Mutual Funds 101

A (a)   is a pool of professionally managed funds where fund houses / Asset Management Companies (AMCs) collect money from investors sharing a common investment objective and invest this pool of funds across the Indian economy

Which of these are descriptions of NAV (net asset value)?

• Represents the per unit/share market value of a mutual fund
• The price at which shares in the fund can be bought or sold during trading hours
• The price at which an investor can buy /sell mutual fund units from the AMC/fund house
• Is calculated by dividing the total market value of the mutual fund’s assets, minus the fund’s existing liabilities.

This type of mutual fund is invested in fixed income securities like treasury bills, call money, debentures, government securities, corporate bonds, etc.

• Index fund
• Equity Fund
• Exchange traded fund
• Debt fund

This type of mutual fund replicates the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc.

• Index fund
• Equity Fund
• Exchange traded fund
• Debt fund

This type of mutual fund allocate a certain portion of their assets to both equity and debt instruments in order to meet the scheme’s investment objective. Also known as balanced funds.

• Equity fund
• Hybrid Fund
• Large Cap Fund
• Balanced fund