A gilt fund is a kind of mutual fund that invest your money only in government securities. These funds are considered to be safe as they bear no default risk.

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Index funds are passive mutual funds that invest in shares of companies comprising a particular index. These funds intend to replicate the performance of a particular index.

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Exchange Traded Funds (ETFs) are funds that can be traded on a stock exchange, just like shares. These funds invest in shares, indexes or commodities.

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Hybrid mutual funds invest both in shares and bonds. The portion invested in shares helps grow your wealth, while the portion invested in bonds offers stability to your portfolio.

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Debt mutual funds collect money from several investors like you, and invest this amount in bonds of reputed companies and government bonds.

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Equity mutual funds collect money from several investors like you, and invest this amount in shares of various companies. The primary objective of equity mutual funds is to invest in shares of different companies and generate good returns.

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A fund of fund is a kind of mutual fund that invests in a variety of mutual fund schemes.

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KIM or Key Information Memorandum provides detailed performance related information on the several schemes of a mutual fund company. So before you invest in any scheme you can have a look at the various scheme performances and take an informed decision. But always remember that a fund’s past performance is no guarantee of its future success .

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An offer document provides details about a new mutual fund scheme entering the market. It provides information on the features of the scheme, risk factors, loads – entry or exit load, the track record of the mutual fund company among others.

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NFO stands for a New Fund Offer. When a new fund is launched for investors, it is known as a NFO. A NFO could also be the launch of additional units of a close-ended fund.

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The performances of Mutual funds are influenced by the performance of the stock market as well as the economy as a whole. Equity Funds are influenced to a large extent by the stock market. The stock market in turn is influenced by the performance of the companies as well as the economy as a whole. The performance of the sector funds depends to a large extent on the companies within that sector. Bond-funds are influenced by interest rates and credit quality. As interest rates rise, bond prices fall, and vice versa. Similarly, bond funds with higher credit ratings are less influenced by changes in the economy.

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If you’re looking at investing in equity linked saving schemes (ELSS) the lock in period is three years, which means your money will remain locked in with the mutual fund company for a period of three years.

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Yes. NRIs can invest in mutual funds.

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Except for Exchange Traded Funds you do not need a demat account to invest in mutual funds.

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Mutual funds invest in a variety of financial instruments such as equities, debt, government securities to name a few. Note that the value of these investments could fluctuate, thereby influencing your mutual fund NAV. But since the risk is spread among a large pool of individuals you individually take on low risk through diversification and rake in high returns.

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Some of the major benefits on investing in a mutual fund are: – Diversification – Professional management – Convenience – Liquidity – Variety of schemes and types – Tax benefits.

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