INSUBCONTINENT EXCLUSIVE:
A mutual fund is a financial vehicle that pools together money from various sources and invests it into different types of securities like
When investors put their money in mutual funds, they partially own the fund and thus become eligible to get a share of the revenue generated
The two differ in terms of their investment structure, the flexibility of investment, and the time within which they can be bought or
sold.Open-Ended Mutual FundsOne of the most common and popular investment tools, they always remain open to investment and recovery as they
do not have a lock-in or fixed maturity period
Open-ended mutual funds offer higher liquidity and are not traded on stock exchanges.Benefits And DisadvantagesIn these funds, people can
invest either a lump sum amount or periodically through Systematic Investment Plans (SIPs)
There is no limitation on the number of purchases made within a fund
Before investing, an investor can check and verify a mutual fund's track record
One can invest as little as Rs 500 in these schemes.Close-Ended Mutual FundsAs the name suggests, these funds lock in investments for a
fixed time, preventing people from liquidating them until the specified time has passed
Also, you can apply for close-ended mutual funds only at launch
Once the New Fund Offer (NFO) period ends, investors cannot purchase or redeem units
These funds provide stability during the lock-in period.Benefits And DisadvantagesThe stability allows fund managers to strategise a growth
trajectory for the mutual fund
However, this reduces options for investors as they can redeem their investments only after the lock-in period is over
Since an investor can make a purchase only during the NFO, he/she needs to make a lump-sum investment, and not through SIPs
The minimum investment amount is Rs 5,000.
