Mutual funds are more than just equities, experts explain it in simple terms:

News Topical, Digital Desk : Everyone wants to invest to maximize returns, accumulate assets for the future, and fulfill their desires. But the truth is, people are still searching for better investment options because no one knows which way the market will turn. In such a situation, investment options that were once highly attractive become boring due to geopolitics and economic downturns. Therefore, retail investors face the challenge of finding the best investment option that requires less time and provides better returns.

Mutual funds are a popular investment option primarily because they manage your money with a professional manager, diversify it as needed, and, most importantly, allow you to sell it whenever you wish. However, many people assume that mutual fund managers invest your money solely in equities, i.e., the stock market. The truth is, mutual funds aren't just equities. They offer a variety of investment options, including debt funds, hybrid funds, and fund of funds.

You can invest in these funds based on your risk appetite. On this topic, Jagran Business Consulting Editor Geetu Moza had a wonderful conversation with Sunil Bahri, Founder of Wealthyworld Pathways Pvt. Ltd. Sunil shared valuable information about equity mutual funds with the audience. He also emphasized that mutual funds aren't just about equities, but also offer a wide range of other options. Video of Geetu Moza and Sunil Bahri's insightful conversation on mutual fund investing:
Apart from equity, what are the asset classes in mutual funds?

Apart from equity, investors' money is invested in debt, hybrid and fund of funds in mutual funds, but the choice is made by the investor himself. Equity - In this, money is invested in the stock market. Debt Mutual Fund - In this, money is invested in treasury bonds, government securities, commercial papers, money market etc. You can invest money in it for the long term. Hybrid Mutual Fund - This is a mixture of equity and debt, through this investors can invest in both. There are two categories in this - aggressive hybrid and conservative hybrid. Apart from this, investors also get investment options like multi-asset funds, fund of funds and ETFs.

How to do asset allocation while investing in mutual funds?

Asset allocation in mutual funds depends on your goals, your risk tolerance, and your investment horizon. These are the three main factors in asset allocation. Each mutual fund investment option has advantages and disadvantages. We must maintain a balance.

"If the seasons change, people's moods change too. For example, some time ago, when the equity market was booming, people were investing there. Now, gold and silver are rising, so people want to invest in them. But this is not the right way to invest." - Sunil Bahri

How to create an ideal portfolio?

To create an ideal portfolio, you should define your goals, which are of three types: short-term (one to five years), mid-term (five to seven years), and long-term (more than seven years). Sunil Bahri says, "If your child's education is going to be funded 10 years from now, and you invest your money in debt, it will never grow. Here, you should invest in equities. Simply put, choosing the right vehicle is crucial to reaching your goal."

How do investors identify market cycles?

Investors can identify market cycles in mutual funds by analyzing economic indicators, identifying price trends and sentiment, and evaluating the fund's historical performance using metrics such as volatility, alpha, and beta.