There are a few factors which decide the popularity of a Mutual Fund in the Indian Market. In order to get an actual idea of the best Mutual Fund, an individual needs to know the current Net Asset Value or NAV. NAV stands for latest market value of the holdings of the fund that brings down fund’s liabilities. Most of the fund’s NAV is decided on a daily basis after the trade closes on certain financial exchanges. If NAV increases it signifies rise in the holdings of the shareholder. The fund firm will then do the transaction on the shares along with the sales fees.

A few Top Mutual Funds in India are as follows:

• Reliance Mutual Fund
• The DSP ML Tiger Fund
• SBI Magnum Contra Fund
• HDFC Equity Fund
• Prudential ICICI Dynamic Fund
• SBI Mutual Fund

Volatility in the market activity is referred to as the risk in Mutual Fund investment. Several key factors attribute the sudden upward and downward sentiments of the markets and individual issues.

A few such factors are:

• General economic scenario
• Interest rate changes
• Inflation

These factors are the main cause of worry amongst the investors. The investors fear that the value of the stock they have invested will fall considerably. However at the same time this acts as vice-versa as well. This element of volatility also brings them substantial long-term return in comparison to savings account.

Mutual fund is an easy investment process which is preferred for its cost-effectiveness. An investor can buy various stocks or bonds at lower trading charges just by investing all the money in a mutual fund. In fact this is one of the main benefits which is not available other wise.

Apart from this, another advantage of Mutual Fund is diversification. Diversification means diffusing money across various different categories of investments. It so happens that when one investment is down, the other can be up. Thus it helps in reducing risk.

Some of the other benefits of a Mutual Fund includes transparency, professional investment management, flexibility, variety and liquidity which are not found in case of other investments to such an extent.

Mutual funds are professionally managed investments which offer liquidity and diversity. These funds have the buying power to invest in hundreds of different securities in one go as they pool the money of many individuals. A mutual fund consists of individual stocks, bonds or money market securities.

If you invest money in a mutual fund, the fund gives you units in that fund that represents your participation.

Types of Mutual funds available in the market

A fund is defined by depending upon the different investment objectives such as long-term growth, high current income or stability of principal.  Depending upon its objective, a fund might invest in cash investments, bonds or equities or in some cases a combination of these.

Equity funds: These funds are known for investing in common share of companies.

Bond or Debt Fund: These funds invest in fixed income securities of companies or the Government of India.

Money Market Funds: These funds hold cash investments like short-term commercial paper issued by companies.