WHAT ARE MUTUAL FUNDS?
A mutual fund is an investment vehicle that constitutes a pool of money collected from various investors in order to invest in securities such as stocks, bonds, money market instruments, and other assets. This helps in increasing the buying power of investors and eventually leading to diversified portfolios. Investors are able to buy a number of securities at a much lower price than investing in individual securities.
Small and individual investors gain access to professionally managed portfolios of equities, bonds and other securities through Mutual funds. The average mutual fund holds numerous of different securities, meaning mutual fund shareholders gain diversification at a very low price. Each shareholder, hence, acquires proportionally in the gains or losses of the fund. Mutual funds invest in a wide amount of securities, and performance is usually evaluated asthe change in the total market cap of the fund, obtained by aggregating performance of the underlying investments.
Mutual funds are registered with SEBI (Securities and Exchange Board of India), which monitors the security markets before pooling of funds from investors. Investors can simply buy and sell stocks or bonds online while investing in mutual funds.