It is a trust that collects money from a number of investors who share a common investment objective. Then, it invests the money in equities, bonds, money market instruments, and/or other securities.
Each investor owns units, which represent a portion of the holdings of the fund. The income/gains generated from this collective investment are distributed proportionately among the investors after deducting certain expenses, by calculating a scheme’s “Net Asset Value or NAV.
Simply put, a Mutual Fund is one of the most viable investment options for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.
Some benefits of Mutual Fund
Professionally managed by Fund Manager
Investment in different variants like Systematic Investment Plan(SIP), Systematic Transfer Plan (S.T.P.), Systematic Withdrawal Plan (S.W.P.)