Mutual Fund at a Glance

Mutual Fund

Definition of NAV?

NAV stands for Net Asset Value. The market value of the assets of the Mutual Fund scheme less the liabilities gives you the NAV. The net asset value of the scheme divided by the number of units outstanding on the Valuation date is the per unit NAV.


What is Load Fund?

A Load Fund is a sales commission to regulate the investment procedure which includes an investment advisor, a financial planner for his experience and expertise in guiding the investor regarding his investment scheme.

Types Of Load FundExplanation
Front-End Load FundWhen the load fund is paid at the time of the purchase of the scheme.
Back-End Load FundWhen the load fund is paid at the time of selling the shares of the investment scheme.
No Load FundWhen no sales commission is charged against the investment scheme.
Discuss in the different types of Mutual Fund.

Open-ended Funds – This fund doesn’t have a fixed maturity period. An open-ended fund unit can be easily bought and sold at NAV related prices which are declared on a daily basis.

Close-ended Funds – This fund has a maturity period of 3-15 years. For a specified period of time only, the subscription of this fund is available. At the time of the initial public issue, you can invest in the scheme, thereafter if the scheme is listed, you can easily buy or sell the units of the scheme on the Stock Exchange.

Interval Funds – This fund is the mix of open and close-ended fund structure. At the prevailing NAV based price, this fund is available for redemption during the pre-specified time period.

Fund of Funds – This fund scheme invest in other mutual fund schemes. In this type of fund, investment is done with the units of another mutual fund either of the same fund house or some other fund houses.

What is Equity Fund?

An Equity Fund is a kind of scheme where the mutual fund invests in equity related instruments like stocks, shares. This type of fund is targeted at the investors who are risk lovers and having a long-run investment schedule.

What are the different types of Equity Mutual Fund?
Types Of Equity FundsExplanation
Large Cap FundThis category of fund invests in large companies. Minimum of 80%of the total assets of the scheme is invested in large companies. These schemes generally experience a low level of risk.
Mid Cap FundThis kind of fund invests in mid-cap companies. At least 65% of the total assets of the scheme is invested in mid-cap stocks. These schemes experience a little more risk than large-cap stocks.
Large and Mid-Cap FundIn this schemes, a fund is invested in both the large and mid-cap companies. At least 35% of the asset is invested in both large and mid-cap companies each.
Small Cap FundThis fund invests in small companies having a lower market capitalisation. At least 65% of the total assets of the scheme must be invested in small cap stocks. This schemes include maximum risk but also ensures maximum returns.
Equity Linked Saving Scheme (ELSS)It is also known as tax saving mutual fund scheme with a lock-in period of 3 years. It is an open-ended mutual fund scheme. There must be 80% investment of the total assets in the equities.
Index FundThis fund invests in companies with the number of securities of same proportion to replicate the portfolio of a particular market index.
Debt/Income FundThis fund invests in debt securities like government bonds, corporate bonds etc. The return this fund is from interest income from the investments in these securities.
Money Market or Liquid SchemesThis fund invests in short-term instruments like Certificate Deposits, Treasury Bills, Commercial Papers etc. which are safer instruments. This fund is used to keep the surplus fund for a short period of time which is quite unaffected by the change in interest rates and other changes in the market.
Gilt FundThis fund mainly invests in Government securities which have no default risk. But due to changes in economic factors like interest change or inflation, the NAV of this fund/scheme might change.
Sector Specific FundThis fund invests in companies in particular sectors like Banking, Information Technology (IT) etc. This scheme involves a high level of risk as the portfolio is less diversified than other equity funds. That’s why the return might get affected if the particular sector does not perform well.
Thematic FundThis type of fund invests in sectors having a common theme. For example- An automobile thematic fund will invest in companies which are directly or indirectly connected to the Automobile sector.
Balanced FundThis fund invests in a portfolio which is a mix of equity and debt instruments in the distribution amount specified in the offer document. The investor can invest in both stocks and bonds for the better-combined result of income and moderate growth.
Monthly Income PlansThese funds invest majorly in debt securities and a little amount in equity securities for a diversified portfolio and better yield. This fund is ideal for protection from capital and also capital appreciation. This scheme is also called Debt Oriented Hybrid Schemes.

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