Mutual funds means a fund established in the form of a trust to raise money through sale of units to the public one or more schemes for investing in securities,including money market instruments.
A mutual fund is a professionally-managed investment scheme, usually run by an asset management company that brings together a group of people and invests their money in stocks, bonds and other securities.
As an investor, one can buy mutual fund ‘units’, which basically represent his/her share of holdings in a particular scheme. These units can be purchased or redeemed as needed at the fund’s current net asset value (NAV) . These NAVs keep fluctuating, according to the fund’s holdings. So, each investor participates proportionally in the gain or loss of the fund.
All the mutual funds are registered with SEBI. They function within the provisions of strict regulation created to protect the interests of the investor.
The biggest advantage of investing through a mutual fund is that it gives small investors access to professionally-managed, diversified portfolios of equities, bonds and other securities, which would be quite difficult to create with a small amount of capital.