19-Jan-2023 01:02 AM
What is Leverage Mutual Funds?
Leverage is nothing more or less than using borrowed money to invest. Leverage Mutual Funds refer to mutual funds that make use of aggressive investment techniques of financial leverage to deliver superior returns. Financial leverage techniques include short selling, buying assets on margin, options trading and the likes. The way leverage works is by using margin in a standard brokerage account. Most brokers allow investors to borrow money from them to buy more stocks. For example, if an investor owns Rs.20,000 worth of a mutual fund, they could borrow Rs.20,000, doubling their exposure without the use of their own money. If the mutual fund rises in value, the profit would be twice as much as it would be without it.
Answer given by Shubhamm Sir at 26-Jan-2023 11:52 PM