An investor has various options available to invest his
savings, ranging from fixed deposit with banks to investment
in the capital market. It is up to the investor to make
an appropriate choice based on the quantum of funds available
for investment, investment objective, risk taking ability
and his risk perception.
In the past decade, a sizeable proportion of investors
have turned towards capital market as an investment avenue.
Even though the Indian capital market is getting more robust,
there are several complexities associated with it. Only
an investor who is able to comprehend the complexities involved
in the stock market is confident enough to directly invest
in capital market. So a person with moderate knowledge of
the capital market or a person who does not have the required
time to analyze the market and who wants to minimize his
risk prefers the alternative route of mutual funds.
Mutual funds are gearing up in a big way as an avenue yielding
moderate-to-high returns while exposing the investor to-low-to
moderate levels of risk. By simple definition, "A mutual
fund is a body corporate that pools the savings of a number
of investors and invests the same in a variety of different
financial instruments or securities". The income earned
through these investments and the capital appreciation realized
by the scheme is shared by its unit holders in proportion
to the number of units owned by them. In other words, mutual
funds are financial intermediaries who collect funds from
and invest on behalf of the public. The losses and gains
accrue to the investors only.
Today, a wide variety of schemes are offered to investors
such as diversified equity funds, growth funds, income funds,
balanced funds, money market funds, sector-specific funds,
tax savings funds, etc. One such fund which is gaining increasing
popularity is Contra Fund.
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