A mutual fund company is an investment company that collects money from the various investors and again invests them in bonds, shares, stocks, short term money market instruments and in other securities. A mutual fund share value also known as the net asset value (NAV) per share is calculated daily on the basis of the total value of the fund divided by the number of currently issued shares.
The fund manager also known as a portfolio manager is the person who trades the securities and collects the dividends. Those people who don�t have much knowledge about the financial market and cannot decide on which share to invest, mutual fund can be a good option for them to invest in.
There are a number of mutual funds available in a market offered by a number of mutual fund companies. One of the types is Pharma fund that invests only in the Pharmaceutical companies. When a company launches a mutual fund, it releases a prospectus that carries all the information about the fund including the amount of money involved in the stocks, bonds and also the risk involved in the investment.
Mutual funds investing are not direct investment but just a method by which people make investment.
The mutual fund companies have experienced financial professionals who have a right knowledge of the financial market.
They know which company�s share to buy and also know the right time to buy and sell the shares and stocks. The objective behind the investments made by the mutual fund companies is to make profit for the investors and this is done by diversifying the capital and investing them into various growing companies of the market. The professional fund managers generally have a good experience of handling a large amount of money and the mutual fund companies hire the skilled fund managers to carry out the task.
While buying a mutual fund, people should check with the experience of the fund manager. The past performance and the returns made by the mutual fund company should also be considered well before buying a mutual fund of any company. People who are new to investment should start buying mutual fund for a very low amount and can continue buying every month. Growth fund, open ended fund, closed ended fund, income fund and balanced fund are some of the types of mutual fund that are available in the market.
Last Updated on : 22th July 2013