A mutual fund collects money from a number of investors and professional fund managers after thorough analysis invests those funds in securities such as stocks and bonds. The mutual fund’s holdings are referred to as its portfolio. Mutual fund units are purchased by investors. Each unit represents an investor’s ownership of the fund and its earnings.
Reason Why people invest in Mutual funds.
Never put all your eggs in one basket, in the same way, Mutual funds managers invest in a range of companies and industries according to the theme of the fund.
Open-end Mutual funds prices are calculated daily and can be redeemed easily, while closed-ended funds are traded on the exchange, and price discovery is possible.
Mutual funds are regulated by the Securities and exchange board of India (SEBI) which monitors and regulates the Indian capital and securities market while ensuring to protect the interests of the investors, formulating regulations and guidelines.
The fund manager is generally highly qualified and experienced in markets and can be managing the portfolio through research and investment with due diligence.
Investing in a mutual fund is very convenient due to the low investment amounts and also the ability to buy or sell them on any business day. Mutual funds maximize the principle of economies of scale.
Protection against Inflation
When an economy goes through a boom period or inflationary cycle, prices of property generally goes up and so does the rental income. Which in turn increase the prices of funds assets and hence REITs maintain the purchasing power.