The concept of a Mutual Fund works on pooling resources with one common objective in mind. In other words, a Mutual Fund is made up of money that is pooled together by a large number of investors. Their money is given to a professional (referred as fund manager) to invest in a basket of stocks and/or other financial instruments such as bonds/commodities. The objective of every Mutual Fund scheme is clearly defined and explicitly mentioned by a Mutual Fund company, i.e. Asset Management Company (AMC). In simple words, one can think of a Mutual Fund as a company that brings together a group of people and invests their money in stocks, bonds, and other securities. Each investor owns units, which represent a portion of the holding of the fund, based on the amount invested by the respective investor.
Every Mutual Fund is managed by a fund manager, who, using his investment management skills and necessary research work, is capable of providing better returns than what an investor can manage on his own. The capital appreciation and other incomes earned from these investments are passed on to the investors (also known as unit holders) in proportion of the number of units they own. In short, Mutual Funds are the new way of saving.
THE MUTUAL FUND CONCEPT
Mutual Funds are one of the best vehicles for people who don't have either the expertise or the time to tab care of their own investments.
An Investor Education and Awareness Initiative by Mirae Asset Mutual Fund.
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Mutual Fund investments are subject to market risks, read all scheme related documents carefully.