Capital Market

The market where investment funds like bonds, equities and mortgages are traded is known as the capital
market. The primal role of the capital market is to channelize investmentsfrom investors who have surplus funds
to the ones who are running a deficit. The capital market offers both long term and overnight funds. The
financial instruments that have short or medium term maturity periods are dealt in the moneymarket whereas
the financial instruments that have long maturity periods are dealt in the capital market. The different types of
financial instruments that are traded in the capital markets are equity instruments, credit market instruments,
insurance instruments, foreign exchange instruments, hybrid instruments and derivative instruments

Capital market instruments are responsible for generating funds for companies, corporations, and sometimes national governments.
These are used by the investors to make a profit out of their respective markets. There are a number of capital market instruments used for market
trade, including
• Stocks
• Bonds
• Debentures
• Treasury-bills
• Foreign Exchange
• Fixed deposits, and others
Capital market is also known as securities market because long term funds are raised through trade on debtand equity securities. These activities
may be conducted by both companies and governments. This market is divided into primary capital market.

and secondary capital market. The primary market is designed for the new issues and the secondary market is meant for the trade of existing issues.
Stocks and bonds are the two basic capital market instruments used in both the primary and secondary markets. There are three different markets in
which stocks are used as the capital market instrument: the physical, virtual, and auction markets.

Bonds, however, are traded in a separate bond market. This market is also known as a debt, credit, or fixed income market.

Trade in debt securities are done in this market. There are also the T-bills and Debentures which are used as capital market instruments by the
investors.

These instruments are more secured than the others, but they also provide less return than the other capital market instruments.

While all capital market instruments are designed to provide a return on investment, the risk factors are different for each and the selection of the
instrument depends on the choice of the investor.

The risk tolerance factor and the expected returns from the investment play a decisive role in the selection by an investor of a capital market
instrument.

Capital market instruments should be selected only after doing proper research in order to increase one.
A capital market is a market where both government and companies raise long term funds to trade securities on the bond and the stock market. It
consists of both the primary market where new issues are distributed among investors, and the secondary markets where already existent securities
are traded.

In the capital market, mortgages, bonds, equities and other such investment funds are traded. The capital market also facilitates the procedure
whereby investors with excess funds can channel them to investors in deficit.
The capital market provides both overnight and long term funds and uses financial instruments with long maturity periods. The following financial
instruments are traded in this market:
Foreign exchange instruments
Equity instruments
Insurance instruments
Credit market instruments
Derivative instruments
Hybrid instruments

The following are some of the main capital market regulatory authorities:

U.S. Securities and Exchange Commission

Securities and Exchange Board of India
Australian Securities and Investments Commission
Authority of Financial Markets (France)
Canadian Securities Administrators
Securities and Exchange Surveillance Commission (Japan)

The stock market forms a major portion of the capital market.

For further information on Capital Market, please refer to the following links:

Information On Capital Market

• Capital Market Theory • Capital Market Transactions

• Efficient Capital Market • Capital Market Risk
• Capital Market Regulations • Capital Market Conditions
• Committee on Capital Market Regulation • Capital Market Equilibrium
• Capital Market Liberalization • Role of Capital Market
• Capital Market Services • Capital Market Securities
• Capital Market Research • Capital Market Line
• Secondary Capital Market • Venture Capital Market
• Capital Market Trends • Debt Capital Market
• Capital Market Reform • Equity Capital Market
• Capital Market Integration • Capital Market Companies
• Capital Market Investment • Global Capital Market
• Capital Market Assumptions
• Primary Capital Market
• Capital Market Instruments
mutual fund
A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests
typically in investment securities (stocks, bonds, short-term money market instruments, other mutual funds, other securities,
and/or commodities such as precious metals).[1] The mutual fund will have a fund manager that trades (buys and sells) the fund's
investments in accordance with the fund's investment objective. In the U.S., a fund registered with the Securities and Exchange
Commission (SEC) under both SEC and Internal Revenue Service (IRS) rules must distribute nearly all of its net income and net
realized gains from the sale of securities (if any) to its investors at least annually. Most funds are overseen by a board of
directors or trustees (if the U.S. fund is organized as a trust as they commonly are) which is charged with ensuring the fund is
managed appropriately by its investment adviser and other service organizations and vendors, all in the best interests of the fund's
investors.

