Mutual Fund

Mutual funds are a type of certified managed combined investment schemes that gathers money from many investors to buy securities. There is no such accurate definition of mutual funds, however the term is most commonly used for collective investment schemes that are regulated and available to the general public and open-ended in nature. Hedge funds are not considered as any type of mutual funds.

Mutual funds are identified by their principal investments. They are the 4th largest category of funds that are also known as money market funds, bond or fixed income funds, stock or equity funds and hybrid funds. Funds are also categorized as index based or actively managed.

In a mutual fund, investors pay the funds expenditure. There is some element of doubt in these expenses. A single mutual fund may give investors a choice of various combinations of these expenses by offering various different types of share combinations.

The fund manager is also known as the fund sponsor or fund management company. The buying and selling of the funds investments in accordance with the funds investment is the objective. A fund manager has to be a registered investment advisor. The same fund manager manages the funds and has the same brand name which is also known as a fund family or fund complex.

As long as mutual comply with requirements that are established in the internal revenue code, they will not be taxed on their income. Clearly, they must expand their investments, limit the ownership of voting securities, disperse most of their income to their investors annually and earn most of their income by investing in securities and currencies.

Mutual funds can pass taxable income to their investors every year. The type of income that they earn remains unchanged as it gets transferred to the shareholders. For e.g., mutual fund distributors of dividend income are described as dividend income by the investor. There is an exception: net losses that are incurred by a mutual fund are not distributed or passed through fund investors.

Mutual funds invest in various kinds of securities. The various types of securities that a particular fund may invest in are mentioned in the funds prospectus, which explain the funds investments objective, its approach and the permitted investments. The objective of the investment describes the kind of income that the fund is looking for. For e.g., a "capital appreciation" fund generally looks to earn most of its returns from the increase in prices of the securities it holds rather than from a dividend or the interest income. The approach of the investment describes the criteria that the fund manager may have used to select the investments for the fund.

The investment portfolio of a mutual funds investment is continuously monitored by the funds portfolio manager or managers who are either employed by the funds manager or the sponsor.

Advantages of Mutual funds are:

1) Increase in diversification.
2) Liquidity on a daily basis.
3) Professional investment management.
4) Capacity to participate in investments that may be available only for larger investors.
5) Convenience as well as service.
6) Government oversight.
7) Easier comparison

like its advantages, the Mutual funds have disadvantages too. Here are some of them:

1) High fees.
2) Less control over timing of recognition of gains.
3) Much lesser predictable income.
4) No opportunity for customization.

There are different types of Mutual funds as well. Here are some of them.

Open-end funds
In open-end mutual funds, one must be willing to buy back their shares from investors at the end of every business day at the net asset value that is calculated for that day. Most of the open-end funds also sell shares to the public on every business day. These shares are also priced at a particular net asset value. A professional investment manager will oversee the portfolio, while buying or selling securities whichever is appropriate. The total investment in the funds will be variably based on share buying, share redemptions and fluctuation in the market variation. There are also no legal limits on the number of shares that can be issued.

Close-end funds
Close-end funds generally issue shares to the public just once, when they are created via an initial public offering. These shares are then listed for trading on a stock exchange. Investors, who dont wish any longer to invest in the funds, cannot sell their shares back to the funds. Instead, they must sell their shares to another investor in the market as the price they may receive may be hugely different from its net asset value. It may be at a premium to net asset value (higher than the net asset value) or more commonly at a lesser to net asset value (lower than the net asset value). A professional investment manager will oversee the portfolio, in buying or selling securities whichever is appropriate.

Unit Investment Trusts
UIT or Unit Investment Trusts issue shares to the public just once when they are created. The investors in turn can cash in on the shares directly with the fund or they may also sell their shares in the market. UITs do not have any professional investment managers. Their portfolio of securities is established by the creation of the UITs and does not undergo any changes. UITs in general have a limited life span, which is limited at their creation.

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Fund managers managing over Rs 6 lakh cr bet on tech, consumer  private banks in July Total AUM of domestic MFs increased 1.2 percent MoM to Rs 24,50,000 crore in July after declining 6.5 percent in June, led by inflows in income and debt-oriented, equity and ETF schemes
Thu, 15 Aug 2019 10:39:51 +0530


Mutual fund equity inflows rise despite weak markets; SIP flows at all-time high in July Net inflows into equity schemes increased to Rs 8,092 crore in July
Fri, 09 Aug 2019 16:52:49 +0530


