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If you are new in the investment world then mutual funds can be an easy and safe option for you. In this, the money of many investors is invested in different places, which reduces the risk and the possibility of returns better.
Mutual Fund: Easy Guide for New Investors, NAV to Scheme- Understand complete ABCDNew Delhi. Mutual funds are a means in which many investors are collected and invested in various shares and securities. Instead of this, investors get units and profits or deficit is divided into the same proportion. This process is called diversification, as investment is spread in different sectors, which reduces the risk. Before launching a mutual fund, it is necessary to register every scheme in SEBI.
Mutual funds are built as a trust, which consists of four important parts- sponsors, trustee, asset management company (AMC) and Custodian. Sponsor promotes it, trustees protect investors’ interests, while AMC manages investment. Custodian protects the securities of the scheme. According to the rule, 50 percent of AMC directors and two-thirds of the trustee board members should be independent.
What is Nav and why is it necessary?
The performance of a scheme of mutual funds is measured by its net asset value (NAV). This is taken out of the total units issued to the market value of the total securities present near that scheme. Since the value of securities changes daily, the Nav also changes daily or weekly. For example, if the total securities of a scheme are priced at Rs 200 lakh and 10 lakh units have been released, then the NAV of one unit will be Rs 20.
Mutual fund schemes
Mutual funds are mainly two types-
Open-ended scheme: In this, investors can buy or sell units at any time. It does not have a certain maturity period and has the biggest facility.
Close-ended scheme: Its duration is fixed, such as 5–7 years. It can only be purchased at the time of launch and later sold on the stock exchange.
Apart from this, the schemes of mutual funds also fall in growth, income and balanced category based on investment objectives.
Rakesh Singh is a chief sub -editor with a 14 -year experience in media and publication. There are fields of international affairs, politics and agricultural interest. Many articles written by Rakesh Singh published …Read more
Rakesh Singh is a chief sub -editor with a 14 -year experience in media and publication. There are fields of international affairs, politics and agricultural interest. Many articles written by Rakesh Singh published … Read more
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