A Mutual Fund is a professionally managed investment vehicle that pools money from multiple investors to invest in a diversified portfolio of assets such as stocks, bonds, money market instruments, or other securities. The primary objective of a mutual fund is to offer investors an opportunity to participate in a diversified and professionally managed portfolio without having to buy and manage individual securities themselves.
Each investor in a mutual fund owns units (or shares), which represent a proportionate ownership in the fund’s holdings. The value of each unit is determined by the fund’s Net Asset Value (NAV), which fluctuates daily based on the market value of the underlying securities.
Mutual funds are managed by qualified fund managers and regulated by financial authorities such as SEBI (Securities and Exchange Board of India) in India or the SEC (Securities and Exchange Commission) in the United States. They cater to different investment goals, risk appetites, and time horizons through various types such as equity funds, debt funds, hybrid funds, index funds, and money market funds.
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