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What are mutual funds?

Mutual funds are investment vehicles that help you convert your savings to wealth!

A mutual fund is an investment vehicle that pools the savings of investors and invests the money on their behalf in stocks, money market instruments, bonds, gold and other types of securities. Investors invest their money having a common financial goal in mind; in different asset classes according to the fund’s investment objective. Investing in mutual funds is like owning a small slice of a pizza where you are not hungry for the entire thing but rather eat a small share.

Objectives of a mutual fund

Objectives of a mutual fund

The financial goal that an investor or a mutual fund pursues is termed as the investment objective of the fund. For example, an equity fund will invest only in stocks, a debt fund will invest only in fixed-income securities, a balanced fund will invest portion of its assets in certain classes such as equity, debt and gold to maintain a balance. In balanced funds - if one asset class were to fall in value, another would rise to accommodate, thus helping the investor in diversifying risks.

Managed by Asset Management Companies (AMCs)

According to Investopedia, "An asset management company (AMC) is a company that invests its clients’ pooled funds into securities that match declared financial objectives. Asset management companies provide investors with more diversification and investing options that they would have by themselves." They also hire professional fund managers who buy and sell securities in line with the fund’s stated objective. The pool of money is thus collected and is then invested by the Asset Management Company (AMC) in different types of securities. AMCs are involved in the daily administration and act as investment advisors for the fund.

AMCs are regulated by SEBI, Funds governed by Board of Directors

Mutual Funds are regulated by Securities and Exchange Board of India (SEBI). SEBI formulates policies and regulates the mutual funds to protect the interest of the investors. From time to time, SEBI also issues guidelines to the mutual funds and are subject to monitoring and inspections. In addition, every mutual fund has a Board of Directors of Trustee that represents the investors' interests in the mutual fund.

To conclude, mutual funds are well-regulated by SEBI and professionally managed by fund managers. SEBI’s stringent regulations that bind the mutual fund industry ensure that investors’ money is not misappropriated. Strict rules on commission disclosure help prevent mis-selling. Professional fund management gives investors the benefit of informed decisions, while systematic investment mechanism counters the risk of market volatility. All this, combined with the benefits of higher return potential, adequate liquidity and the flexibility to make small-ticket investments make mutual funds ideal for retail investors.

Mutual fund investments are subject to market risks read all scheme related documents carefully.

Please visit - to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.
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Mutual Fund investments are subject to market risks, read all scheme related documents carefully.