Mutual Funds, an Overview

A mutual fund is a pool of investments managed by professional money managers who have in-depth knowledge of the equity as well as global markets. Investments may be in stocks, bonds, money market securities or some combination of these. When you are investing in mutual funds, you are actually pooling your money with other people who have similar investment goals. For the individual investor, mutual funds provide the benefit of having someone else manage your investments and diversify your money over many different securities that may not be available or affordable to you otherwise. Today, minimum investment requirements on many funds are low enough that even the smallest investor can get started in mutual funds. Just like shares units are allotted to investors for their investment. Units are allocated on the basis of NAV (Net Asset Value). This is the price at which investors buy fund from the company. NAV is calculated at the end of each trading day. For example if the NAV of a fund is Rs.50/- and the investor invests Rs 1000 monthly then he will get 1000/50 = 20units. Next month the investor will get units according to the NAV in that particular month.