Mutual Funds: If you are planning to invest in mutual funds, then always keep these tips in mind!


Many investors want to invest in mutual funds. Before investing in any investment option, it is important to know about its basic details, and risks, among others.

If you are interested in Mutual Funds and want to invest in the same, then here are some basic details provided by SEBI and BSE that you need to know.

What is a Mutual Fund?

Mutual Fund is a mechanism of pooling the units by issuing units to the investors and investing the fund in securities as per the objectives stated in the offer document. Mutual funds issue units to investors according to the money invested by them. Investors of mutual funds are known as unitholders.

As per the information provided by SEBI, Mutual Funds generally come with multiple schemes with different investment objectives, which are launched from time to time.

In addition, a mutual fund is required to be registered with the Securities and Exchange Board of India (SEBI) which regulates the securities markets before collecting funds from the public.


Types of Mutual Fund Schemes?

A mutual fund scheme can be classified into an open-ended scheme or a closed-ended scheme on the basis of its maturity period.

An open-ended fund or scheme is available for subscription and repurchase on an ongoing basis and does not have a fixed maturity period. Whereas a closed-ended fund or scheme has a stipulated maturity period. The fund is open for subscription only during a specified period at the time of the launch of the scheme.

Schemes as per Investment Objective:

A plan can also be classified as a growth plan, income plan, or balanced plan, considering its investment objective. Such schemes may be open-ended or closed-ended schemes.

How to invest in mutual fund schemes?

Investors can contact the agents and distributors of mutual funds for necessary information and application forms. Forms can be submitted to mutual funds through agents and distributors providing such services. Post offices and banks also distribute units of mutual funds.


How much should one invest in debt or equity-oriented schemes?

An investor should consider his risk appetite, age factor, financial condition, etc.

What should an investor look for in an offer document?

As per the information provided by SEBI, a brief offer document containing a lot of useful information is required to be given by the mutual fund to the potential investor. The application form for membership in a scheme is an integral part of the offer document. SEBI has prescribed minimum disclosure in the offer document.

An investor should read the offer document carefully before investing in a scheme. Investors will be informed of the scheme's salient features, risk factors, initial issue expenses and recurring expenses to be charged for the scheme, entry or exit load, sponsored track record, educational qualifications, and work experience of the key personnel including fund managers, pre-launched by mutual funds Plans made, litigation pending and penalties imposed, etc. should be looked at. ,