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Definition of 'Mutual Fund'

Definition: A mutual fund is a professionally-managed investment scheme, usually run by an asset management company that brings together a group of people and invests their money in stocks, bonds and other securities.

Description: As an investor, you can buy mutual fund 'units', which basically represent your share of holdings in a particular scheme. These units can be purchased or redeemed as needed at the fund's current net asset value (NAV). These NAVs keep fluctuating, according to the fund's holdings. So, each investor participates proportionally in the gain or loss of the fund.

All the mutual funds are registered with SEBI. They function within the provisions of strict regulation created to protect the interests of the investor.

The biggest advantage of investing through a mutual fund is that it gives small investors access to professionally-managed, diversified portfolios of equities, bonds and other securities, which would be quite difficult to create with a small amount of capital.

    Related Defintions

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    • Categories

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    • Net Asset Value

      : Net asset value(NAV) is the value of a fund's asset less the value of its liabilities per unit.

    • Open-ended Funds

      : These funds buy and sell units on a continuous basis and, hence, allow investors to enter and exit

    • Debt Funds

      : Debt funds are mutual funds that invest in fixed income securities like bonds and treasury bills.

    • Exit Load

      : Mutual funds companies collect an amount from investors when they join or leave a scheme. This fee

    • Swap

      : Swap refers to an exchange of one financial instrument for another between the parties concerned.

    • Scheme Category

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    • Yield To Maturity

      llyad=0; Definition: It is also known as redemption yield. As the name suggests, if an investment

    • Scheme Options

      : There are a number of scheme options available to the investors depending upon how much they want

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