MUTUAL FUND – SINGLE SCHEME WITH BALANCED FUND OPPORTUNIY

 MUTUAL FUND – SINGLE SCHEME WITH BALANCED FUND OPPORTUNIY

WHAT ARE MUTUAL FUNDS?

Mutual fund is a financial instrument for pooling of money from investors sharing a common objective and invests the money in equities, bonds, money market instruments etc. The entire pool of money in mutual fund is managed by professional fund manager.

The income / gains from this collective investment are distributed proportionately among the investors after any relevant costs and levies are taken into account by calculating a scheme's "Net Asset Value," or NAV.

WHAT IS NET ASSET VALUE “NAV”

The unit price of a mutual fund scheme is called. Mutual funds are bought or sold on the basis of NAV. NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on a given date. 

For e.g., If the market value of securities of a mutual fund scheme is ₹200 lakh and mutual fund issued 10 lakh units of ₹ 10 each to the investors, then the NAV per unit of the fund is ₹ 20 (i.e., total ₹200 lakh/10 lakh = ₹ 20).

Hence NAV varies from day-to-day basis as per changing market value

The NAVs of all mutual fund schemes are declared at the end of the trading day after markets are closed, as per SEBI Mutual Fund Regulations.

Source - https://www.amfiindia.com/investor-corner/knowledge-center/net-asset-value.html

WHAT IS A “BALANCED FUND”?

BALANCED FUND = EQUITY + DEBT

A balanced fund provides dual fund opportunity in both equity and debt in a single mutual fund scheme. A balanced fund combines equity stock, bond, and sometimes money market components in a single portfolio. These funds invest in both stocks and bonds, giving investors the best output. Balanced funds benefit largely from equities, but the debt component protects them from any adverse market situation.

Balanced funds are best suited for investors seeking a mix of safety, income, and modest capital appreciation over the medium term.

WHY INVEST IN BALANCED FUND?

Equity – provides capital appreciation and aim at generating returns above inflation. An equity fund is a mutual fund scheme that have investment in stocks.

Debt – provide stable portfolio through investment in fixed income instruments, such as Corporate and Government Bonds, corporate debt securities. Also referred to as Bond Funds.

The ideal ratio of exposure to debt and equity is provided by balanced funds. Managers of hybrid funds will make investments in debt and equity in a certain ratio. The fund's direction is the only factor that influences the equity-debt ratio.

KEY REASONS TO INVEST IN BALANCED FUND:

•Potential stable returns and growth

•Participation opportunity in both debt and equity

•Platform for investor to invest in equity

•Tax efficient tool

CONCLUSION:

Although retail investors have a great opportunity for good returns through mutual, choosing the correct fund can be difficult. Hence investors should always conduct thorough market research on the funds, check the risk-return trade-off, consider their time horizon for investment and evaluate their own risk appetite, or else it is advisable to seek professional advice from investment adviser. 

In balanced fund, investors get the most out of investment in both debt and equity in a single mutual fund scheme with the help of diversified portfolio.

While investors of all types can invest in the securities market on their own, a mutual fund is a preferable option simply because all advantages are included in one price.

*Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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