A mutual fund is an investment vehicle that pools money from many investors and uses that capital to buy a diversified portfolio of stocks, bonds, or other securities.
The operation of a mutual fund is managed by professional fund managers who make investment decisions on behalf of the fund's investors.
The goal of a mutual fund is to provide investors with a convenient way to invest in a diversified portfolio, even with relatively small amounts of money.
Advantages:
Mutual funds invest in a variety of securities, spreading the risk across different assets. This diversification helps reduce the impact of poor performance in any single investment.
Experienced fund managers make investment decisions based on research, analysis, and their understanding of financial markets. Their goal is to achieve the fund's stated objectives.
Investors can buy or sell mutual fund shares on any business day at the fund's net asset value (NAV). This provides liquidity and flexibility for investors to enter or exit the fund.
Mutual funds are accessible to a wide range of investors, from individuals with small amounts of money to large institutional investors.
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Mutual funds are regulated by SEBI. Regulations are in place to protect investors and ensure transparency in fund operations.
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Because a mutual fund buys and sells large amounts of securities at a time, its transaction costs are lower than you as an individual would pay.
