What is a Mutual Fund?
A mutual fund is an investment vehicle that uses the collective capital pooled together from different investors. This capital is then invested in a mix of various assets like equity stocks, debt instruments, money market securities and other financial and non-financial assets. The investments chosen for a mutual fund scheme’s portfolio depend on the objective and type of fund.
Depending on the primary asset class in focus, mutual funds can be classified as debt funds, equity funds or hybrid funds. Furthermore, they can also be categorised based on their structure (open-ended or close-ended), investment style (active or passive) and investment objective (income, growth or liquidity).