Learn with ETMarkets: List of key features on mutual funds

Financial planners recommend mutual funds (MFs) to many first-time investors.Many investors have started investing in MFs to meet their long-term and short term investment goals. They put their investments into equity, hybrid or debt schemes for time periods ranging from as little as a day to years together.

1. How flexible are MFs?
There are vari ous types of MFs for invest ment starting with a time frame of one day to years. These investments could range from investments in money market instruments, G-Secs to equities or even a hybrid combina tion of instruments.


Minimum amount of investment starts from as low as Rs 500, with no upper limit. You can in vest online, offline, directly with the fund house or through an intermediary .

2. Are MFs liquid? How fast can you withdraw in case of an emergency?
Many investors look for easy li quidity , so that if there is an emergency they can encash easily. In case of open-ended funds, redemption request can be submitted on any working day . Once such a request is place, you can get your money back in a time frame of 1 to 5 working days.There are some specific schemes in money manager funds, where investors can withdraw up to `2 lakh, instantaneously throughout the year.

3. What transparency do MFs exhibit?
There is an element of uncer tainty when an investor hands over his savings. The comfort is higher if you trust the person and know how exactly your

money will be used. In case of MFs, your money is handed over to a professional fund manager, whose entire job is to keep track of markets and look out for the best opportunities for you, that fits in line with the schemes objective.In addition, the NAV is published on AMFI (Association of Mutual Funds in India) and on each of the fund company websites on a daily basis, ensuring that you're always in the loop about your investments. The fund house also publishes a monthly fact sheet listing all the important facts you need to know about the scheme you've invested in.

4. How do MFs diversify?
MFs diversify the portfolio across different types of invest ments, multiple companies and sectors. Equity MFs invest in shares of various companies whereas debt funds invest in government securities, NCD, CDs, CPs bonds and other fixed income securities. Thus as an investor, you have a diversified investment basket.