Things You Should know before investing in Mutual funds

Mutual funds are a means of investing money in a variety of assets such as gold, government bonds, equities and other securities. Mutual funds help you to diversify your investments and reduce investment risk as they invest in a broad range of securities. You can generate regular income from the funds or use it as a means to grow money in the long term. You can invest fixed amount of money regularly in mutual funds as per your financial plans and thus build wealth in the long term..

ICICI Pru MF offers different types of mutual funds. You can identify the right fund as per your needs and also compare the performances of funds before investing. The different types of funds include the following:

Equity fund

Equity funds provide potential for high growth and returns by investing in shares or equities. They are best suited for investors looking for long term investment horizon. They can be actively and passively managed. Equity funds are considered a high risk option as they are subject to market volatility however they can also generate big returns if you choose the right shares to invest in..

Debt funds

This fund mainly invests in bonds and other debt instruments. They are best for investors looking to optimize current income assuming low to moderate levels of risk. They are suitable for medium to long term investors.

Exchange traded funds

These funds are instruments that track an index, commodity or a basket of assets closely and trade like shares on an exchange. Exchange traded funds invests in stocks of companies, precious metal or currencies and are backed by physical holdings of a commodity. They give the flexibility to buy or sell units all through the day. They generate lower returns than equity funds.

Balanced funds

Balanced funds bridge the gap between the high risk equity and the low risk debt schemes. They are made up of a mix of equity stocks and bonds. They are best suited for investors looking for debt plus returns with a higher level of risk. These funds are a great place to start you investments in mutual funds.