Mutual Fund
A mutual fund is a collection of money from investors that is used to purchase securities like stocks, bonds, and other investments. The fund is managed by a professional money manager, or asset management company (AMC), who decides when to buy and sell securities. Investors buy shares in the fund, which represent their ownership in the fund and its income Mutual funds can be a good way to diversify a portfolio and offer a number of benefits. Mutual funds are generally considered to be better suited for long-term objectives, but they can be volatile in the short term
Mutual funds can be a good way to diversify a portfolio and offer a number of benefits, including:
Low costs: Mutual funds buy and sell large amounts of securities at once, which typically results in lower transaction costs than for individual investors.
Professional management: Investors can benefit from the expertise of professional money managers.
- Economies of scale: Investors can potentially benefit from economies of scale
There are different types of mutual funds, including:
- Equity: Funds that invest in stocks
- Fixed income: Funds that invest in bonds
- Money market funds: Funds that invest in short-term debt
- Balanced or hybrid: Funds that invest in a combination of stocks and bonds