What is mutual fund and how it works?

A mutual fund is an investment vehicle that pools money from investors with a common investment objective. It then invests the money in various asset classes like equities and bonds based on the scheme’s objectives. An asset management company (AMC) makes these investments on behalf of the investors.

What is mutual funds in simple words?

A mutual fund is a company that brings together money from many people and invests it in stocks, bonds or other assets.

How do mutual funds make you money?

Investors typically earn a return from a mutual fund in three ways: Income is earned from dividends on stocks and interest on bonds held in the fund’s portfolio. A fund pays out nearly all of the income it receives over the year to fund owners in the form of a distribution.

What is mutual fund in Nepal?

A mutual fund is an investment vehicle that pools investors’ money and invests on behalf of the investors. It is an instrument that raises money from a group of people and invests their money in stocks, bonds, and other securities. In Nepal, Mutual Funds are governed by: The Mutual Fund Regulations, 2067(2010 A.D.)

Is mutual fund is safe?

If you’re concerned that mutual funds are a type of dodgy investment, rest assured that they’re completely safe. No mutual fund house can steal your money because it is regulated and supervised by the SEBI (i.e. Securities and Exchange Board of India) and the AMFI (Association of Mutual Funds in India).

What are benefits of mutual funds?

Mutual funds are one of the most popular investment choices in the U.S. Advantages for investors include advanced portfolio management, dividend reinvestment, risk reduction, convenience, and fair pricing. Disadvantages include high fees, tax inefficiency, poor trade execution, and the potential for management abuses.

What is the role of mutual fund?

The Purpose of mutual funds is to provide liquidity and higher returns with optimum degree of safety to investors at minimum risk. Based on these goals, various types of mutual fund schemes have evolved over a period of time.