What is Mutual Funds? Know the benefits of how to invest in Mutual Funds.

Welcome friends, today we will read about What is Mutual Funds, How to invest in Mutual funds, Mutual Funds Types, Mutual Funds Meaning, Mutual Funds Investment, 2021 best mutual funds to invest, App for Mutual Fund Investment

If you are an investor, then you must have heard about Mutual Funds, so today in this article we are going to tell about what is Mutual Fund and what are the benefits of investing in it. Mutual fund is one where many investors deposit or invest their capital at one place. And then this fund is sent to invest in the stock market. You must have seen advertisements about it in your TV, Newspaper, in which it has been told that the scheme of Mutual Fund is subject to risks. But is it really subject to risks, then we will know all this through this post.

There is a very good and easy way to earn money from mutual funds. It is not necessary that you have thousands of rupees to invest in this. Rather, you can also invest in it at the rate of only Rs 500 per month.

Many people consider Mutual Funds and stock/share market to be the same but it is not so at all. Mutual fund and share market both are part of the market but there is a lot of difference between the two.

From today’s post, we will know what is the difference between them and after all what is this mutual fund and how can we safely invest in it?

What is Mutual Fund?

In mutual funds, the money of many investors is deposited in one place. Mutual fund companies do this work of depositing money. This deposited money is then invested in the market and its management is done by Asset Management Companies (AMC). This is a safe way to invest in the stock market. All investors have the freedom to choose mutual fund schemes according to their financial goals.

Understand in simple language, mutual fund is a fund deposited by many people and this money is used to invest in different places in the market. With this, it is tried that the people who have deposited money should get maximum profit from their deposited amount. This means that Mutual Funds are a good way to earn money from money itself.

The work of managing the fund is done by a professional person who is called a Professional Fund Manager.

The job of a professional fund manager is to look after the mutual fund and make more profit by investing the fund money in the right place. If put in simple words, its job is to convert the money invested by the people into profits.

Mutual Funds are registered under SEBI (Securities and Exchange Board of India) which regulates the market in India. The work of keeping investors’ money safe in the market is done by SEBI. It is ensured by SEBI that any company is not cheating with the people.

Mutual Funds have been present in India for a very long time, but even today people do not know much about it. In the early times, people had the impression that Mutual Funds are only for the rich class.

But this is not the case at all and in today’s time this perception seems to be changing. The trend of people has increased towards Mutual Funds. In today’s time, Mutual Funds are not only for the rich class.

Rather, any person can invest in Mutual Funds at the rate of only 500 ₹ every month. The minimum amount to invest in Mutual Funds is Rs 500.

History of Mutual Funds

The mutual fund industry in India began in 1963 with the formation of the Unit Trust of India (UTI) on India at the initiative of the Reserve Bank of India (RBI) and the Government of India.

Its main objective was to attract small investors and make them aware of the topics related to investment and market.

UTI was formed in 1963 under an Act of Parliament. It was established by the Reserve Bank of India. And initially it worked under RBI.

In 1978, UTI was separated from RBI. Industrial Development Bank of India (IDBI) got regulatory and administrative control in place of RBI. And UTI started working under it.

The development of Mutual Funds in India can be divided into several stages. As the first phase was from 1964 to 1987, in which UTI had a fund of ₹ 6700Cr.

After this the second phase starts from 1987, in which the entry of public sector funds started. In this time, many banks got a chance to make Mutual Funds.

SBI created the first NONUTI mutual fund. The second phase ended in 1993, but by the end of the second phase, the AUM ie Assets under management increased from ₹ 6700Cr to ₹ 47004CR. In this phase, there was a lot of enthusiasm among the investors in mutual funds.

The third phase started from 1993 and lasted till 2003. In this phase private sector funds were approved. In this phase, investors got more options of Mutual Funds. This phase ended in 2003.

The fourth phase started from 2003 which is going on till now. In 2003, UTI was divided into two separate phases. First SUUTI and second UTI mutual fund which used to work according to the rules of SEBI MF. The effect of the 2009 economic recession was read on the whole world.

Investors in India also suffered a lot. Due to this, people’s confidence in mutual funds decreased a bit. But slowly this industry started coming back on track. In 2016, the AUM was ₹15.63 trillion. Which was the highest ever.

The number of investors is almost above 5 CR and lakhs of new investors are being added every month. This phase has proved to be golden for mutual funds.

Types of Mutual Funds

Following are the types of mutual funds, services are available to all types of investors.

Equity Mutual Fund

In Equity Mutual Fund, money is directly invested by investors for a long period. In the short term, this scheme can be risky and the investor gets low returns in this. But if you invest for a long period, it helps you to get the best returns.

Debt mutual fund

This is a good scheme if you want to invest in mutual funds for a short period of time. One can invest in this scheme for a period of less than 5 years. This scheme is less risky than shares in which you get better returns than bank fixed deposits.

Hybrid Mutual Fund Scheme

If you want the combined benefits of Equity Mutual Fund and Debt Mutual Fund, then you can opt for Hybrid Mutual Fund Scheme. But investors should invest only after keeping their risks in mind while investing in these schemes.

Solution Oriented Scheme

It is made according to a particular goal or solution. There can be goals like retirement scheme and children’s education, children’s marriage, but you need to invest in this scheme for at least 5 years.

Note:- Mutual fund investment is subject to market risks. So read all the information and documents carefully before investing.

Types of Mutual Funds Based on Structure

Open ended mutual fund

Open Ended Funds = In this scheme, investors are allowed to sell or buy funds at any point of time. There is no fixed date or period to buy or sell funds in this.

These funds provide liquidity to the investors, hence they are very much liked by the investors.

