MUTUAL FUNDS TYPES AND NAV

MUTUAL FUNDS TYPES

A mutual fund scheme can be classified into an open-ended scheme or a close-ended scheme depending on its maturity
period.

OPEN-ENDED FUND

An open-ended Mutual fund is available for subscription and
repurchase continuously. These Funds do not have a fixed.

● Any time entry and exit
● Liquidity can be maintained by investing
in open-ended funds Difficult to manage the funds, as the money flows in and out, so the total funds get changed frequently
● The units are brought and sold at NAV

CLOSE-ENDED FUND

A close-ended Mutual fund has a stipulated maturity period e.g. 5-7
years. The fund is open for subscription only during a specified period
at the time of the launch of the scheme.

● The minimum lock-in period of 3 years
● Short term returns are not possible
The number of units does not fluctuate on daily basis Hence the number of units also remains the same except through bonus or right issue
● A new investor buy units of close-ended funds through a secondary market.

Fund According To Investment Objective

A scheme can also be classified as a growth fund, income fund, or balanced fund considering its investment objective.
Growth/Equity Oriented Scheme.

The aim of growth funds is to provide capital appreciation over the medium to long- term.

Such funds have comparatively high risks.
These schemes provide different options to the investors like dividend option, capital appreciation, etc.

EQUITY BASED MUTUAL FUND

A mutual fund that invests principally in stocks
A minimum of 65% of total investment should be in Indian equity
It includes various types such as

● LARGE CAP: Investment in companies
having a market capitalization of more than
$10 billion.
● MID CAP: Investment in companies
having market capitalization between
$2 billion to $10 billion.
● SMALL CAP: Investment in companies having marketing capitalization less than  $2 billion.

DEBT BASED MUTUAL FUNDS

It includes different types of schemes such as
Gilt Funds: These funds invest exclusively in government securities. Government securities have no default risk.

CORPORATE BONDS:

COMBINED: This better than the above two
because investment only guilt securities may not even cover the inflation cost.

Balanced Fund

It is a balanced fund of Equity and Debt
The investment is done in both equity and
debt
For tax benefit investment in Indian equity
should account for 65%.

ELSS FUND

ELSS is a type of diversified equity mutual fund Qualified for tax exemption under 80C
Investment up to 150000 are exempted under this section
It usually comes with a lock-in period of 3
years

Money Market

These funds are also income funds and their aim is to provide easy liquidity, preservation of capital
and moderate-income.
These schemes invest exclusively in safer short-term instruments such as treasury bills, commercial paper, and government securities, etc
These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods.

SECTORAL FUNDS

Investments are done in stocks of a particular sector.

These funds have high risk but also give high
returns.

OTHER FUNDS

● International funds
● Quant funds
● Arbitrage funds

What is  NAV (Net Asset Value)

● Net Asset Value is simply the price of one
of the mutual fund's units and is indicative
of the fund's intrinsic value.
● When one buys units in a mutual fund, one
buys them at NAV
● Net Asset Value of a mutual fund indicates how well the fund manager has placed his or her bets in the market
In the case of investment in mutual funds,
calculating the value is a little complex.
Here is where one can look at the concept of Net Asset Value or NAV
Thus, NAV is a very important tool for investors

Thanks for your time.

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