasing power over
time.

8. INTEREST RATE RISK: In a free market economy interest rates
are difficult if not impossible to predict.
POLITICAL/GOVERNMENT POLICY RISK: Changes in
government policy and political decision can change the investment
environment.
LIQUIDITY RISK: Liquidity risk arises when it becomes difficult
to sell the securities that one has purchased.