Types Of Mutual Fund

Mutual funds are recently introduced in India and larger portion of the investors in the market still need to get acquainted with the concept. Therefore it becomes the prime responsibility of the financial services providing companies to market the product side by side of selling. Most of us are not aware of what Mutual Funds actually are, therefore, we define Mutual Funds as a collective investment scheme, which takes money from different investors and invests them in stocks, bonds and other commodities. Mutual Funds require a manager who trades the investments; this manager is known as Funds Manager.

There are different types of mutual funds. Two most common are Open-ended and Closed-ended Mutual Funds. Open-ended are named so because at the end of each day, the funds issues new shares to investors buying into the fund. These shares can be bought from investors redeeming their shares. The Closed-ended funds are not very much different from Open-ended, except they sell shares once to the public. Except for a few transactions, these Closed-ended cannot grow by getting more investors like in Open-ended fund.

A recent innovation is the ETF, which stands for Exchange-traded fund, which has a similar structure like that of Open-ended Mutual Funds. ETF trading works the entire day on a Stock Exchange just like Closed-ended but at prices which are approximated to the asset value and comparatively low. ETFs are considered to be more efficient than the earlier mutual funds. ETFs have lower expenses and are also valuable for foreign investors who are often able to trade securities on a stock market.

Another type is Equity funds which involves only the stock investments. Equity funds are very common in the market and focuses on particular strategies and some types of issuers.

Other activities on the market are "fund of funds" which invests in other funds. Fund charges typically a management fee lower than those of other funds. This is due to the fact that the consideration for the services of ownership is still low.

We conclude that investment funds will benefit the majority of business in society. These funds offer advantages over investing in individual stocks. The transaction cost is distributed among all mutual fund shareholders, enabling economic diversification. There are many financial services companies and banks of State Bank of mutual funds in India, ICICI Prudential mutual funds and trust are the key. These services offered by financial companies began to launch innovative products and customer service to increase value for investors. Mutual funds are one of the fastest growing in the country and provide its investors with a well-balanced portfolio of products to meet the different needs of investors.

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