HDFC AMC posts strong Q1, should investors buy? NULL
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#39;Current market weakness not similar to 2002-2003 crisis; bet on these 4 consumption stocks#39; FII#39;s outflow, slower domestic growth, weaker rupee, fiscal deficit are major concerns that should be addressed soon.
Fri, 23 Aug 2019 10:29:59 +0530


Market will continue to drift unless there is stimulus from government, says Avendus Capital With regards to the auto space, he said the house is constructive on the auto sector. According to him, there are a lot of things the government can do like reduce insurance which was moved from one to five years.
Thu, 22 Aug 2019 17:07:53 +0530


#39;Expect recovery in auto sector but may not reach all-time highs of 2018 anytime soon#39; We expect earnings to pick up only in the second half of FY20 especially the fourth quarter as the transmission of rate cuts along with increased government spending is expected to push up GDP growth.
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#39;Don#39;t expect runaway rally in short run, keep insurance stocks in portfolio#39; Global situation is getting murkier, there are visible signs of slowdown in the leading economies of the world because of the US-China trade war.
Thu, 22 Aug 2019 10:55:08 +0530


Market is not as irrational as it is made out to be: Motilal Oswal#39;s Aashish Somaiyaa Somaiyaa said that they are merely in a consolidation phase currently.
Wed, 21 Aug 2019 17:55:52 +0530


Saurabh Mukherjea of Marcellus Investment is positive on these blue-chip stocks "Despite the depth of the downturn that has taken us aback, the financialisation of the economy continues – especially the flow into insurance policies, the flow into mutual funds and the PMS industry," Mukherjea said on Wednesday.
Wed, 21 Aug 2019 17:47:54 +0530


Naveen Kulkarni This is the right time as quite a few quality names are available at reasonable valuations. Moreover, the base will start softening in the second half of the year.
Wed, 21 Aug 2019 13:24:21 +0530


Here#39;s why HUL  Apollo Hospitals are among top 3 picks from SMC Global 10,900 and 11,000 Put strike witnessed marginal OI addition while on higher side 11,100 Call strike holds maximum OI in this week (August 22) expiry contract
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#39;US-China trade war, and not inverted yield curve, can lead to recession#39; For an investor with a 3-year time horizon, auto stocks can be wealth creators. Market leaders in passenger vehicles, 2-wheelers and tractors are good long-term buys.
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IRCTC files Rs 600-crore IPO papers with Sebi According to market sources, the IPO would be worth about Rs 500-600 crore.
Thu, 22 Aug 2019 15:35:05 +0530


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Sterling and Wilson Solar closes IPO with 92% subscription The reserved category for qualified institutional buyers (QIBs) subscribed 1.02 times while non-institutional investors saw 89 percent subscription and retail individual investors 29 percent.
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Affle India shares mark remarkable debut, closes with 17.5% premium The company#39;s market valuation was at Rs 2,231.19 crore on the BSE.
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Subscribe to Spandana Sphoorty Financial: Choice Broking Choice Broking has come out with its report on Spandana Sphoorty Financial. The research firm has recommended to "Subscribe#39;#39; the IPO in its research report as on August 2, 2019
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Subscribe to Spandana Sphoorty Financial: Mehta Equities Mehta Equities has come out with its report on Spandana Sphoorty Financial. The research firm has recommended to "Subscribe#39;#39; the IPO in its research report as on August 5, 2019
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Subscribe to Sterling and Wilson Solar: Choice Broking Choice Broking has come out with its report on Sterling and Wilson Solar. The research firm has recommended to "Subscribe#39;#39; the IPO in its research report as on August 03, 2019
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Subscribe to Sterling and Wilson Solar: Mehta Equities Mehta Equities has come out with its report on Sterling and Wilson Solar. The research firm has recommended to "Subscribe#39;#39; the IPO in its research report as on August 05, 2019
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Sterling and Wilson Solar IPO subscription begins, should you subscribe? While assigning three-out-of-five rating to the issue, Centrum Wealth also suggests investors can subscribe to the issue from a long term perspective. It believes it is fairly priced.
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Sterling and Wilson Solar IPO to open on Aug 6; 10 things you should know The shareholding of promoters Shapoorji Pallonji and Company Pvt Ltd and Khurshed Yazdi Daruvala will be reduced to 49.11 per cent and 25.01 per cent from 65.77 per cent and 33.33 per cent respectively, post issue.
Mon, 05 Aug 2019 17:16:09 +0530


Spandana Sphoorty Financial IPO opens today; should you subscribe? "SSFL#39;s successful exit from corporate debt restructuring (CDR) mechanism in March 2017 (well ahead of scheduled date of Mar’18), consistent profits along with a healthy asset book, builds confidence in the prospects," Centrum Capital said.
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