A mutual fund is pool of funds collected from multiple investors. Purpose of this pool is to invest in asset classes like debt, equity, liquid assets etc. it is called "mutual" fund because all the risks, losses and gains arising from the investments with such funding shared between all investors proportionately according to their contributions.
In other words mutual fund is a trust with sponsor. The fund is registered with Securities Exchange board of India (SEBI) and managed by an Asset Management Company (AMC). These AMCs are authorized by SEBI to manage any fund and are under trustees who make sure the fund complies with regulation.
Mutual funds allow a very wide range of investors to invest including NRIs, registered FIIs, Trusts, Resident Individuals, HUFs, PIOs, Partnership Firms, Cooperative Societies, Companies, QFIs, Banking and Non-Banking Financial Institutions etc. This list represents almost all common types of investors in India.
Mutual funds have become very popular investment option in India even with new funds and schemes launched regularly. Below are some of the benefits mutual funds:
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