Mutual Fund Investment
A mutual fund is formed when an asset management company (AMC) pools investments from various individual and institutional investors to purchase securities.
The AMCs have fund managers to manage investments from investors. In short, mutual funds club investments from various investors to invest their money in bonds, stocks, and other similar avenues.
Mutual fund investors are assigned with fund units corresponding to their quantum of investment. Investors are allowed to purchase or redeem fund units at the current net asset value (NAV).
The NAV of mutual funds varies daily as per their underlying fund assets. Mutual funds are regulated by the Securities and Exchange Board of India (SEBI), and hence, they can be considered as a safe investment. A significant advantage of investing in mutual funds is that investors can diversify their portfolio at a lower investment amount.