Mutual fund companies, as we all know, invest our money into stocks and bonds and manage our wealth to generate superior returns. The management of mutual funds is done by fund managers of that company. Fund managers are finance professionals with ample experience in the functions of portfolio management, risk management and wealth management. Investment in these funds is simpler, and returns are assured in most cases.
While selecting mutual funds, one should look at the past fund management history of the firm. There are some funds which have performed well consistently, even in poor market conditions while some other funds fail to deliver expected returns. Naturally, one would like to go with the former to safeguard his/her financial future. Mutual funds do come at a price, as you have to pay fees for signing up and management fees to the company. So, before you buy one, make sure that the charges you are paying are not astronomical, and are as per the set standards. As an intelligent investor, you should read the offer document completely and get all your doubts answered. Though there are many that one can invest in, you should choose the one which suits your style of investing and your risk taking ability.
Mid Cap and Small Cap Mutual Funds
Understanding the different types of mutual funds is essential to pick the right one. Mid cap and small cap funds do come with a risk, however, the chances of getting more returns, as compared to large cap funds are more. So, with a high risk taking ability, you can try this option.
Large Cap Funds
Large cap funds will basically invest in stocks of blue chip companies which are much more stable, as compared to mid cap and small cap stocks. The chances of losing money here would be very less. The returns can be modest at times, however, long term investors need not worry as the outlook for the next few years remains positive, as per the view of several investment analysts.
Growth funds are those which look for fast growing companies in the market. These companies can be from the mid cap space too. A growth fund can have stocks of diverse sectors so that investors get the maximum advantage of a turn around or transformation happening in a company.
Value funds look out for companies which have strong fundamentals, and yet have not been popular investment bets. The chances of getting appreciation in terms of stock price are more in such stocks when they come into focus. For investors in value funds, returns may come slowly, but the gains would be substantial in four to seven years time span.
These funds include investments in different companies belonging to various sectors. The investments are done in a planned manner to help investors reap the maximum benefits. This type of funds have been the most profitable in market crashes.
Mutual funds explained above will definitely help you to take the right investment decision. Also consult a knowledgeable person to prepare a good investment portfolio for good gains. All the best!
DISCLAIMER: This article is just for reference purposes and does not recommend any investments.