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What is a Mutual Fund?
1. INVESTMENT BASICS
7. MUTUAL FUNDS
9. CONCEPTS & MODES OF ANALYSIS
10. RATIO ANALYSIS
A Mutual Fund is a body corporate registered with SEBI (Securities Exchange
Board of India) that pools money from individuals/corporate investors and
invests the same in a variety of different financial instruments or securities
such as equity shares, Government securities, Bonds, debentures etc.
Mutual funds can thus be considered as financial intermediaries in the
investment business that collect funds from the public and invest on behalf
of the investors. Mutual funds issue units to the investors. The appreciation
of the portfolio or securities in which the mutual fund has invested the
money leads to an appreciation in the value of the units held by investors.
The investment objectives outlined by a Mutual Fund in its prospectus are
binding on the Mutual Fund scheme.
The investment objectives specify the class of securities a Mutual Fund can invest in. Mutual Funds invest in various asset classes like equity, bonds, debentures, commercial paper and government securities. The schemes offered by mutual funds vary from fund to fund. Some are pure equity schemes; others are a mix of equity and bonds. Investors are also given the option of getting dividends, which are declared periodically by the mutual fund, or to participate only in the capital appreciation of the scheme.