How does a fund generates returns for...

How does a fund generates returns for the investor?

Posted in the Personal Finance Forum

Since: Jan 13

Mumbai, India

#1 Jan 10, 2013
Can someone please explain how does one make money by investing in mutual funds.

Since: Jul 12

Mumbai, India

#2 Jan 14, 2013
Based on the investment philosophy of the fund, the fund will invest in different asset classes with an aim to generate returns for the unit holders. For example an equity fund would invest in different stocks/sector across capitalization or in a focused manner, following value based or growth based approach (depends on how the fund is positioned) and has the potential to generate returns in the form of dividends which are declared by these companies or through capital gains when the stocks are sold. Similarly, a debt fund will invest in wide variety of debt instruments available in the market of different maturities depending upon the investment philosophy of the fund. These papers have the potential to generate interest income which is accrual income, reinvestment income and also capital gains if bonds are sold. There are funds which have both debt and equity component. Such funds have the potential to generate both dividend income as well as interest income other than capital gains when stocks/ Bonds are sold.

Warm Regards,
ICICI Prudential Mutual Fund
__________

Make an informed investment decision. Consult your Financial Advisor or visit our website for details.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
QUITTNER

Toronto, Canada

#3 Jan 15, 2013
2:26 pm, Tuesday, January 15, 2013:
RE: How does a fund generates returns for the investor?
..... Think of a fund as just a bunch of very many people who want their money to make more money for them. That group hired a firm of so-called "experts" for pay who are supposed to know how to make more money with the available money. No more than that! Lots of information about funds is available, but past performance is no guarantee of similar, or even better, performance in the future. Giving your money to anybody has a risk attached.

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