Professionally managed baskets of assets
Mutual Funds
What is it?
A mutual fund pools money from many investors and invests it per a stated strategy under a professional manager.
How does it work?
Buy units directly from an AMC or through a distributor/app. Prices are set once daily as Net Asset Value (NAV).
Benefits
- Diversification even with small amounts
- Professional management
- SIP option for discipline
Risks
- Expense ratios reduce returns
- Not all funds beat their benchmark
- Market risk still applies
Important terms
- NAV
- Per-unit value of the fund.
- Expense Ratio
- Annual fee as % of AUM.
- AMC
- Asset Management Company running the fund.
Common mistakes
- • Chasing last year's top performer
- • Ignoring fees
- • Frequent switching
Beginner tips
- • Start with a low-cost index fund
- • Use SIPs for discipline
- • Match category to horizon
Educational only. This page explains how mutual funds work. It is not a recommendation to buy, sell, or hold any specific asset.