What is Mutual Funds?

A mutual funds is a pool of money from numerous investors for the purpose of investing in securities like stocks ,bonds,money market investment etc.In mutual fund ,as an investor you own shares of mutual funds ,not the individual security .All share holder share in the fund’s gain & losses on equal basis ,proportional to the amount of invested.

For most mutual funds,shareholder are free to sell their shares at any time ,although the price of mutual fund fluctuate daily,depending upon the performance of securities held by the fund.

Benefit of mutual funds include diversification & professional money management by money managers .Mutual fund offer choice ,liquidity and convenience , but charges fees and often require a minimum investment.

A mutual fund’s portfolio is structured and maintained to match the investment objective stated in its prospectus.

There are some type of mutual fund depending upon the objectives of it .Example are like aggressive growth fund ,balanced fund ,Income fund , money market mutual fund ,equity fund etc.

Mutual fund is also divided in Closed end fund and Open end fund.

Closed- end funds

It has a fixed number of shares outstanding and operate for a fixed duration (generally ranging from 3 to 15 year).

The fund would be open for subscription only during a specific period and there is even balance of buyers and sellers. They are listed on stock exchanges.So,it is traded just like other stock on exchange.

Open- end funds

An open end fund is one that is available for subscription all through the year and is not listed on stock exchanges. The majority of mutual funds are of this type .

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