What is a mutual fund?
Buying a mutual fund is a lot like going in on a group gift or joining a co-op–with people you’ll never meet. Mutual funds allow a group of investors to combine their cash and invest it. By pooling their money together, mutual fund investors can sample a broader range of stocks or bonds than they could if they were trying to buy the stocks and bonds on their own.
A mutual fund is an investment that pools the money of many individual investors. This money is then managed by experienced professionals, who can buy or sell a diversified or well-mixed number of stocks, bonds or money market securities for the fund. As a mutual fund investor, you own shares in a portfolio made up of as many as several hundred different securities.
A Mutual Fund is a body corporate that pools the savings of a number of investors and invests the same in a variety of different financial instruments, or securities. The income earned through these investments and the capital appreciation realised by the scheme are shared by its unit holders in proportion to the number of units owned by them. Mutual funds can thus be considered as financial intermediaries in the investment business who collect funds from the public and invest on behalf of the investors. The losses and gains accrue to the investors only. The Investment objectives outlined by a Mutual Fund in its prospectus are binding on the Mutual Fund scheme. The investment objectives specify the class of securities a Mutual Fund can invest in. Mutual Funds invest in various asset classes like equity, bonds, debentures, commercial paper and government securities.
A mutual fund is an investment company created under the Investment Company Act of 1940 that pools the resources of investors to buy a variety of securities, depending on the fund’s stated objectives and management style. The investments typically are chosen by a professional manager. Mutual funds offer diversification and convenience even to small investors, and the thousands of mutual funds available today cater to every conceivable investment need and taste.
Investments may take many forms. Some people buy and sell stocks and bonds while others purchase real estate. Another common investment tool is a mutual fund. Mutual Funds are pools of money managed by an investment company and regulated by the Securities and Exchange Commission under the Investment Company Act of 1940. According to the Investment Company Institute, there are over 12,000 mutual fund choices in the United States today controlling close to $13 trillion in assets1. The investment company uses the assets in the fund to buy and sell securities such as stocks or bonds in pursuit of a specific objective as outlined by the company charter. The fund objectives and other important information are found in the prospectus. It is important to note that there is market risk involved when investing in mutual funds, including possible loss of principal. One objective a mutual fund may attempt to achieve is long-term growth of capital. This may be done by purchasing the stock of large
Related Questions
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