Each mutual fund has a specific stated objective
| Fund Objective | What the fund will invest in |
| Equity (Growth) | Only in stocks |
| Debt (Income) | Only in fixed-income securities |
| Money Market (including Gilt) | In short-term money market instruments (including government securities) |
| Balanced | Partly in stocks and partly in fixed-income securities, |
WHO ARE AMC ?
| The company that puts together a mutual fund is called an AMC. An AMC may have several mutual fund schemes with similar or varied investment objectives. |
| All AMCs Regulated by SEBI, Funds governed by Board of Directors |
| What is NAV ? Net Asset Value or NAVNAV is the total asset value (net of expenses) per unit of the fund and is calculated by the AMC at the end of every business day. How is NAV calculated? The value of all the securities in the portfolio in calculated daily. From this, all expenses are deducted and the resultant value divided by the number of units in the fund is the funds NAV What is Expense Ratio ? It is the AMCs charge that covers administrative expenses, salaries, advertising expenses, brokerage fee, etc A fund's expense ratio is typically to the size of the funds under management and not to the returns earned. Normally, the costs of running a fund grow slower than the growth in the fund size - so, the more assets in the fund, the lower should be its expense ratio |
What is Open-ended Funds ?
At any time during the scheme period, investor can enter and exit the fund scheme (by buying/ selling fund units) at its NAV (net of any load charge). Increasingly, AMCs are issuing mostly open-ended funds.
What is Close-Ended Funds ?
Redemption can take place only after the period of the scheme is over. However, close-ended funds are listed on the stock exchanges and investors can buy/ sell units in the secondary market (there is no load).
Important documentsTwo key documents that highlight the fund's strategy and performance are 1) the prospectus (legal document) and the shareholder reports (normally quarterly).