Introduction

Retail funds are investment opportunities tailored for individual investors. Popular options include Mutual Funds and Exchange-Traded funds (ETFs), perfect for retail investors like you.

Unlike institutional funds attracting large sums from professional investors and firms like pensions or insurance companies, retail funds offer accessible entry points.

Let's explore the potential of retail funds and their benefits, setting them apart from their institutional counterparts

Start Investing with Free Expert Advice!

What are the objectives of retail funds?

Retail funds aim to encompass a diverse range of asset classes, catering to individual investors and forming a significant segment of the overall market investment. Various retail fund options are offered by investment companies, thereby facilitating investor access to varying degrees of risks and potential returns.

What are the types of retail funds?

Here are the different types of retail funds available in the market:

Growth vs. Value Funds

In various asset classes, subcategories like value, growth, and blend exist. They determine the type of stocks held in mutual funds, such as ICICI Prudential Blue chip Fund with large-cap growth stocks, and DSP Midcap Fund with mid-cap value stocks.

Growth stocks show rapid revenue or earnings growth, reinvesting cash and no dividends. Value stocks represent undervalued firms with stocks near a 52-week low, often offering high dividends.

Share Classes

Some retail funds may share names but have distinct stock ticker symbols. This indicates different share classes of the same available funds. Fund houses use this approach to offer variations of a fund instead of creating entirely identical ones. Each share class may have unique requirements and fee structures while maintaining the fund's holdings.

Management Styles

Retail funds come in two management approaches: active and passive. Passive funds, like index funds, invest in all firms within a market index, resulting in lower fees. Actively managed funds use research to select stocks and aim to outperform the market average, with higher fees. A newer category, tactical asset allocation, gives managers the flexibility to invest in any asset class they believe will yield optimal returns.

Conclusion

Individual investors are privy to a plethora of retail fund options, which are devoid of any specific transaction cost requirements or minimal investment thresholds. These funds can be accessed through various pathways - mutual funds can be obtained directly from the fund house or an intermediary, while closed-end funds and ETFs are typically procured via open market operations involving intermediaries.

It is crucial, however, to exercise due diligence when involving intermediaries, as transactions with full-service brokers may involve sales charges.

Related Blogs: Are PSU Funds A Good Investment Option? | What is the Statement of Additional Information in Mutual Funds? | Mutual Fund v/s Exchange Traded Fund: Which One to Invest | Who Is A Chartered Mutual Fund Counselor (CMFC)?