With a wide range of mutual fund schemes available for investment, it is always good to be aware of the key features of the schemes you are comparing and ultimately making an investment decision.
Here are some important terms that you ought to know while investing in a mutual fund scheme:
Whenever you are travelling towards any destination, you look for directions to reach that destination. Likewise, your financial advisor may act as your navigation to achieve your financial goals within the desired time.
Mutual fund fact sheets are the treasure house for the investors to get updated information about their mutual fund scheme. Most of the fund houses publish the fund fact sheets every month, and the investors can access these on the website of the mutual fund houses.
One may invest in equity markets by following the two investment strategies – active or passive. While active investing requires careful stock selection in the investment portfolio, passive investing refers to mirroring the benchmark index entirely.
Types of mutual fund schemes based on asset classes:
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Sector funds are those mutual fund schemes, which carry the mandate to invest in the companies working in the specified sector predominantly. Such funds invest a minimum of 80% in equity instruments of that particular sector. For example, a banking fund can help you have a focused investment in banking stocks.
Historical data suggests that no asset class has been consistently a winner always. As such, having an optimum asset allocation is your key to long term wealth creation, as it allows the portfolio to perform across the market trends and economic cycles.
Mutual funds are suitable for the investors who don’t want to invest directly into equity and debt markets but still wish to have such investment exposure in their portfolio.
Mutual funds provide you with a wide range of investment options, including opportunities to invest across the asset classes, market caps, sectors, and companies.