Since 1940 in the U.S., with the passage of the Investment Company Act of 1940 (the '40 Act) and the Investment Advisers Act of
1940, there have been three basic types of registeredinvestment companies: open-end funds (or mutual funds), unit investment
trusts (UITs); and closed-end funds. Other types of funds that have gained in popularity are exchange-traded funds (ETFs) and hedge
funds, discussed below. Similar types of funds also operate in Canada, however, in the rest of the world, mutual fund is used as a
generic term for various types of collective investment vehicles, such as unit trusts, open-ended investment companies
(OEICs), unitized insurance funds, undertakings for collective investments in transferable securities (UCITS, pronounced "YOU-sits")
and SICAVs (pronounced "SEE-cavs").
Mutual funds can be defined as the money-managing systems that are introduced to professionally invest money collected from the public. The Asset
Management Companies (AMCs) manage different types of mutual fund schemes. The AMCs are supported by various financial institutions or
companies.

Investment in mutual funds in India means pooling money in bonds, short-term money market, financial institutions, stocks and securities and
dishing out returns as dividends. In India, Fund Managers manage the mutual funds. They are also referred to as portfolio managers. The mutual
funds in India are regulated by the Securities Exchange Board of India.
Types of Mutual Funds

Mutual funds have different structure and aims, which in turn enable us to classify them into various major categories. These categories are:

• Closed-end mutual funds

• Open end funds
• Equity mutual funds
• Mid cap funds
• Large cap funds
• Growth funds
• Balanced funds
• Exchange Traded Funds (ETFs)
• Load mutual funds and No-Load mutual funds
• Value funds
• International mutual funds
• Money market funds
• Sector mutual funds
• Fund of funds (FoF)
• Index funds
• Regional mutual funds

Benefits of Mutual Funds

Mutual funds are preferred for their cost-effectiveness and easy investment process. By investing all the money in a mutual fund, investors can buy
stocks or bonds at lower trading charges. This is indeed one of the main benefits, which is not available otherwise. You don't need to see which stock
or bond would be better to buy. Another advantage is diversification. Diversification stands for diffusing money across various different categories of
investments. There is every possibility that when one investment is down, the other can be up. In simple terms, this is helpful in reducing risks.

Transparency, flexibility, professional investment management, variety and liquidity are some of the other benefits of the mutual funds, which are not
found in case of other investments to such an extent.

Risk versus Reward

Volatility in the market activity can be referred to as the risk in the mutual fund investment. The sudden upward and downward sentiments of the
markets and individual issues can be attributed to several key factors. These factors comprise:

• Inflation
• Interest rate changes
• General economic scenario

The aforementioned factors are the main cause of worry amongst the investors. Most of the investors fear that the value of the stock they have
invested will fall considerably. However, it is here one can notice its reward angle. It is this element of volatility that can also bring them substantial
long-term return in comparison to a savings account.

List of Mutual Fund Companies in India

Some of the popular firms that deal in mutual funds in India are:

• Reliance Mutual Funds

• HDFC
• ABN Amro
• AIG
 • Bank of Baroda
• Canara Bank
• Birla Sun Life
• DSP Merrill Lynch
• DBS Chola Mandalam AMC
• Escorts Mutual
• Deutsche Bank
• ING
• HSBC
• ICICI Prudential
• LIC
• JP Morgan
• Kotak Mahindra
• Lotus India
• JM Financial
• Morgan Stanley
• State Bank of India (SBI)
• Sahara Mutual Funds
• Sundaram BNP Paribas
• Taurus Mutual Funds
• Tata
• UTI
• Standard Chartered

Best Mutual Funds in India

Before knowing about the arguably best mutual funds in India, it is important to know the factors that actually decide their fate in the market.

In order to get an actual ideal of the best performing mutual funds in the market, one needs to track its current Net Asset Value or NAV. NAV stands
for the latest market value of the holdings of a fund that brings down the fund's liabilities, which are generally indicated in terms of per share amount.
On a daily basis, most of the funds' NAV is decided. This is determined after the trade closes on certain financial exchanges. The net asset value of
the mutual funds is ascertained at the end of the trading day. An increase in NAV signifies rise in the holdings of the shareholder. The Fund Firm will
then do the transaction on the shares along with the sales fees. While open-ended net asset value of the mutual funds is issued daily, the close-
ended NAV of the mutual fund is released on a weekly basis.

You can calculate net asset value of the mutual fund easily. Track the latest market value of the net assets of the fund and then subtract that by the
number of outstanding shares.

Top mutual funds in India

Here are some of the top mutual funds in India that are listed below :

• Reliance Mutual Fund

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