What are mutual funds?

 

Definition

A mutual fund is a pool of money managed by a qualified Fund Manager.

For instance,

Specified objective to invest in debt fund is to have fixed income products like bonds, debentures, government securities and it is risk-free, while the equity fund is invested in stocks and other equity instruments.

Some common categories of mutual funds are:

Equity funds – Funds that meant for stocks and other equity instruments

Debt funds – Funds that invest only in fixed income instruments

Money market funds – Funds that participate in short-term money market instruments

Hybrid funds – Funds that divide investments between equity and debt to create equilibrium

Absolute returns
Absolute return is the easy increase (or decrease) in your asset in terms of percentage. It does not take into account the time taken for this change.

Annualized returns
it is also known as a Compound Annual Growth Rate (CAGR). It is a rate of return over an investment (ROI) period. It is a smoothened rate since it measures the progress of an investment as if it had full-grown at a stable rate, on a yearly compounded basis.

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