Mutual Fund Advantages

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A mutual fund is a pool of money, collected from investors, and is invested according to cell in investment objectives. A mutual fund is created when investors put their money together. It is there fore pool of the investor’s funds. The most important characteristic of a mutual fund is that the contributors and the beneficiaries of the fund are the same class of people. The term mutual means IL investors contribute to the pool, and also benefit from the pool. There are no other claimants to the funds. The pool of funds held mutually by investors is the mutual fund. A mutual fund’s business r. invest the funds thus collected, according to the wishes of the investors who created the pool. In markets these wishes are articulated as “investment mandates”. Usually, the investors appoint profesional investment managers, to manage their funds. The same objective is achieved when professional…show more content…
Nature of participation: Open or closed end funds b. Nature of income distribution: Dividend; growth; re-investment of dividends. Investors can also chose from varying periodicity for distribution of dividends- daily, weekly, monthly, quarterly or annual. Open-ended funds There are two ways in which investor participation in a mutual fund can be structured. In an open- ended fund, investors can buy and sell units of the fund, at NAV related prices, at any time, directly from the fund. This is called an open- ended fund. Closed end funds: - A closed end fund is open for sale to investors for a specific period, after which further sales are closed. The following are the types offered by mutual funds; 1. Equity funds 2. Debt funds 3. Balanced funds I. Equity funds Equity funds are those that invest pre- dominantly in equity shares of companies. There are a variety of ways in which an equity portfolio can be created for investors. There are thus the following choices in equity

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