Close ended Mutual Funds

This type of plan has a stipulated maturity period and investors can buy funds only during the fund tenure. And such funds are also included in the share market. After this they are also used for trading.

Interval Funds

This type of Mutual Funds is made up of both open ended funds and close ended funds. In this, the facilities of both the funds are primed.

It allows investors to trade funds at pre-determined intervals. And trading of funds can be done on that fixed period.

It was talked about the type of Mutual Funds based on the structure, now we will talk about how many types of Mutual Funds are taken on the basis of asset.

How to Invest in Mutual Funds

There are two ways to invest in mutual fund schemes online and offline.

Investor by completing the application form, along with a bank check or bank draft at any of your nearest branch or designated Investor Service Centers (ISCs) dealing with mutual funds or registrar and transfer agents of mutual funds itself You can start investing.

Investors can also invest in mutual funds online, for this they have to visit the official website of the mutual fund.

How to buy mutual funds

By the way, you will find many such Android Apps in the market, using which you can easily invest in Mutual Funds. Some of them are special like Groww, MyCams, InvesTap, KTrack Mobile App, IPRUTouch App etc.

Best mutual funds to invest 2023

3 Mutual Funds To Start SIP In 2023

Various agencies are responsible for providing mutual fund ratings. CRISIL, ICRA, MorningStar, ValueResearch, and others are some examples. Mutual fund ratings do not allow you to choose the best, however, it works by sorting different types of mutual funds to find a fund that can be a part of your portfolio to meet your personal finance goals. In terms of mutual fund ratings, we have picked three best performing mutual funds which have not only been rated 4 to 5 star by Value Research and Morningstar but have also performed well based on past returns.

Axis Bluechip Fund Direct Plan Growth

In the Bluechip Fund category, Axis Bluechip Fund has undoubtedly performed well for the last 8 years since its existence. The logic behind this is that Axis Bluechip Fund Direct Plan – Growth Return is 40.14 per cent over last year. As per data from Value Research, it has generated an average annual return of 16.80 per cent since its inception. The fund has equity allocation across financial, technology, services, healthcare, FMCG sectors. Infosys Ltd., HDFC Bank Ltd., Bajaj Finance Ltd., Tata Consultancy Services Ltd. and Avenue Supermarts Ltd. are the top five holdings of the fund.

Both Morningstar and Value Research have given this fund a 5-star rating, making it a good bet for long-term capital appreciation. The fund currently has Rs 28,233 crore in assets under management (AUM), and the current NAV as of 20 July 2021 is Rs 46.33. The fund has an expense ratio of 0.49% and an exit load of 1%. One can start investing in this fund with a minimum amount of Rs 500 through Systematic Investment Plan (SIP), the most preferred route.

Canara Robeco Emerging Equities Fund Direct Growth

Canara Robeco Emerging Equities Fund Direct-Growth is a large and midcap mutual fund launched by fund house Canara Robeco Mutual Fund in January 2013. The fund has also received 5-star ratings from both Morningstar and Value Research, indicating that it has the potential to generate risk-adjusted returns. Last year, Canara Robeco Emerging Equities Fund had a direct-growth return of 59.88 per cent, according to data from Value Research.

Nippon India Short Term Fund Direct Growth

Nippon India Short Term Fund Direct-Growth is a short duration mutual fund scheme that was established in January 2013 by fund house Nippon India Mutual Fund. Nippon India Short Term Fund Direct-Growth has a 1-year return of 6.42 per cent. According to Value Research, it has provided an average annual return of 8.79 percent since its inception. The fund’s debt allocation is spread across the engineering, construction, sovereign, energy and financial sectors. India Infradate Limited, Reserve Bank of India, Housing Development Finance Corporation. Ltd., GOI and India Grid Trust are among the major holdings of the fund.

Source- Goodreturns

Benefits of Mutual Funds

If you invest in mutual funds, then what kind of benefits you will get, which are described below:

  • The biggest advantage of Mutual Fund is that it is subject to risks, there is very little chance of your money sinking in it.
  • If the investor wants to invest in mutual funds with less money, then they can invest in it with a minimum amount of Rs 500.
  • When investing in mutual funds, investors do not have to take care of their money on their own as the entire fund is managed by experienced managers.
  • Managers keep giving complete information about the scheme to the investors like- what is happening in the market, where is your capital investing etc.
  • Many schemes are provided to the investors in mutual funds, they can invest in them according to their ability.
  • Mutual Funds in India are regulated by SEBI which takes full care of the interests of the investors.

How to withdraw money from Mutual Fund

If you want to withdraw money from mutual funds, then you can do this work with the help of your agent, but if you want to withdraw money by yourself, then for this you have to download the transactions slip from the mutual fund website and submit the redemption application form along with it. Filled and deposited in any office of your nearest concerned mutual fund company.

App for Mutual Fund Investment 2023

There was a time when information about mutual funds was available only to the upper class people. But now there is more awareness among every citizen about it.

Mutual funds offer a wide spectrum of benefits to the investors and thus many people are turning to this investment through various methods and mutual fund apps.

The following is a list of some of the best mutual fund apps you can try out for direct SIP:

RankMutual Fund AppsApps Download
1Zerodha Coin AppAndroid | iOS
2Groww AppAndroid | iOS
3ET Money AppAndroid | iOS
4CAMS AppAndroid | iOS
5Paytm Money AppAndroid | iOS
6Kuvera AppAndroid | iOS
7Goalwise AppAndroid | iOS
8Piggy AppAndroid | iOS
9PaisaBazaar AppAndroid | iOS
10KfinKart AppAndroid
11CashRich AppAndroid | iOS

Mutual fund applications provide simple and smart ways to invest in mutual funds. All the applications we have mentioned here have quite similar features. You can choose any of these apps to start your investment journey on Mutual Funds.

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