Mutual fund
A mutual fund is a collective investment vehicle that pools money from numerous investors to purchase a diversified portfolio of securities, such as stocks, bonds, and government instruments. Professional fund managers oversee these pools, making investment decisions based on the fund's specific objectives, such as long-term growth or regular income.
How Mutual Funds Work Pooling Resources: Multiple investors contribute money to a scheme, creating a large corpus. Unit Allocation: In exchange for their investment, investors are issued "units" based on the current Net Asset Value (NAV), which represents the market value of one unit. Expert Management: Professional managers at an Asset Management Company (AMC) invest the pooled capital into various assets. Distribution of Returns: Any income generated (dividends, interest, or capital gains) is distributed proportionately among unit holders after deducting applicable expenses.
