Author: Ho KhinwaiKhin Wai is a Year 3 Banking and Financial Services student from the School of Business Management (SBM). He started his foray in finance in 2011 and has his roots in value investing. Archives
December 2013
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Author: riyarai The financial market is bubbling with opportunities for investors to invest their money in. People turn towards various means of investment instruments such as bonds, debentures, equity shares, mutual funds and fixed deposits for their investments. However, the most sought after method of investment remains mutual funds; which are also one of the most lucrative methods of gaining returns. A mutual fund is the collective pool of money from many investors in bonds, stocks and other assets; which belong to different industries as well as regions of the world. It is a diversified portfolio of securities and which raise their money by selling the different units to the public or even a section of the public. They are also known to help save on tax, having a number of tax exemptions that are allowed on different units of the funds. There are many different types of mutual funds and may be classified under different categories: by structure, geographical classification, by nature and by investment objectives. By structure, they are classified as open-ended, close-ended and interval schemes. The open-ended type refers to all those which do not limit the number of units or shares that are issued by the fund. There is no restriction on them and investors can buy and sell whenever they want to. On the other hand, closed-ended ones have a limited number of shares. They do not redeem their units and are traded in the securities market. They are available only for a specific period of time. Interval schemes combine both the features of open-ended as well as closed-ended funds. Another popular classification is made by geographical location. There are generally two different types of classifications: domestic and offshore. Domestic funds refer to those which are mobilised within the country. The market area is limited only to the boundaries of the nation. Offshore ones are those which can be cross-traded across the border. They permit open-domestic capital market to international investors. By nature, mutual funds can be classified as equity funds. Equity funds refer to all those funds which are invested primarily in equity shares of different companies. They may be of different types such as large cap, mid cap, equity linked savings scheme, sector and index funds. Mutual funds can also be classified depending on their investment objectives. They may be growth schemes, income schemes, balanced fund schemes, money market schemes and index schemes. Growth schemes refer to those funds which aim at generating wealth for long term investors. Income schemes are opportunities for those people to invest in the market, where investments are primarily made in debt instruments. Balanced transfer refers to those funds which aim at investing in both debt as well as equity instruments in equal proportion. They aim at balancing the safety of capital, capital appreciation and income. Money market schemes are the ones which are invested in short term investments. They provide a high amount of liquidity. Article Source: http://www.articlesbase.com/investing-articles/making-money-in-a-volatile-market-mutual-funds-6757081.html
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