How Mutual Fund Works
A vehicle for investing in stocks and bonds A mutual fund is not an alternative investment option to stocks and bonds, rather it pools the money of several investors and invests this in stocks, bonds, money market instruments and other types of securities. Buying a mutual fund is like buying a small slice of a big pizza. The owner of a mutual fund unit gets a proportional share of the fund’s gains, losses, income and expenses. Each mutual fund has a specific stated objective The fund’s objective is laid out in the fund's prospectus, which is the legal document that contains information about the fund, its history, its officers and its performance. Some popular objectives of a mutual fund are - Fund Objective What the fund will invest in Equity (Growth) Only in stocks Debt (Income) Only in fixed-income securities Money Market (including Gilt) In shor