Mutual Fund - Definition

A goal oriented fund, wherein, many investors having mutual expectations invest money into the fund. This fund is professionally managed by a group (Asset Management Company) of managers having good experience in the same field. Same managers based on their experience invest funds on behalf of investors into various securities, bonds depending upon the goal of the mutual fund “The Game Changer”.

If we enquire about mutual fund, hundred of its kind would be available in the market (types of mutual fund are covered in the next article). But the question here arises is why should we invest in mutual funds?

As an individual, firstly, we have our own limitations in terms of market knowledge, macro and micro level economic conditions and indicators of the country etc. where else; a group of professionals having experience in the same area for a number of years would stand better as compared to individuals. These mutual funds are all managed by professionals (AMC).

Secondly, it is very important to diversify your portfolio to have maximum return with minimum risk. Mere investment in one or two stock may lead to challenge your risk appetite. To avoid leaving in “a fool’s paradise” it’s better to invest in a mutual fund were your short term and long term expectations would be met.

Based on “high risk high return” concept, if your expectations is to earn maximum, funds like growth funds is available in the market. For moderate income, income funds are available and for minimum guarantee return, bond funds are available.