UNDERSTANDING MUTUAL FUND
Mutual fund is a trust that pools money from a group of investors (sharing commonfinancial goals) and invest the money thus collected into asset classes that match thestated investment objectives of the scheme. Since the stated investment objectives of amutual fund scheme generally form the basis for an investor's decision to contributemoney to the pool, a mutual fund can not deviate from its stated objectives at any pointof time.
The securities and exchange board of India regulations.1993 defines a mutual fund as“a fund established in the form of a trust by a sponsor, to raise monies by the trusteesthrough the sale of units to the public, under one or more schemes, for investing insecurities in accordance with these regulations”.Every Mutual Fund is managed by a fund manager, who using his investmentmanagement skills and necessary research works ensures much better return than what aninvestor can manage on his own. The capital appreciation and other incomes earned fromthese investments are passed on to the investors (also known as unit holders) in proportion of the number of units they own.3