About Mutual Fund l Free Presentation on Mutual Fund l MBAhotspot.com

By | April 27, 2012

A mutual fund is a type of professionally-managed collective investment scheme that pools money from many investors to purchase securities.

We will discuss now as to what are mutual funds before going on to seeing the advantages of mutual funds. Mutual funds are investment companies that pool money from investors at large and offer to sell and buy back its shares on a continuous basis and use the capital thus raised to invest in securities of different companies. The stocks these mutual funds have are very fluid and are used for buying or redeeming and/or selling shares at a net asset value. Mutual funds posses shares of several companies and receive dividends in lieu of them and the earnings are distributed among the share holders.

[1] While there is no legal definition of mutual fund, the term is most commonly applied only to those collective investment schemes that are regulated, available to the general public and open-ended in nature.

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.Generally there are 3 types mutual funds: open-end, unit investment trust, and closed-end.

The most common type, the open-end mutual fund,

must be willing to buy back its shares from its investors at the end of every business day. Exchange-traded funds are open-end funds or unit investment trusts that trade on an exchange.

Open-end funds are most common, but exchange-traded funds have been gaining in popularity.   Mutual funds are classified by their principal investments.

 The four largest categories of funds are money market funds, bond or fixed income funds, stock or equity funds and hybrid funds.

Funds may also be categorized as index or actively-managed.   Investors in a mutual fund pay the fund’s expenses.

There is controversy about the level of these expenses. A single mutual fund may give investors a choice of different combinations of expenses by offering several different types of share classes.

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