The mutual funds are a type of financial vehicle whose goal is to pool money collected from numerous investors. It is mainly done to invest in securities like bonds, stocks, money markets, and other assets.

Professional money managers operate mutual funds and allocate the fund’s assets while attempting to produce capital gains and income for the fund’s investors. 

A mutual fund’s portfolio is structured and maintained so that one can match their investment objects as stated in its prospectus.

How Mutual Funds Work?

A mutual fund not only works as an investment but also as an actual company. When someone chooses to invest in a mutual fund, they buy into its partial ownership of that mutual fund company and its assets. 

Top 5 Best Performing Mutual Funds:

Mutual funds are divided into equity funds, debt funds, and hybrid or balanced funds based on the equity of their equity. If the equity exposure of a mutual fund exceeds 65%, then it is classified under equity funds. If not, then it goes under the category of debt funds.

The Best 5 Mutual Funds One Can Invest:

Quant Small Cap Fund – Direct Plan-Growth 

Quant Small Cap Fund Direct Plan-Growth is mainly a mutual fund scheme that has been in existence for approximately around 10 years and 2 months, having been launched on 01/01/2013. This Quant Small Cap Fund Direct Plan-Growth has an expense ratio of 0.62%, which is less than what most other Small Cap funds charge.

Tata Digital India Fund Direct-Growth: 

Tata Digital India Fund Direct-Growth is mainly a Sectoral-Technology mutual fund that has been in existence for around 7 years and 3 months, having been launched in 04/12/2015. The Tata Digital India Fund Direct-Growth has an expense ratio of approximately 0.31%, which is way lesser than what most other Sectoral-technology funds charge.

Quant Tax Plan:

Quant Tax Plan Direct-Growth is an ELSS mutual fund scheme from the company of Quant Mutual Fund. This fund has been in existence for 10 years and 2 months, having been launched on 01/01/2013. Quant Tax Plan Direct-Growth has an expense ratio of approximately 0.57%, which is lesser in comparison to what most other ELSS funds charge.

ICICI Prudential Technology Fund:

ICICI Prudential Technology Direct Plan-Growth is a fully Sectoral-Technology mutual fund scheme from ICICI Prudential Mutual Funds. This fund has been in existence for about 10 years and 2 months, having been launched on 01/01/2013.

ICICI Prudential Technology Direct Plan-Growth has an approximate expense ratio of 0.98%, which is close to what most other Sectoral-technology funds charge from others.

SBI Technology Opportunities Fund:

SBI Technology Opportunities Fund Direct-Growth is a Sectoral-Technology mutual fund scheme from SBI Mutual Funds. This fund has been in existence for 10 years and 2 months and has been launched on 01/01/2013. SBI Technology Opportunities Fund Direct-Growth has an expense ratio of almost 0.88%, which is close to what most other Sectoral-technology funds charge.

Benefits of Mutual fund:

Here are a few reasons mutual funds have been the vehicle for retail investors for several decades.

  • Diversification: One of the major benefits of investing in mutual funds is diversification which reduces the risk while enhancing the return of the portfolio. A fully diversified portfolio has securities with different capitalizations and industries and those bonds have varying issuers and maturities.
  • Easy Access: Since they trade on major stock exchanges, those mutual funds can be purchased and sold relatively easily, which makes them highly liquid investments for others.

Conclusion:

The mutual funds meaning is quite apparent in the above article. One can find the best mutual funds to invest in from online websites. Not only that, but with those several schemes and policies, one can invest small amounts and enjoy a flexible withdrawal policy.