Needless to say it is crucial for an investor, to analyze the intricacies of mutual fund investment before buying mutual fund ‘units’, which are basically a presentation of one’s share of holdings in a particular scheme. People who desire a deeper knowledge of what mutual funds actually are should know that these funds are investment schemes. They are managed professionally and are run by AMCs or asset management companies. These investment plans involve several investors putting in money for investing in several securities and this is tracked and run by the AMC in question. If you take the NAV or net asset value into consideration, you can then buy or redeem at the present NAV of the fund in question. These can fluctuate and are based on the holdings of the fund. Each investor takes part equally or in a proportionate manner as per the loss or gains incurred by the fund. There are several benefits entailed in investing in mutual funds, including liquidity, transparency, professional expertise, and so on. The 3 main types of mutual funds comprise of equity funds, fixed-income funds, and money market funds.
SEBI registration is present for all mutual funds. In order to safeguard the interests of the investor, mutual funds function within the provisions of strict regulation. The big benefit of making investments via mutual funds is the sheer access that investors can get to well spread out and professionally operated equity, securities and bonds in portfolios. It is interesting to note that an expense ratio is the fee assessed, when an investor purchases shares in a mutual fund. The expense ratio of any fund is the management and advisory fees totaled with the costs of administration. It should be noted that the assessment of fees can be on the front-end or back-end. Fees are usually worked out during the initial buying itself whenever there is a front-end load for any mutual fund. Also, they can be assessed whenever shares are sold by the investor in case of a back-end load.