Share Market

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. Units are issued to the investors in accordance with quantum of money invested. They are known as unit holders. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them.

These days between work, family, and friends, most of us do not have the time to make or monitor personal investment decisions on a regular basis. Mutual funds have competent professionals who do all this for you. This is the reason why, the world over, they have become the most accepted means of investing.

Mutual funds curtail risk by creating a diversified portfolio while providing the essential liquidity. Additionally, you benefit from the expediency of not having to bother with too much paperwork or repeat transactions. It is our belief that investors vary in their investment needs based on their individual financial goals.

In order to make investments, investors have to pay certain fees. These fees/expenses are mentioned as follows:

• Distribution charges: The charges for marketing and distribution of the fund’s shares to investors.

• Front-end load or sales charge: It is the commission paid to a third party/ broker, when an investor purchases a share. The amount deducted from an investor’s account and reduces the amount invested.

• Back- end load: Sometimes, when shares are redeemed, an amount needs to be paid by the investors called back-end load. These are also called contingent deferred sales charges (or CDSCs). Like front-end loads, back-end loads are also deducted from an investor’s account.

• 12b-1 fee: It is an annual fee charged for marketing and distribution services. This fee is computed as a percentage of a fund’s assets, subject to a maximum of 1% of assets.

• Management fee: It is paid to the professionals- fund managers or sponsors who manage and monitor the portfolio of the investor. The management fee is paid by the fund and is included in the expense ratio.

• Other fund expenses: There could be some other expenses like-

• Board of directors’ (or board of trustees’) fees and expenses
• Fund accounting fee
• Custody fee
• Legal and accounting fees
• Registration fees
• Shareholder transaction fees
• Securities transaction fees
• Transfer agent services