Some mutual fund gyan

What is a mutual fund?
A mutual fund is a financial intermediary that allows a group of
investors to pool their money together with a predetermined investment
objective. The mutual fund will have a fund manager who is responsible
for investing the pooled money into specific securities (usually
stocks or bonds). When you invest in a mutual fund, you are buying
shares (or portions) of the mutual fund and become a shareholder of
the fund.

Mutual funds are one of the best investments ever created because they
are very cost efficient and very easy to invest in (you don't have to
figure out which stocks or bonds to buy).

By pooling money together in a mutual fund, investors can purchase
stocks or bonds with much lower trading costs than if they tried to do
it on their own. But the biggest advantage to mutual funds is
diversification.

Diversification be spreading of risk. However, I would not go into the
details of it.

Mutual funds can be debt funds, equity funds or balanced funds.

Debt funds invest exclusively in the debt market. So they have lower
risk than the equity funds, which invest in equity shares. A balanced
fund is a combination of both.

Money Market Funds
These funds are a great place to park your money. Whether you're
storing money for emergencies, saving for the short-term, or looking
for a place to store cash from the sale of an investment, money market
funds are a safe place to invest. These funds invest in short-term
debt instruments.

Growth Funds
These funds invest in stocks believed to be the fastest growing
companies in the market. Growth funds rarely provide dividend income
and are considered risky investments.

Value Funds
These funds invest in large and mid-sized companies that appear to be
overlooked or out of favor. These undervalued stocks tend to pay
dividends.

Large-Cap Funds
These funds invest in companies whose market value (# shares
outstanding X current market price) is large. There is no set limit
which can be called as a threshold. For instance, in its IPO (Franklin
Flexi Cap), Franklin Templeton defined large caps as companies with a
market capitalisation in excess of Rs 15 bn (Rs 1,500 crores). But
sundaram mutual fund defines large cap as those companies having
market cap of over Rs 18 bn.

Mid-Cap Funds
These funds invest in mid-sized companies whose market value is more
in the range of Rs 2 bn to Rs 15 bn

Small-Cap Funds
These funds invest in emerging companies whose market value, is less
than Rs 2 bn. These companies tend to use profits to grow rather than
pay dividends.

Sector Funds
Sector funds choose to invest in a particular industry or segment of
the market. Examples of sectors include automotive, technology,
baking, air transportation, biotechnology, health care and utilities.

Sector funds are considered less diversified than most mutual funds,
but they do offer diversification within a particular industry.

More to follow later..