What are mutual funds?

Mutual fund is a company that pools money from several investors to purchase securities. A MF
Portfolio is a collection of its investments. Investors buy shares in mutual funds. Investors earn
returns from mutual funds in three ways: dividends, distribution and capital gain.

Types of mutual funds:

Mutual funds broadly fall into one of four categories – money market, bond, stock, and target date
funds. Each type has different risks, and rewards.

 Money market funds are low risk and issued for short term.
 Bond funds have higher risks and aim to produce high returns.
 Stock funds invest in corporate stocks like index and growth funds.
 Target-date funds are structured to grow assets in ways optimized for a time frame . 

Future of mutual funds

During 2020 & 2021, scores of people opened demat accounts and started investing. Picking out
individual stocks to invest in is not everybody’s cup of tea and mutual funds are a convenient
alternative.