Definition of Finance

The word finance was originally a French word. In the 18th century, it was adapted by English speaking communities to mean the management of money. Today, finance is not merely a word but it has emerged into an academic discipline of greater significance and now it is an organized branch of Economics.

Evolution of Finance

Financial management emerged as a distinct field of study around 20th century. Its evolution is divided into three broad phases:

Traditional phase – This phase started from 1920 and lasted till 1940. During this phase focus was mainly on below aspects: …

Types of Asset Allocation Models

  • Aggressive portfolio

Have primarily equities or similar higher risk investments, weighted toward aggressive growth, small company and international investments.

An aggressive portfolio may be suitable for you if you:

  • Have high return expectations for your investments
  • Can tolerate higher degrees of fluctuation (sharp, short-term volatility) in the value of your investments
  • Are a younger or a more experienced investor and a risk taker
  • Desire returns that exceed inflation
  • Have 15 years or more before you will need to utilize the money from your investments

Mutual Fund Investment :As per Investment Objectives

Mutual funds can also be broadly classified into three distinguishable types as per class of investments Objectives:

  • Growth Funds

The objective of a Growth Fund Scheme is to provide capital appreciation over the medium to long term. These schemes normally invest a major portion of their funds in equities and are willing to bear short-term decline in value for possible future appreciation in the net asset value of the scheme. These schemes are suitable for investors seeking growth over the long term. …

Parties Involved

  • Investors – Who have savings for investment and are looking for proper investment channel
  • Sponsor – Is a person who sets up a mutual fund and sets up a trust after executing trust deed. Sponsor contributes to the initial capital of the trust and appoints the board of trustees. It also appoints asset management company (AMC) and contributes minimum of  40% of net worth of AMC