What are mutual funds ?

Mutual funds

Mutual fund is a fund created and maintain by company that pools in money from many investors and invest the accumulated money in stock on short term money market instrument other security is or some combination of these investments the holding that mutual fund on are called as its portfolio each or unit represent and investors proportionate ownership of funds holding and the income these holdings generate.

Mutual funds are financial instruments that combine the funds of many individuals to invest in a variety of securities, including stocks, bonds, and other assets. Professional investment businesses, sometimes referred to as fund managers or asset management organisations, are in charge of their management.

You effectively purchase shares or units of a mutual fund when you invest in one. Based on the investing objective and strategy of the fund, the fund manager will use your money to buy a range of assets. The goal of the fund can be to promote growth, revenue, a particular industry, or a mix of things.

It's important to note that mutual funds charge fees, such as expense ratios and sales loads (commissions), which can vary depending on the fund. Investors should carefully consider these costs and evaluate a fund's historical performance, risk factors, and investment objectives before making an investment decision.

Features of mutual fund

• A mutual fund is a financial intermediary. It collects fund from small investors and then invest the same invite variety of investments
• Open ended mutual fund are quite popular because purchase and repurchase of unit are on a continuous basis.
• Close ended mutual fund cells unlimited number of shares and does not stand ready to redeem them.
• Mutual funds are expected to give its investors monthly updates and reports that include details about the holdings, performance, costs, and fees of the fund. Investors may make wise judgements and track the success of their investments thanks to this openness.
• Mutual funds offer liquidity to investors, allowing them to buy or sell fund units at the prevailing Net Asset Value (NAV) on any business day. 
• Mutual funds can offer tax benefits, such as tax deferral on capital gains and the ability to offset gains with losses.
• Mutual funds often offer systematic investment plans (SIPs) and systematic withdrawal plans (SWPs).