A mutual fund collects savings from small investors and invests it in securities like government and corporate bonds to earn income from interest, dividends, and capital gains. The fund is managed by professional fund managers on behalf of investors. Investors own units of the fund that change in value like share prices based on the fund's net asset value. Mutual funds allow individuals to invest in a diversified portfolio managed by experts for a small fee.

2. 
A mutual fund collects the savings from
small investors, invest them in Govt. and
other corporate securities and earn
income through interest and dividends,
besides capital gains.

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Ownership of the fund lies in the hands of the
investors.
Management of funds is left in the hands of
investment professionals who earn a fee for their
services.
The pool of funds collected is invested in a portfolio
of marketable securities.
The investors share in the fund is represented by
“units”.
The unit value changes just like share market values
and the unit value is called Net Asset Value(NAV).
The investment portfolio of the mutual fund is
created according to the objective of the fund.

4. 
SEBI (mutual funds) Regulations, 1993,
“ A fund established in the form of a trust
by a sponsor, to raise monies by the
trustees through the sale of units to the
public, under one or more schemes, for
investing in securities in accordance with
the regulations.”

5. A sponsor institution to promote the fund.
 A team of trustees to oversee the
operations and to provide checks for the
efficient, profitable and transparent
operations of the fund.
 An Asset Management Company (AMC)
to actually deal with the funds.
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6. Annual fee -1.25% of funds managed at
the maximum.
 Exceeds 100 crores – only 1%.
 Custodial fee, cost of dividend warrants,
fee for registration, asset management
fee – cannot exceed 3% of the assets in
the respective schemes each year.
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7. 
The NAV is the market price of each unit
of a particular scheme in relation to all
the assets of the scheme.
NAV = Market value of the investments
* Value of each unit
Scheme size (corpus of fund)

8. 
Represents
investment in a
particular co.
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Risk is diversified.
Net asset value.
Genuine investors
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Tax benefits
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Represents
investments in the
parts of shares of a
large no. of cos.
Risky
Market value
Genuine investors
and speculators
No tax benefits

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Close-ended fundsThe corpus and its division into units are prefixed.
The duration is fixed.
Once the period is over or the corpus is reached,
the door is closed for the investors.
Publicly traded through stock exchanges and
generally no repurchase facility.
The whole fund is available for the entire duration.
At the time of redemption, the entire scheme is
liquidated and distributed among the unit holders.
Attracts more tax from investors.
If the market condition is not favourable, affects
the investors.

10. There is free entry and free exit.
 Not publicly traded as they are not listed
in stock exchanges.
 Fund is ready to repurchase and resell
them on any working day.
 Objective is income generation.
 The prices are linked to NAV.
 Different prices for purchases and sales.
 Redemption demands from investors at
any time.
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11. Income funds
 Pure growth funds
 Balanced funds
 Specialized funds
 Money market mutual funds (MMMfs)
 Taxation funds
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12. Leveraged funds
 Dual funds
 Index funds
 Bond funds
 Aggressive growth funds
 Off-shore mutual funds
 Property funds
 Fund of funds
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Channelizing savings for investments
Offering wide portfolio investment
Providing better yields
Rendering expertise service at low cost
Providing research service
Offering tax benefits
Introducing flexible investment schedule
Providing greater affordability and liquidity
Simplified record keeping
Supporting capital market
Promoting industrial development
Acting as substitute for IPOs
Reducing the marketing cost of new issues
Keep the money market active

14. Market risks
 Scheme risks
 Investment risks
 Business risks
 Political risks
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15. Repurchase facilities
 Reissue facilities
 Roll over facilities
 Lateral shifting facilities
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