Mutual Funds- Frequently Asked Questions

1. What is Mutual Fund?
A mutual fund is a monetary vehicle that collects money from various investors in order to invest in different equities like Bonds, assets, money market instruments, and other market securities. These investments are managed by professional Fund Managers on a day-to-day basis, who make an effort to create capital gains for the fund’s investors.

2. What are the advantages of investing in mutual funds online?
• You can invest at your convenience
• Systematic and speedy
• Lessen the paperwork every time you invest
• Ensures privacy about your investment

3. What is Net Asset Value?
For any company, net asset/net worth is the difference between assets and liabilities. As per the SEBI guidelines, it’s mandatory that all mutual funds highlight their NAV every business day. NAV indicates each mutual fund’s market value. NAV is always calculated at the end of the market day as securities’ market value fluctuates on a daily basis.
Net Asset Value= (Assets- Liabilities)/ Total number of outstanding shares

4. Can you explain Asset Management Company (AMC)?
An Asset Management company is a company that invests collected funds in different securities and assets as per the financial objectives. AMCs are also known as money managers.
Benefits:
• Professional Fund Manager
• Better investment options
• Portfolio diversification

5. What are Exchange Traded Funds ‘ETFs’?
An Exchange Traded Fund is a collected fund that operates very similar to a mutual fund. Let’s suppose you want to invest in an ETF, it can be bought and sold intraday at different prices. ETF offers a low-cost ratio and more liquidity as compared to mutual funds.
• The ETF includes various types of investments including bonds, stocks, commodities, or a mixture of investments. It lowers the risk as it offers diversification within a portfolio.
• These funds are listed on exchanges i.e. NSE or BSE.

6. What details should investors look into in an offer document?
This is the document containing the details of a mutual fund issued by an Asset Management company. An investor must read the offer document carefully before investing in any scheme. These are must-see details including risk factors, entry or exit charges, main features of the scheme, past performance of that particular scheme, investment objectives, work experience of a fund manager, sponsor’s track, etc.

7. What is a load Fund?
When an investor buys or sells units in the fund, he must pay charges each time.
• Load funds are mutual funds that charge a commission
• In a no-load fund, investors will not be charged for purchase or sale of units.