Mutual Fund allows small investors
access to a well-diversified portfolio of equities, bonds and other securities.
Each shareholder participates in the gain or loss of the fund. Units are issued
and can be redeemed as needed. The fund's Net Asset Value (NAV) is determined each day,From that NAV,Investors can get value of their Investment.Thus a Mutual Fund is the most suitable
investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low
cost.
Mutual funds are
financial intermediaries, which collect the savings of investors and invest
them in a large and well-diversified portfolio of securities such as money
market instruments, corporate and government bonds and equity shares of joint
stock companies.
Characteristics of a Mutual Fund:
- Investors own the mutual fund.
- Professional managers manage the affairs for a fee.
- The funds are invested in a portfolio of marketable securities, reflecting the investment objective.
Advantages of Mutual Funds:
- Portfolio diversification
- Professional management
- Reduction in risk
- Reduction in transaction cost
- Liquidity
- Convenience and flexibility
Disadvantages of Mutual Funds:
- No control over costs
- No tailor-made portfolios
- Issues relating to management of a portfolio of mutual funds
No comments:
Post a Comment