Mutual Fund
What is mutual fund?
Mutual funds are investment vehicles that pool money from multiple investors to invest in a diversified portfolio of securities such as stocks, bonds, or other assets. Here are the key characteristics and aspects of mutual funds:
Investment Pooling: Investors contribute money to a mutual fund, which is managed by a professional portfolio manager or team. The pooled funds are invested in a diversified portfolio of securities according to the fund's investment objectives.
Diversification: Mutual funds spread investments across a wide range of assets, which helps reduce risk compared to investing in individual stocks or bonds. This diversification can include different sectors, industries, and geographic regions.
Professional Management: Mutual funds are managed by experienced professionals who make investment decisions based on thorough research and analysis. The goal is to achieve the fund's investment objectives, such as growth, income, or a combination of both.
Types of Mutual Funds
There are various types of mutual funds tailored to different investor needs and goals:
Equity funds:invest primarily in stocks or equities.
Bond funds:invest in fixed-income securities like government or corporate bonds.
Balanced or asset allocation funds:invest in a mix of stocks and bonds to achieve a balanced portfolio.
Index Funds:Aim to replicate the performance of a specific market index, such as the S&P 500.
Specialty Funds:Focus on specific sectors or themes, such as technology, healthcare, or socially responsible investing.
Liquidity:Mutual fund shares can typically be bought or sold at the fund's current net asset value (NAV) per share, calculated at the end of each trading day. This provides liquidity compared to other investments like real estate or certain bonds.
Regulation and oversight:Mutual funds are regulated by government authorities to protect investors' interests. They must adhere to specific rules and guidelines regarding disclosure, operations, and reporting.
Fees and Expenses:Mutual funds charge fees and expenses, including management fees, operating expenses, and sales charges (if applicable). These costs can vary depending on the fund's structure and management style.
Specialized Investment Fund :
Launch Fund Launch after 1 st April
Singh said that the SIF was brought in to fill the gap between mutual funds and PMS. "There is a gap between mutual funds and PMS in terms of portfolio flexibility, creating an opportunity for a new investment product. The absence of such a regulated investment product appears to have inadvertently propelled a segment of investors towards unregistered and unauthorized investment products which have been available on YouTube and other social media channels. And those products are risky, unregulated. To address this gap, SEBI has recently introduced a new asset class called the specialized investment fund under mutual fund structure."
| Asset class | SIFS | Characteristics | Taxation | Redemption frequency |
|---|---|---|---|---|
| Equity | Equity Long-Short Fund | At least 80% in equity and up to 25% in unhedged derivative position in equity | Equity | Daily |
| Equity Ex-Top 100 Long-Short Fund | At least 65% in stocks beyond top 100 companies and up to 25% in unhedged derivative position in equity | Equity | Daily | |
| Sector Rotation Long-Short Fund | At least 80% in shares of up to 4 sectors and up to 25% in unhedged derivative position in equity | Equity | Daily | |
| Debt | Debt Long-Short Fund | Invest in debt securities across duration including unhedged short exposure through debt derivatives | Debt | Once in a week |
| Sector Rotation Long-Short Fund | Invest in debt securities of at least two sectors with up to 75% in single sector and Debt Once in a week up to 25% in unhedged short Long-Short exposure through debt derivatives | Debt | Once in a week | |
| Hybrid | Active Asset Allocator Long-Short Fund | exposure through debt derivatives Invest in equity, debt, equity and debt derivatives, REITs/InvITs and commodity derivatives and upto 25% in unhedged derivative position in equity and debt instruments | Depending on product structure | Twice in a week |
| Hybrid Long-Short Fund | Invest 25% each in Depending equity, debt and derivatives | Depending on product structure | Twice in a week |