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What are Mutual Funds- Types of Mutual Funds in India, Examples of Mutual Funds, Investment Procedure of Mutual Funds in India

May 29, 2012 in Financial Services

A Mutual fund is an institutional device through which the investors pool their funds to invest in a diversified investment portfolio. This gives them the benefit of spreading and reducing risks. Mutual funds can be classified into three categories i) Open-end mutual Funds ii) Close-end Mutual Funds iii) Interval or Mixed Mutual Funds

What are Mutual Funds, Mutual Fund Returns, Mutual Funds India

Types of Mutual Fund in India

Open-ended mutual Funds

In case of Open-ended mutual funds, the fund itself is ready to buy back the shares surrendered and sell new shares. Thus there is no fix number of outstanding shares. Ordinarily, the transaction of purchase or sale is made at the net assets value calculated every now and then. The repurchase price is usually slightly lower than the selling price. The net assets value of the mutual finds increase or decreases depending upon the performance of securities in the portfolio of the mutual fund. Most of the mutual funds started by the commercial banks in India in this category.

Close-ended Mutual Funds

In case of close-ended mutual funds, the mutual fund management sells a limited number of shares. It does not stand ready to redeem or re-purchase these shares. Primary example of close-end mutual fund is UTI’s master-share. The shares of close-end mutual fund are purchased and sold in the secondary markets.

Interval or Mixed Mutual Funds

Interval Mutual Funds or Mixed Mutual Funds are those mutual funds that is mix of Open-end mutual Funds and Close-end Mutual Funds. Interval Mutual Funds have mix features and characteristics of Open-end mutual Funds and Close-end Mutual Funds.

Types of Mutual Fund in India, Kinds of Mutual Fund, Open-end mututal Funds, Close-end Mutual Funds, Interval or Mixed Mutual Funds

Types of Mutual Fund in India

Examples of Mutual Funds

Several Commercial banks in India have recently entered into the field of mutual funds viz. SBI Mutual Fund-Magnum, Canshare of Indian Bank, BOI Mutual fund of Canara Bank, Swarnpushpa Mutual Fund of Indian Bank, etc. Besides UTI, GIC, Life Insurance Corporation of India have also entered this area. Some other banks are also likely to enter this market.

Investment Procedure in Mutual Funds India

The investment procedure in Mutual Funds India is very simple.
1. Investors Pool their money with Fund Manager (Mutual Funds Company in India)
2. Fund Manager of Mutual Fund company in India invests in securities
3. Investment in Security generates returns which is passed back to Investors after deducting mutual fund manager investment fee and fund management fee

Investment Procedure in Mutual Funds India, how to invest in mutual funds

Investment Procedure in Mutual Funds India