Mutual funds are investment havens which pool savings from a
number of investors under a particular scheme managed by an asset management
company (AMC).
The pooled money is then invested in securities like equity
shares, bonds according to scheme’s investment objective. The fund manager,
appointed by the AMC, manages the investment portfolio as per the market
movements to create wealth for investors.
The fund house charges an annual fee called expense ratio from the
investors to manage their portfolio.
The investors usually make money by way of regular
dividends/interest and capital appreciation. They may choose to reinvest the
capital gains via a growth option or earn regular income by way of dividend
option.
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