Mutual Fund: An Introduction A Mutual Fund Is A Form Of

1087 WordsMar 17, 20175 Pages
Mutual fund: An Introduction A mutual fund is a form of collective investment. It is a pool of money collected from various investors which is invested according to the stated investment objective. The fund manager is the person who invests the money in different types of securities according to the predetermined objectives. The portfolio of a mutual fund is decided taking into consideration this investment objective. Mutual fund investors are like shareholders and they own the fund. The income earned through these investments and the capital appreciation realized by the scheme is shared by its unit holders in proportion to the number of units owned by them. The value of the investments can go up or down, changing the value of the…show more content…
Mutual funds save your time and make investing easy and convenient. Return potential: Over a medium to long term, mutual funds have the potential to provide a higher return as they invest in a diversified basket of selected securities. Low costs: Mutual funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors. Liquidity: In open ended schemes, the investors get the money back promptly at net asset value related prices from the mutual fund. In closed end schemes, the units can be sold on a stock exchange at the prevailing market price or the investor can avail of the facility of direct repurchase at NAV related prices by mutual fund. Transparency: You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme, the proportion invested in each class of assets and the fund manager’s investment strategy and outlook. Flexibility: Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, you can systematically invest or withdraw funds according to your needs and convenience. Affordability: Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual fund because of its large corpus allows even a

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