Mutual Funds: Meaning, Types, Features, Benefits & Prices
Table of Contents
- jaro education
- 15, September 2023
- 4:00 pm
Mutual funds are a type of pooled investment that allows several shareholders to participate in bonds, stocks and other assets. It can be difficult for individual investors to buy shares in high-profile portfolios. Various kinds of mutual funds are available in the market depending on their risk-to-return ratio. Mutual funds enable investors to diversify their investments rather than putting all their money in one single place. A mutual fund manager selects where and when people can invest their money in this fund. Each investor has units, a percentage of the fund’s holdings. After subtracting certain fees, the income/gains created from this mutual fund investment are dispersed proportionately among the participants by computing a scheme’s Net Asset Value, or NAV.
Mutual fund investment and other types of investment are great areas of study in the commerce sector. If commerce interests you and if you 10+2 qualified student, you can pursue ample of courses such as Online B.com Courses. For now, let’s dive deeper into the fundamentals of mutual funds.
Mutual Funds: Meaning
This is an investment body that merges capital from shareholders and places it into financial instruments such as bonds, stocks, securities, and other assets with value. These funds are secured and upheld to align with the investment goals outlined in the prospectus by the shareholders. Expert financial managers handle these resources and utilize them for financial returns and profits for the investors of the fund.
One can choose mutual funds as an ideal investment option as it provides entry to professionally managed portfolios of bonds, equities, stocks and other financial instruments. As a result, each stakeholder shares equal profits or losses. Mutual funds invest in a broad array of assets and their success is often measured as the change in the fund’s total market value, calculated by summing up the performance of the underlying investments.
Types of Mutual Funds
Different types of mutual funds are available in the commerce industry. These funds are tailored in terms of structure, asset class, and investment objectives.
Interval funds
These mutual funds allow for transactions at certain times. When the trading window opens, investors can buy or sell their units.
Open-ended funds
These funds have no restrictions on when or how