Mutual Funds

Meaning
A mutual fund is just a financial intermediary that allows a group of investors to pool their money together with an investment objective. The MF will have a fund manager who is responsible for investing the gathered money into different (stocks or bonds). The income generated from these instruments and the capital appreciation is shared by the investors in proportion to the number of units owned by them

History
The concept of mutual fund by Unit Trust of India was created by the UTI Act passed by the Parliament in 1963. Though the growth was slow, but it accelerated from the year 1987 when nonUTI players entered the industry. As of 2010, UTI has 10 million investors

The Working Of a Mutual Fund

Advantages
Affordability Easy to invest in

Convenience
Liquidity Minimizing risk Maximizes returns

Disadvantages
No Guarantees

Fees and commissions

Management risk Tax