Mutual funds are collective investment vehicles which pool money from the public, make investments and distribute surpluses either in the form of dividends or the surpluses are reflected in the form of a higher Net Asset Value (NAV) of the scheme. Mutual funds act as a pooling agent that collects money from various small investors and invests those funds in the market. The returns are distributed according to the scheme of the mutual fund.
An offer document is issued by a mutual fund containing proper details of the scheme, it’s investment horizon and class of securities in which it intends to invest. After the issue the collective money is pooled together to constitute a fund. The fund is managed by a fund manager who takes all the major investment decisions. A trust takes care that the mutual fund investments are in accordance with the scheme of the fund and that the fund is being managed in the interest of investors. Continue reading ‘Mutual Fund Basics’ »
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