what is mutual funds ?

Answer 1

Mutual fund is such a financial instrument used for investing which provides you an oppertunity to invest in stock markets and gain out of it with reduced risks. ie People who have less expertise to invest in stock market and lack with the skills or time they invest in a collective investment vehicle known as Mutual fund
Let me explain you by an example..

there are 5 friend A
They all want to invest in stock markets but they don't have that much knowlegdge and time so they collect money 10000 each and give to A as he is expert. After a year the money becomes 1 lakh so they distribute among them equally.

If such things are done at large ie National level or universal level than they do it through Mutual funds

Totol money is devided into units of 10 Rs each and profit is calculated on unit basis

ie New MF is priced at unit of 10Rs. If you invest 10000Rs u will be alloted 1000 units. When the stocks of this MF will grow the price of each unit will increse lets say 15 Rs after 1 year. Now when you will sell your 1000 units at a price of 15each you will get 15000 ie 50% Returns. The performance is measured by NAV (NET ASSET VALUE) of the fund

Calculation of Net Asset Value

Mutual Funds raise money by selling their shares to public and redeeming them at current net asset value. Net Asset Value is the value of assets of the each unit of the scheme. Thus is the NAV is more than the face value of Rs 10, there is an appreciation for the investment. If the NAV is less than the face value, it indicates the depreciation of the investment. NAV also includes dividends, interest accruals and reduction of liabilities and expenses apart from market value of investment. Every Mutual Fund shall compute the NAV of each scheme by dividing the net asset of the scheme by the number of units of that scheme outstanding on the date of the valuation and public the same at least in two daily newspapers at intervals not exceeding one week. However, the NAV of any scheme for special target segment or any monthly scheme which are not mandatory required to be listed in the stock exchange may publish the NAV at monthly or quarterly intervals as permitted by SEBI.


The formula for calculation of NAV

Answer 2

A mutual fund is a form of collective investment that pools money from many investors and invests the money in stocks, bonds, short-term money market instruments, and/or other securities. [1] In a mutual fund, the fund manager trades the fund's underlying securities, realizing capital gains or loss, and collects the dividend or interest income. The investment proceeds are then passed along to the individual investors. The value of a share of the mutual fund, known as the net asset value (NAV), is calculated daily based on the total value of the fund divided by the number of shares purchased by investors.

Legally known as an "open-end company", a mutual fund is one of three basic types of investment companies available in the United States. [2] Outside of the U.S. (with the exception of Canada which follows the US model), mutual fund is a generic term for various types of collective investment. In the UK and western Europe (including offshore jurisdictions) other forms of collective investment are prevalent including unit trusts, Open-Ended Investment Companies (OEICs), SICAVs and unitized insurance funds.

Answer 3

These are open-end funds that are not listed for trading on a stock exchange and are issued by companies which use their capital to invest in other companies. Mutual funds sell their own new shares to investors and buy back their old shares upon redemption. Capitalization is not fixed and normally shares are issued as people want them.

E.G.: if u buy stocks of ICICI, it will invest in another fund. so, ur mutually using ur money. Mutual fund!

Answer 4

Mutual funds, also called Unit Trust, are a pool of funds collected from like-minded investors. These funds are further invested, managed by expert financiers of the mutual fund trust company or AMC on behalf of the investors in the equity and debt markets.

Answer 5

A mutual fund enables investors to pool their money and place it under professional investment management. The portfolio manager trades the fund's underlying securities, realizing a gain or loss, and collects the dividend or interest income. The investment proceeds are then passed along to the individual investors. There are more mutual funds than there are individual stocks.

Answer 6

Mutual Fund is a investment company that pools money from shareholders and invests in a variety of securities, such as stocks, bonds and money market instruments. Most open-end mutual funds stand ready to buy back (redeem) its shares at their current net asset value, which depends on the total market value of the fund's investment portfolio at the time of redemption. Most open-end mutual funds continuously offer new shares to investors.

Also known as an open-end investment company, to differentiate it from a closed-end investment company. Mutual funds invest pooled cash of many investors to meet the fund's stated investment objective. Mutual funds stand ready to sell and redeem their shares at any time at the fund's current net asset value: total fund assets divided by shares outstanding.

In Simple Words, Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document.

Answer 7

i do compared to American money. they're crew managed and many are loaded money. i favor to placed my funds with a manager who i recognize what type of manager i'm attending to look after my funds. you're 100 % the finest option on banks. they're undesirable places to make investments. The URL below is a normal highway map to making an investment. bear in mind you've a good number of judgements. i love no load mutual money. Why pay a fee once you may get something more effective for loose?

Answer 8

As you can tell it is hard to concisely define mutual funds.

For brief and clear answers to these type of questions I would suggest "The Wall Street Journal Guide to Understanding Money & Investing" by Kenneth M. Morris and Virginia B. Morris.

It's only 150 pages long, you can get it used for about two dollars and it has very precise information.

http://www.amazon.com/Street-Journal-Guide-Understanding-Investing/dp/0684869020/sr=1-1/qid=1162948742/ref=pd_bbs_1/104-8240933-7779160?ie=UTF8&s=books

Answer 9

mutual funds are the funds that are pooled from general public and invested in stock market by fund manager in professional way in the ratio of proposed in the offer document. in mutual funds the risk is diversified but in shares its high than that of mutual funds by conventional investment.

offer document is the document in which all terms and conditions mentioned before inception of the fund under the regulations of SEBI.

In Shares we will be investing in one company only.
but in mutual funds the funds are invested in many companies investing in many companies is called conventional investment.

mutual funds are subject market risk please read offer document carefully before investing

Answer 10

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