Mutual Funds: A Comprehensive Guide
What is a Mutual Fund?
A mutual fund is a professionally managed investment vehicle that pools money from various investors and invests it in a diversified portfolio of securities like stocks, bonds, or money market instruments. This diversification helps reduce risk and improve potential returns.
Types of Mutual Funds
- Equity Funds:
- Invest primarily in stocks of companies.
- High-risk, high-return potential.
- Categorized as large-cap, mid-cap, small-cap, or multi-cap.
- Debt Funds:
- Invest primarily in debt securities like government bonds, corporate bonds, and money market instruments.
- Lower risk, lower return potential.
- Categorized as short-term, medium-term, long-term, or gilt funds.
- Hybrid Funds:
- Invest in a mix of equity and debt securities.
- Categorized as balanced advantage, aggressive hybrid, or conservative hybrid.
- Balanced risk and return.
