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What is Mutual Funds – All You Need to Know about Mutual Funds

Mutual Fund refers to a pool of money collected by various investors who intend to save and make money through their investment. The financial corpus so formed is invested in different asset classes, namely, liquid assets, debt funds etc. Much like profits and rewards earned during the tenure of investment, losses are also equally distributed among all the investors, i.e. in accordance with the proportion of their contribution to the financial corpus.

Mutual Funds are registered with the Securities and Exchange Board of India (SEBI). SEBI is responsible for regulating security markets prior to the accumulation of the funds from the investors. Making investment in Mutual Funds can be as simple purchasing or selling stocks or bonds online. In addition, the investors can also sell out their shares whenever they want or need.

Basics Of Mutual Fund

Mutual funds investment pool investors’ and make use of that money to purchase other securities basically bonds and stocks. Mutual Fund Company’s value depends on the performance of securities it decides to purchase. So, while buying a share or unit of a MF scheme, you’re purchasing the performance of the portfolio of the mutual funds or to be more exact, a part of the value of the portfolio. Making investment in a share of a mutual fund is quite different from making investment in shares of stock. Different from stocks, MF shares don’t give voting rights to its holders. A share of mutual fund represents investments in various stocks (or other securities) despite just single holding.

This is the reason why mutual funds price is called Net Asset Value (NAV) per share. A NAV of fund is a derivative of division of securities’ total value in the portfolio by the total outstanding amount of shares. Outstanding shares are the ones held by the institutional investors, company officers, insiders, or the shareholders. Shares of MF can usually be bought or redeemed as required at the current NAV of the funds, which – unlike the price of stock – does not vary during the market hours, but is settled at the end of the trading day.

Many investors wonder which is the best mutual funds investment plan? They often get confused with a plethora of mutual fund schemes in the market. Moreover, once they’ve chosen a fund to invest in, they’re not so sure whether they’ve picked up the right scheme or not. This is the reason that we’ve decided to compile a list of the most popular mutual funds investment plans. This list is not in any particular order; however, we’ve picked two schemes from five different categories namely, mid and large cap, multi-cap, ELSS, aggressive hybrid scheme, tax saving schemes, and value schemes.