Mutual Fund

A mutual fund is a financial vehicle that pools assets from shareholders to invest in securities like stocks, bonds, money market instruments, and other assets. It is operated by professional money managers, who allocate the fund’s assets and attempt to produce capital gains or income for the funds investors.

A mutual fund's portfolio is structured & well maintained to gain maximum profit & to match the investment objectives stated in its prospectus.

How mutual fund makes profit.

1. Income earned from dividends on stocks and interest on bonds held in the fund’s portfolio and pays out nearly all of the income it receives over the years to fund owner in the form of distribution.

2. If the fund sells securities that have increased in price, the fund realises a capital gain.

3.  When the fund’s share increase in price, you can then sell your mutual fund shares for a profit in the market.

Written by - Aman Singh | LinkedIn