Mutual fund is nothing but a investment fund which is managed by professionals. It pools the savings of many investors and invests them in securities like stocks, bonds, short-term money market instruments and commodities such as precious metals. People who want to save and make money through thier investment put thier money in such funds. Profits and losses are shared by all the investors in equall proportion.
Mutual funds are operated by professional money managers, who allocate the fund's investments and attempt to produce capital gains and/or income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus.
Investments in mutual funds entail comparatively small amounts, giving retail investors the advantage of having finance professionals control their money even if it is a few thousand rupees. The funds are generally well diversified to mitigate potential losses. Mutual funds is best platform for those investors who lack the time or knowledge to make traditional and complex investment decisions.
Mutual funds are registered with SEBI ( Securities and Exchange Board of India). SEBI makes the policies for mutual funds and also regulates the industry. It lays guidelines for the mutual funds to safeguard the investors’ interest. In short, your money goes in safe hands.