Mutual Funds
What is a Mutual Fund?
Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unitholders.
The profits or losses are shared by the investors in proportion to their investments. The mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the public.
More from this specialization
- What are the different types of mutual fund schemes?
- How to choose a scheme for investment from a number of schemes available?
- If schemes in the same category of different mutual funds are available, should one choose a scheme with lower NAV?
- How long will it take for transfer of units after purchase from stock markets in case of close-ended schemes?
- Are the companies having names like mutual benefit the same as mutual funds schemes?
- How to choose a scheme for investment from a number of schemes available?