| The real estate stocks are difficult for an average | | | | your objectives. As a matter of fact, the |
| retail investor to read. Wild swings have been the | | | | specialized investment management by mutual |
| order of the day. However, mutual funds that | | | | funds has evidently produced returns as high as |
| have 3-4 per cent investments in real estate | | | | 80 per cent a year, which a naive investor rarely |
| stocks allow a small investor to benefit from the | | | | achieves in the course of direct stock market |
| surges but remain protected from the troughs. | | | | trading. |
| Making an informed decision is necessary for the | | | | Types of Mutual Fund |
| success of your investment goals. Mutual Funds | | | | Selecting a mutual fund scheme mainly depends |
| (MFs) are certainly among the most sought-after | | | | on your risk appetite, investment horizon, and |
| investment instruments in the market but since | | | | future needs. Once you work out these factors, |
| you have to select from dozens of mutual funds | | | | you can choose a suitable scheme for yourself. |
| and not all funds perform well, here we demystify | | | | Meanwhile, Brix Research brings you the insights |
| the world of mutual fund investing for you. | | | | on the various types of mutual funds classified on |
| What are MFs? | | | | the basis of their investment strategy and time |
| MFs are the professionally managed funds that | | | | horizons. |
| invest in the equities of various companies, | | | | Corpus investment Equity or Balanced - Equity |
| including real estate, listed on the Indian stock | | | | funds park their corpus anywhere between 65 |
| markets. These funds are governed by the | | | | and 100% in equities. Balanced funds, on the other |
| Securities and Exchange Board of India (SEBI) | | | | hand, maintain a fine balance between equity and |
| that safeguards rights and interests of retail | | | | fixed income securities. The latter option offers |
| investors. Any citizen of India can buy mutual | | | | you security and the rate of return is relatively |
| fund units that are available at certain Net Asset | | | | lower than the equity fund. |
| Value (NAV) declared every day by the fund | | | | Growth or Dividend - Under a Growth fund, the |
| managing company. | | | | returns generated over the capital invested keep |
| Should you invest in MFs? | | | | on accumulating, and your cost per unit increases |
| As an investor you could well think of investing in | | | | in tandem. You can redeem your mutual fund |
| the stocks of real estate companies directly. | | | | units, in case you want to book profits. Choosing |
| However, in order to make successful | | | | the dividend option, on the flip side, entitles you to |
| investment, you must take a look at the kind of | | | | receive returns in the form of dividend that is |
| volatility realty stocks witness on the stock | | | | distributed among the investors, on a periodic |
| exchanges. The Realty Index clocked whopping | | | | basis. Although it depends on the company's |
| returns of 48 per cent between Feb 7, 2007 and | | | | policy, dividends are generally distributed 2-3 times |
| Feb 7, 2008, on Bombay Stock Exchange (BSE) | | | | a year. |
| but it's not that every investor who pumped in his | | | | Open-ended or Close-Ended - On the basis of |
| money in realty companies directly into stock | | | | investment horizon, mutual funds are divided into |
| markets got such returns. In fact, there would be | | | | two categories: open-ended and close-ended. |
| many who bought shares at the wrong time only | | | | Open-ended funds allow you to purchase and |
| to witness substantial erosion in the value of their | | | | redeem units at any time, however, in case of |
| investment. | | | | close-ended funds; there is a lock-in period under |
| Mutual funds, at the other end, are run by fund | | | | which you cannot redeem your mutual fund units |
| managers who have specialized knowledge over | | | | for a certain period of time. |
| stock-market investing, and track market | | | | Specialty or Diversified - A Diversified Fund |
| movements on professional basis. This way, they | | | | allocates its corpus into different sectors of |
| are well-positioned to make suitable decisions to | | | | FMCG, Auto, Petro, Pharma etc. In the event of |
| invest and de-invest in the markets as per the | | | | slowdown in one sector, the other one may be |
| circumstances. Though mutual funds do not | | | | able to compensate it. This way an investor |
| guarantee a win-win situation all the way, investing | | | | invests his entire corpus in different companies |
| in proven funds actually has the capacity to meet | | | | and enjoys the advantages of diversification. |