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
- Are the companies having names like mutual benefit the same as mutual funds schemes?
- How to know where the mutual fund scheme has invested money mobilised from the investors?
- What is a Load or no-load Fund?
- How can the investors redress their complaints?
- How long will it take for transfer of units after purchase from stock markets in case of close-ended schemes?
- What is the difference between the primary market and the secondary market?