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What are Mutual Funds?

11 Jan 2016 | 16:15PM

Yogesh is new to investing and wants to know more about Mutual Funds.

Mutual funds are like a basket of investments.

It can consist of shares, bonds, derivatives and other financial instruments.

There is a fund manager who manages the portfolio. He uses his professional expertise to spread out the money in several financial instruments from different sectors so that, losses from an investment can be balanced out by gains from others. This way, the fund stands a better chance to generate maximum profit.

When investors like Yogesh, buy a mutual fund, they are actually investing into the pool of money, which is then invested into the financial instruments by the fund manager.

Investing in Mutual Funds

So, if Yogesh invests in a mutual fund, he will own a unit of the mutual fund and not shares of companies.

Mutual funds are suitable for investors who want to profit from the stock-market without having to manage shares directly. You can invest in Mutual Funds at Angel Broking.

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