How does a mutual fund work?

how does a mutual fund work what comes

to our mind when someone mentions in

virtual fund boring complicated not

actually let us explain how a mutual

fund works okay this is how it works

investors like us pull in money to form

a mutual fund an asset management

company or AMC is appointed to manage

the money according to various goals the

AMC has professional people who

understand how markets and money work

and then there are trustees of mutual

fund who keep monitoring the AMC's

activities to ensure that investors

interests are protected the AMC's take

your money and invest in stocks and

fixed income investments now it's a

given that stock markets and bond

markets have ups and downs

there is no escape from that fact to

reduce this risk the asset management

company does a very smart thing for

equity investments they go and invest in

not one but several industries this

ensures that even if one stock doesn't

perform well the better performing

stocks balance the dip for debt

investments they invest in various

securities to spread the risk debt funds

when teamed with equity investment in

diverse industries make for a great

investment combo it has the growth of

equity investment and stability of debt

funds all these factors make mutual fund

investments less risky than a common man

investing in equity and debt directly

and more beneficial okay what happens

after you invest in mutual funds once

your money is invested in a mutual fund

you are then given units which represent

the money invested in the fund these

units are easily redeemable to get back

your money and they are generally

mentioned along with the nav you must

have come across this term

a navy or net asset value of a mutual

fund represents the value of one unit of

your investment after all fund expenses

and management fees are paid so whenever

you feel like checking the market value

of your investment you simply need to

multiply the given nav by the number of

units you hold you can invest in a

mutual fund in a lump sum manner or in

smaller bits through a systematic

investment plan called s IP this makes

mutual funds accessible for anyone

salaried entrepreneurs businessmen

anyone you can know more about s IP in

our video on advantages of s IP so is

your investment doing well not so well

how do you know you see every fund has a

fixed benchmark to measure their

performance this benchmark could be part

of the Nifty or sense X to judge the

performance of your fund you need to

check how the fund is performed against

the benchmark set for its measurement

the fund managers task is to analyze the

market and cross the set benchmark of

the fund this is exactly why we pay fund

managers so mutual funds can offer many

benefits like diversification liquidity

professional management low charges and

more you can go through our video on why

should you invest in mutual funds

to invest in mutual funds call your

financial advisor now call toll-free

1-800 to get six double six double eight

or visit us at www.ufxmarkets.com for