When it comes to stock market investing, there is always confusion among budding investors whether they should start investing directly in stocks or go through mutual funds. If you are new to stock/ share market investing, you must first clarify what exactly are stocks and mutual funds and their differences as well.
Although both hedge funds and mutual funds pool money from different investors and invest such funds according to their own strategies in the financial market to make profits, however, their investor profiles, risks involved and tactics to generate returns are different from each other.
In this article, we will understand primarily the difference between hedge funds and mutual funds. But before we go ahead, let me explain first, what exactly hedge funds and mutual funds in brief so that their differences can be understood easily.
Although shares and stocks sound similar in most contexts and have been always misinterpreted, however, there are some key differences between stocks and shares. In this article, we will understand the difference between stocks and shares.
But before we go ahead let us understand the basic meaning and definition of shares and stocks.
Share capital is the most popular and convenient source of long term finance for companies. The organisations utilise multiple types of issues to raise public funds from the capital market. The IPOs and FPOs are one of those issues through which a company issue (sell-off) financial securities like equity shares for the investors to subscribe.
The right issue and bonus issue are other types of issues which the companies utilise to raise capital and as cash alternatives in different circumstances.
The IPOs and FPOs are utilised to arrange funds from the general public and there is a misconception that IPO and FPO are similar but there is some difference between IPO and FPO.
The companies raise long term funds from the capital market for their day to day operations, new project finance and expansion purpose. In order to raise public funds, the companies or government issue the securities like bonds, debentures or shares in the primary market.
There are multiple types of issues through which the organisations float stocks/ shares in the capital market, IPO and FPO are some of those mechanisms of issuing stocks in the capital market.