INTRODUCTION TO MUTUAL FUND
What is Mutual Fund?
Welcome to our website! We are excited to introduce you to the world of mutual funds. A mutual fund is a popular investment vehicle that allows investors to pool their money together and invest in a diversified portfolio of stocks, bonds, and other securities. Professional fund managers oversee these investments on behalf of the mutual fund.
The mutual fund's return is then distributed among the investors based on the proportion of their investment in the fund. This is done after deducting any applicable expenses, such as management fees, transaction costs, and other charges. The value of the mutual fund's assets is calculated daily and is known as its Net Asset Value or NAV.
In India, mutual funds are established as trusts under the Indian Trust Act, of 1882, and are regulated by the Securities and Exchange Board of India (SEBI). The fees and expenses charged by mutual funds are also regulated by SEBI and are subject to specific limits.
Investing in a mutual fund is an easy and convenient way to access a diversified portfolio of investments with the guidance of a professional fund manager and the regulations put in place by SEBI, investors can rest assured that their money is in good hands.
How mutual fund work?
Investors should resist the urge to monitor their fund's performance during significant market fluctuations. It's recommended that investors in actively managed equity schemes practice patience and allow a reasonable time frame of 18 to 24 months for the fund to generate returns in their portfolio.
Mutual funds function by pooling the money of multiple investors to issue "Units" at the current NAV. Returns from mutual funds can come in the form of income distributions such as dividends, interest, capital gains, or other types of income earned by the fund. Investors can also experience capital gains or losses if they sell their mutual fund units for more or less than their initial investment.
For those lacking knowledge or experience in direct stock market investing or those who lack the time or desire to research the market, mutual funds are an ideal investment vehicle. Additionally, mutual funds allow investors to invest smaller amounts of money, making them accessible to a wider range of investors.
Why Invest in the mutual fund
Are you wondering why you should invest in mutual funds? Well, the answer is simple - mutual funds offer a range of benefits that make them an excellent investment option for achieving your financial goals.
One of the primary advantages of investing in mutual funds is diversification. Mutual funds allow you to invest in a diversified portfolio of securities across various asset classes, including equity shares, corporate bonds, government securities, and money market instruments. This diversification helps reduce your overall investment risk and can lead to better investment outcomes.
Another significant advantage of mutual funds is professional management. Mutual funds are managed by professional fund managers who have the expertise and knowledge to make informed investment decisions. As a retail investor, you can benefit from their experience and leave the investment decisions to them. This not only saves you time and effort but also provides you with access to professional investment management at a relatively low cost.
Moreover, mutual funds offer liquidity and flexibility. You can easily buy and sell mutual fund units, making it easy to liquidate your investments when needed. Additionally, you can invest in mutual funds with small amounts and increase your investments gradually as your financial situation improves.
