Mutual Fund is popularly understood as investment tool which provides tax benefits. Whereas some people find it the right way to invest because of affordability, liquidity, professional management and most importantly for getting maximum returns by effectively utilizing hard earned money.
A Mutual Fund is a body corporate registered with Securities and Exchange Board of India (SEBI) that pools up the money from individual/corporate investor and invests the same on behalf of the investor/unit holders, in equity shares, government securities, Bonds etc. and distribute the profit. In other words, a mutual fund allows an investor to indirectly take a position on the basket of assets (investment securities).
One should not mistake Mutual Funds to be risk free investments. In fact, investing in MF contains the same risk as investing in Market, the only different being that due to Professional management of funds the controllable risks are substantially reduced.
Ms. Meenakshi Dewan