A study on the performance of selected sector specific mutual fund schemes in india

Abstract

A Mutual Fund is a trust that pools the savings of a large number of investors who newlineshare a common financial goal. The money thus collected is then invested in capital market newlineinstruments such as shares, debentures and other securities in accordance with objectives newlineas disclosed in offer document. The investment is done by the mutual fund through the newlineexpertise of a team of professional money managers. Investments in securities are spread newlineacross a wide cross-section of industries and sectors and thus the risk is reduced. newlineDiversification reduces the risk because all stocks may not move in the same direction in newlinethe same proportion at the same time. The combined holdings of a mutual fund are newlinecollectively known as the mutual fund s portfolio. Mutual funds issue units to the investors newlinein accordance with the quantum of money invested by them. Units are nothing but a large newlinenumber of small fractions of equal value a fund is divided into. Investors of mutual funds are newlineknown as unitholders. The income earned through interests and dividends from the newlineinvestments and the capital gains realised by a fund on sale of these investments are newlineshared by its unitholders in proportion to the number of units owned by them. An individual newlinewho owns units in a mutual fund does not have to worry about the investment portfolio. By newlineinvesting in mutual fund, every investor s money is spread out and diversified among a wide newlinerange of shares, bonds or other securities, thus minimising risk. The investors need not buy newlineshares and bonds directly. newline