what is meant by mutual funds ? Explain its features brief
Answers
Answer:
Mutual funds are financial products built to provide good returns to the investors and eventually create wealth.
The money is collected from various investors and an experienced person (mutual fund manager) would invest the money in various stocks and debt instruments.
For example, equity mutual funds will invest in equities(stocks) and debt mutual funds will invest in debt instruments like bonds. Balanced and hybrid mutual funds will invest in both equities and bonds.
Equity-based mutual fund funds are further divided into various categories. For example, one of the categorizations is on the basis of company market capitalization into large-cap, mid-cap, small-cap, multi-cap, etc. Debt funds are divided into short term debt fund, long term debt fund, ultra short term debt fund, liquid fund, etc.
Each category of mutual fund has a different risk vs return profile. For example, equity mutual fund provides a higher return than debt mutual fund but the risk is also high. Risk is in terms of volatile returns.
Explanation:
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