What is a Unit trust/ Mutual Fund?
A Unit Trust / Mutual Fund is a Trust in which investors’ money is pooled together to invest in different asset classes such as, equity and fixed income securities. Investors participate in a Unit Trust by purchasing units of the entire pool of assets. The pooled assets are invested by professional managers who manage the units on behalf of the investors.
What is an “open ended” and a “close ended” fund? An open ended fund is a unit trust where investors can purchase or sell units at anytime. There is no restriction on the number of units issued.
Close ended fund is a unit trust opened for subscription only during the initial offer period. These funds usually carry a maturity date. After the offer period is closed, no new units will be issued by the fund management company. The fund manager may provide an exit mechanism to the investors in the fund either through listing in an exchange or through periodical withdrawals.
What are the different types of mutual funds? Equity Funds
There are different types of equity funds and they are,
Fixed income funds are categorized based on the type of securities and the tenor of investments. They are,