Mutual Funds are the professionally managed funds by fund management companies which collectively invest money taken from many big and small investors in bonds, shares, money market instruments, commodities etc. to generate return from the same.
The most important characteristics of Mutual Funds are
Mutual funds are professionally managed.
They are regulated by the market regulator. InIndia, all the mutual funds are regulated by SEBI.
Mutual Funds invest in different financial instruments like shares, bonds, commodities, short term money market instruments etc.
They have to publish the Net Asset Value (NAV) every day.
Mutual Funds can be open-ended or close ended. These two terms will be explained later.
Mutual fund management houses charge for entry, exit and maintenance loads to recover the management and administrative charges.