Different Types of Mutual Funds : Part 1 - Franklin Templeton IndiaFeb 18, 2020
partone ok let's say you want to travel from Mumbai to New Delhi it's a long journey and so your travel agent gives you options of
differentmodes of transport you can use to get there, so you set the room time it takes and the flexibility of each mode for you and now it's up to you to decide which mode best suits your pocket diamond comfort Reaching your financial goal is pretty similar once you know your ultimate goal how much time you have to reach a goal what level of risk you are willing to take and what flexibility you design in terms of liquidity, there are many ways to get there but obviously you want to find the most optimal and suitable option and the only way to do that is understand the
fundsthat are available in the market, so let's discuss the different types of mutual fund schemes to make this simple if an investor's biggest concern rsor is liquidity, so it is best to consider mutual funds that fall into two broad categories: open and closed-end while the fund management principles in the two will be similar the operating characteristic of liquidity is different think about how you save your money in your savings bank account you can deposit and withdraw any amount and the account remains active even after you withdraw some money, on the other hand, the fixed deposit account you open needs a certain amount to be invested over a certain period of time and you may not be able to withdraw a small amount from Midway without incurring a fee or in most cases they end up similarly, open ended mutual fund is like a savings bank account and closed ended is like a fixed term deposit Exactly, an investor can start investing in an open ended mutual fund scheme by investing a stipulated minimum amount and opt for other transactions. ones, such as additional investments, redemption transfers, etc., any number of times, making it as easy to operate as a savings bank account, a closed-end fund compared to operating like a fixed deposit, making it much less liquid or convenient.
The scheme remains a trade for a certain period of time, after which it matures and the money is returned to the investor. Another difference between the two types of funds has to do with how an investor buys and sells the two closed-end funds have to be listed on the stock exchanges from which they are bought and sold as well as the market price of the closed-end fund units. they are normally offered at a discount to the prevailing nav that's more because you are close and fun units that can be sold only through the stock exchanges before expiration you have to do it in the d-mat format remember you can keep the right to hold the units on the statement form, however you will not be able to transact via stock exchanges, just wait until the scheme expires, but wait, there is a third type of interval funds mutual funds that combine the characteristics of open and closed and their schemes, these funds are open for r investment or redemption during predetermined intervals as well as you would evaluate which mode of transportation to choose for your trip depending on the rigidity of your travel plan you can evaluate of the three types of mutual funds here based on liquidity which one best suits your goal if liquidity is not the biggest concern in your plate there are more classifications of mutual funds that you can refer to, some go by the type of assets they invest in, such as debt or fixed income funds that invest in fixed income securities such as treasury bills, government bonds and debt Securitized there are equity funds that invest primarily in equity stocks or equity-related companies and investments and then there are hybrid funds that are a mix of debt and equity.
We have separate videos explaining in detail the different options available within these types of funds and don't stop here watch
part2 of this video to see more types of mutual funds based on how the schemes are managed and various other fund schemes New age mutual funds may seem like a lot, but it's simpler than you think and understanding the different types of mutual funds is key to choosing the right one for you. We hope you enjoyed watching this video. See more and us. We will help you learn about different investment concepts. You can also write us with your comments to the editor.
templetondot-com mutual funds are subject to market risk. Carefully read all the documents related to the scheme.
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