What is Mutual Funds

                             Mutual Fund

A mutual fund is a corporation that receives money from investors and invests in securities, such as stocks, bonds, and short-term liabilities. Investors get shares in mutual funds (Units). Each share represents the investor’s share control over the Money and the income engendered from it. This prospectus contains data on investment goals, Risk, processes and expenses of mutual funds Even minuscule differences in fees can mean astronomically immense differences in return over time.

Mutual Funds Information

There are two types of probabilities :-

(1)  (statutory prospectus) 
(2)  (summary prospectus)

A statutory prospectus is a traditional, long-form prospectus with which most mutual fund investors are familiar. The summary prospectus, utilized by many mutual funds, is only a few pages long and contains paramount information about mutual funds.

AMFI is an association of mutual funds across India. AMFI provides utilizable cognizance about mutual funds and investments. Mutual funds have many homogeneous attributes in ETFs.

Like mutual funds, ETFs are OPTION of investment. However, ETFs often have lower costs, then a kindred mutual fund with no weight and often lower operating expenses.
To begin, look at the bid (ask and bid price) and ask the price and figure that what you will pay will be somewhat closer to those numbers.

Interested for ETF (ask price) Rs. 45.15 is Rs. Divide 10,000 Buy asking price Rs.45.18 and you get 221.34 shares.You will place an order for 221 shares.

Investing in mutual funds is an easy task. You can do this by purchasing a mutual fund unit. Mutual fund units are basically shares of mutual funds. Therefore, when you decide to buy a mutual fund unit, you are buying ownership from the company that runs the fund and its assets. The price at which this purchase occurs is called the net asset value per share. NAV is calculated when the total value of the securities included in the portfolio is divided by the total amount of all shares outstanding.

Investors in mutual funds buy their shares, and sell their shares, selling the mutual funds themselves.

Mutual fund shares are usually purchased from the fund or through investment professionals such as brokers.

Mutual funds are required by law to price their shares every business day and they usually do so after the closing of major Indian exchanges. This value is “the per-share value of a mutual fund’s assets minus its liabilities” called the NAV or Net Asset Value.

Mutual funds will have to sell and redeem their shares in NAV, which is calculated after the investor has made a purchase or redemption order. Each mutual fund should have an investment objective.

The AMC then selects the “Fund Manager”.

Trustees of mutual funds supervise the activities of the fund. AMC takes your money in a specific scheme with a specific purpose for example – capital appreciation and then according to this purpose your money is invested in specific shares and / or bonds.


Prospectus — Disclosure document that describes mutual funds or ETFs.  Each mutual fund or ETF has a prospectus.

The prospectus contains information about the fund’s cost, investment objective, risk and performance.

You can get a prospectus from a mutual fund company or ETF sponsor (through its website or phone or mail).

Your financial professional or broker may also provide you with a copy.

Redemption fee – A shareholder fee that some mutual funds charge when investors sell or sell mutual fund shares within a certain time frame of the purchase of shares.

The redemption fee (which must be paid to the fund) is not the same as (and may be in addition to) a back-end (EXIT LOAD) load (which is usually paid to the broker).

Read the prospectus carefully before buying shares in mutual funds.

The prospectus contains information on the investment objectives, risks, performance and expenses of the mutual fund.

To know more about the main information in the prospectus, see How to Read Mutual Fund Prospectus Part 1, Part 2 and Part 3.  

for example, 
If you have invested in a fund with 10% annual return and 1.5% annual operating expenses, 
Rs. 10,000, then after 20 years you have about Rs. Will be Rs. 49,725.