An investment vehicle that pools money from many investors to build a professionally managed, diversified portfolio of stocks, bonds, or other securities.
A mutual fund collects money from thousands of investors and invests the combined corpus in securities according to a stated objective. Each investor owns units proportional to their contribution and shares in the portfolio's gains and losses. In India, mutual funds are regulated by SEBI and managed by SEBI-registered Asset Management Companies (AMCs). Investor money is held by a separate Custodian bank — making it safe even if the AMC faces problems.
Imagine 10,000 people each putting ₹1,000 into a pot. A trained investment expert then uses this ₹1 crore pot to buy shares in 50 companies, bonds from the government, and other assets. If the portfolio grows by 12%, every investor's share grows by 12%. That's a mutual fund — professional management, diversification, and regulatory protection, accessible with as little as ₹100.
You invest money (₹500 or more in most funds) and receive units at that day's NAV.
Your investment is pooled with thousands of other investors to form the scheme's corpus.
A SEBI-registered AMC deploys this corpus into securities (stocks, bonds, etc.) aligned with the fund's objective.
The fund's value changes daily based on the market prices of its holdings — reflected in the daily NAV.
You can redeem your units on any business day at the prevailing NAV (for open-ended funds).
You invest ₹10,000 in an equity fund with NAV ₹100. You receive 100 units. The fund holds shares in 60 companies. One year later, the portfolio has grown 14% — the NAV is now ₹114. Your 100 units are worth ₹11,400. You made ₹1,400 without picking a single stock yourself.