In today’s scenario, one of the upcoming options for investment in the financial market is mutual fund. Mutual funds special features are it: easy availability, risk containment, liquidity, transparency, professional management and decent returns, these above features attract the small investors mainly of average class, the investors play safer game as compare to the up and down of the stock market.
Suitability of Funds
Mutual Fund suits all class of investors who are interested in raising their personal funds. The investments are based on the risk factor of the investor if the risk is higher the return is also high similarly if the risk is low the return on a particular investment will also be low.
If the risk is slightly-averse, the investor should prefer a balanced fund, which invests in stocks only up to 60-70%. If the investor wants to go for larger risk-averse, stick to growth funds. If the investor wants regular returns than investor must go for income funds, with average risk but the risk is less than equity fund. The Mutual fund managers make decision of the funds depending on the investment objective of the investors. They can go for liquid funds like Cash Funds or short term floating rate funds. They may also go for funds based on when you want your funds back. The investor who wants short term and quick return a short-term bond fund would just be fine as return will be within three to six months. An income fund or an equity fund would fit in if the investor willing to afford the fund to leave it with the fund manager for over a year.
Even within each category, you can pick and choose i.e. in equity funds, for example, you have a variety of options: blue chip funds, mid-cap funds, contrarian funds, opportunity funds, dividend yield funds, sectoral funds that invest specifically in select business segments etc.
Many equity funds offer the option of systematic investment plan (SIP) that allows you to invest a certain sum every month or every quarter. This amount is fixed for every installment to be paid. This way, you not only discipline your investments but to a great extent an investor can protect themselves against the vagaries of the market.
Debt funds don’t lack luster either. The investor have a choice medium term debt funds, short-term bond funds, floating rate funds, dynamic bond funds and cash funds. If an investor wants an aggressive debt fund, then they can go for gilt funds. If the preference is a mix of both equity and debt, MIPs or balanced funds would do just fine.
Fair and Transparent dealings
A mutual fund is nothing more than a collective savings pool. Several investors have come together to invest in stocks, bonds or in both. However, mutual funds are strictly regulated. They have to declare their portfolios from time to time. Almost all the funds declare their portfolios every month.
The net asset value (NAVs) of a fund, which points to how much a unit of the fund is worth on a particular day, is declared every working day. You know where your money is going and how it is doing performing in the market.
Easy Access and Availability in Market:
Earlier, even if you wanted to buy a mutual fund, it was not easy. Few distributors, most of them small, sold mutual funds. The quality of their advice often left a lot to be desired. But today, you could buy mutual funds in over 60 cities or towns, either through their own offices or through banks.
All private sector banks now sell mutual funds across the counters in most branches. Some public sector banks too have begun marketing mutual funds through select branches.
When you buy a mutual fund, you hand over the task of investing to a qualified and probably more knowledgeable fund manager who is paid for finding the right opportunities for you. The service standards set by mutual fund companies are better as compare to other sources of raising finance. As other sources of raising funds are more risky than mutual funds as their investor have to do the direct dealings. As for example, most fund distributors will come to your residence or office and explain the product features and also collect your cheque.
If you want to sell your fund, you can do so pretty quickly too, mostly within one or two working days. There is no paperwork to fear. For example, in the case of some income funds, the money will be credited directly into your bank account if the account is held with select banks.
In case of systematic investment plans too, you can do so with auto debits. Every month, on a day you choose, your bank account will be debited with a particular sum and specified mutual fund units available for that sum will be bought. No more hassles of issuing post-dated cheques.
Mutual fund investment is better than other raising funds and in the coming years it will prove to be the best source of investors. If past collection figures are a testimony, investors seem to have realized this. Both the public Mutual funds and Private Mutual funds are performing better. The result is moving in upward curve of the financial market. To sum up, mutual funds offer the investor large choices of various schemes with special features and can be chosen on the requirement of the investor.
Paradigm Capital Management is a trusted leader in small cap investing.
With a long history of small-cap investing, Paradigm Capital Management employs a disciplined, bottom-up approach with an emphasis on fundamental analysis and extensive management contact.
Our strategies are available through separately managed accounts, mutual funds, and onshore and offshore long/short funds—all of which draw upon the same fundamental research and investment process that have been the key drivers behind our significant, long-term outperformance.
To learn more about how our capabilities align with your long-term goals, please contact us at (518) 431-3500
Or visit us here: http://paradigmcapital.com/