A Mutual Fund is a professionally managed investment vehicle that pools money from multiple investors to invest in a diversified portfolio of securities such as equities, bonds, or other financial instruments. These funds are regulated and open to the public, providing investors with an opportunity to participate in professionally managed portfolios.

Mutual funds can be classified based on their investment objectives — such as Equity Funds, Debt Funds, Hybrid Funds, and Money Market Funds. They may also be Actively Managed, where fund managers make decisions to outperform the market, or Index-Based, where investments mirror a specific market index.

Each fund is managed by a qualified Fund Manager or Asset Management Company (AMC), responsible for selecting and managing investments in line with the fund’s stated objectives. The portfolio is continuously monitored to ensure optimal performance and risk management.

Types of Mutual Funds

1. Open-Ended Funds

   These funds allow investors to buy or redeem units directly from the fund at the Net Asset Value (NAV) calculated daily. Open-ended funds are the most common category, offering high liquidity and flexibility.

2. Close-Ended Funds

   Close-ended funds issue a fixed number of units through an Initial Public Offering (IPO) and are listed on stock exchanges. Units can be bought or sold in the market, and their prices may vary from the NAV depending on market conditions.