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“Mutual funds have historically offered safety and diversification. And they spare you the responsibility of picking individual securities.”
 
Most people get scared simply hearing the term Mutual Fund, but they're the best way to achieve financial goals. That's because mutual funds are professionally managed and offer diversification, which you don't get when you buy individual stocks or bonds.When you buy a fund, the fund takes your money and pools it with others' money into one big pile. The fund manager's job is to decide which securities to buy, sell, and hold—while you're busy at work, raising children or enjoying retirement. Each manager uses a methodology or discipline to select stocks or bonds. Every day, fund managers and their team of analysts examine the companies they own to see if they still fit their criteria for securities selection.
 
 
“Your goals and dreams may be varied but so are
the options given to you by Mutual Funds.” 
 
If you thought mutual funds were primarily about investing in shares or the equity market, think again. Mutual funds extend beyond the limits of equity. They also invest in Debt Instruments. The same principle higher the risk, the higher the returns applies here. Debt products are lower in risk as compared to equity funds.
 
 
“Characteristics of Mutual Funds.” 
 
Investors purchase mutual fund units from the fund itself instead of from other investors on a secondary market, such as the National Stock Exchange or Bombay Stock Market.
The price that investors pay for mutual fund unit is the fund’s per unit net asset value (NAV).
Mutual fund units are “redeemable,” meaning investors can sell their unit back to the fund.
Mutual funds generally create and sell new units to accommodate new investors. In other words, it sells its units on a continuous basis, although some funds stop selling when, for example, they become too large.
The investment portfolios of mutual funds typically are managed by separate entities known as “Asset Management companies” or “AMC” that are registered with the SEBI.
 
 
“What to look at for buying a Mutual Fund.”
 
Find the Risk and Style of Fund that Agrees with Your Own when Selecting a Mutual Fund.
Look for Ample Diversification of Assets.
Look for an Experienced, Disciplined Management Team.
Pay Attention to the Expense Ratio – lesser the better.
 
 
“How Mutual Funds can Earn Money for You”
 
1. Dividend and Interest Payments—a fund may earn income in the form of dividends and interest on the securities in its portfolio.The fund then pays its unit holders of the income (minus disclosed expenses and tax) it has earned in the form of dividends.

2. Capital Gains—the price of the securities a fund owns may increase. When a fund sells a security that has increased in price, the fund has a capital gain. Most funds distribute these capital gains (minus any capital losses) to investors in form of Dividend.

3. Increased NAV—if the market value of a fund’s portfolio increases, after deduction of expenses and liabilities, then the value (NAV) of the fund and its unit’s increases. The higher NAV reflects the higher value of your investment.

With respect to dividend payments, funds usually will give you a choice: the fund can send you a payment, or you can have your dividends reinvested in the fund to buy more units only if you have opted for Dividend options otherwise it is added back to NAV. This is the reason why NAV of Growth option is always more than the NAV of Dividend option.

(Source: US SEC, AMFI)
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Disclaimer: While all efforts have been taken to make this web site as authentic as possible, Team Genus Financial Services Private Limited (www.teamgenus.in) will not be responsible for any loss to any person/entity caused by any short-coming; defect or inaccuracy inadvertently or otherwise crept in the teamgenus.in web site. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully before investing into Mutual Funds. The use of information and services is subject to the terms and conditions governing this website.

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