Definition of Mutual Fund
A mutual fund is a pooled investment vehicle that collects money from many investors and invests it in a diversified portfolio of stocks, bonds, money market instruments, or other securities, managed by a professional fund manager.
Each investor owns units proportional to their investment, and the value of each unit is the NAV. Mutual funds are regulated by SEBI in India. They offer benefits of professional management, diversification (reducing risk), liquidity (easy redemption), and accessibility (start with as little as ₹100 via SIP).
Mutual funds come in many types: equity funds (stocks), debt funds (bonds), hybrid funds (mix), index funds (track an index), and solution-oriented funds (tax-saving ELSS, retirement). As of 2024, the Indian mutual fund industry manages over ₹53 lakh crore in assets.