What are the good mutual funds to buy ?
What are the market capitalisation categories ?
“Mutual funds are subjected to market risk, if fund is not invested in good mutual funds.”
Mutual funds are the pool of funds which are collected from any number of investors for the purpose of investing those collected funds into various kinds of securities. These securities can be equities, bonds , debentures and also in money market instruments like treasury bills, commercial paper and certificate of deposits also. Mutual funds are managed by an investment manager known as Asset Management Company which regulates the mobilization and channelisation of funds from investor to investor.
Investments in mutual funds are done for the following reasons.
Small amount of investment
Good mutual funds are those funds which can provide maximum returns to the investors at a minimum risk over a period of time. Many companies including public and private are providing mutual funds schemes. These are:
Investors should invest according to their risk profile , goals and investment horizon.
Market capitalisation categories
Large cap funds- These type of caps includes companies which have large market capital investment and are less risky because these are less volatile. These companies are stable and dominate to their industries.
Mid cap funds- These type of caps include companies which have less market capital than large caps and are more riskier than large caps but less riskier than small caps, but has more growth potential.
Small cap funds- These types of caps includes companies which have smaller market capital than mid caps and have higher risk than large cap funds.
Balanced mutual funds are the best mutual funds for investors to invest their funds as they includes the combination of equity and debt funds and are less volatile in nature.Balanced mutual funds are not risk free investments but it diversifies the risk. For the first time investor of mutual fund balanced funds are the useful funds because they will satisfy themselves with the maximum returns at the minimized rate of risk.
Mutual funds benefits to small investors who have very less amount to invest and cannot take much risk. By investing in mutual funds it will reduce that risk as it diversifies the money into a portfolio which is a combination of different assets. These person can be a small trader, an employee, or any person belongs to middle class income groups.