A mutual fund is a type of investment in which investors pool their money together to buy a portfolio of stocks, bonds or other securities in order to take advantage of diversification and professional portfolio management at a reasonable cost.

What is the main reason investors buy mutual funds?

Mutual funds can hold many different securities, which makes them very attractive investment options. Among the reasons why an individual may choose to buy mutual funds instead of individual stocks are diversification, convenience, and lower costs.

Is mutual fund better than FD?

While a fixed deposit can guarantee you a fixed income, the returns are substantially lower in comparison to a similar investment made in mutual funds. A comparative analysis will present a clearer picture. When you invest in an FD, banks lend the money to businesses in the form of a loan.

What kind of investment does a mutual fund do?

Mutual funds are a type of investment schemesthat pools together investors’ money and invest it in different types of financial instruments such as stocks, bonds, government securities, gold, etc. Mutual funds are managed by professional investment managers called fund managers. These experts buy and sell securities on behalf of investors.

How are mutual funds used to pool money?

Mutual fund is a mechanism for pooling money by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document.

Where do you buy shares in a mutual fund?

Investors buy mutual fund shares from the fund itself or through a broker for the fund, rather than from other investors. The price that investors pay for the mutual fund is the fund’s per share net asset value plus any fees charged at the time of purchase, such as sales loads.

Are there any fees associated with mutual funds?

The Asset Management Companies which offer various mutual funds charge fees for offering such services. A mutual fund scheme is managed by a fund manager and in some cases, may be aided by a team of professionals as well. Mutual funds are registered with SEBI.