What is mutual fund?

Question

what is the difference between mutual fund and shares?

Answer 1

Suppose you have

100,000

Shares

1.) Buy 20$@100 = 2000$

2.) you get 100 shares of ABC stock at 20$: one and the only one company

3.) Solely depend on you

Mutual Funds

1.) You give $$ to a fund manager

2.) Your 10,000 will be sum up with many other clients' fund to total of somewhat 100Million$

3.) Those 100M will be bought a lot of stocks according to the fund rule

The brief differences are

1.) Share is a share

2.) Mutual fund is a pool of money from many people, which will be used to buy thing according to the policy

3.) the very popular known advantage of MF is diversification

hope this help

Answer 2

Mutual fund is a trade vehicle where your money is managed.  You own shares in the fund.

Answer 3

Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document.

Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unitholders.

The profits or losses are shared by the investors in proportion to their investments. The mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the public.

Have a look at the following link which will give you complete details on mutual funds

http://www.bseindia.com/faqs/mutual_fund...

Answer 4

A mutual fund is a professionally managed firm of collective investments that collects money from many investors and puts it in stocks, bonds, short-term money market instruments, and/or other securities. The fund manager, also known as portfolio manager, invests and trades the fund's underlying securities, realizing capital gains or losses and passing any proceeds to the individual investors.  You essentially own a basket of stocks and have no control as to buy or sell. usually though you are very well diversified. Funds can be very specific, like a China fund or generic, like a large cap fund.

Answer 5

in Mutual funds peoples put together their money and gave that money to a fund house for a particular scheme and fund house, took that collectively money and invest into equity and other sectors....

in shares, u directly invest into share market.....then also u can invest only into selective shares and not too many.....in this case also u dont have that professional tools to identify a good company for investment...........and hence u can get profit on only limited shares with limited skills.....

whereas, in Mutual fund, fund house, collect money from all people and a huge courpus is arranged for investment....collectively, they use thier professionals tools and skills and then invest those courpus into equity and others.....the profit/loss for that big amount also becomes valueable, which is distributed to the people who invested in the their investment ratio (ratio is identifies as units------more units means more invested amount which also entitles for more ratio and vice versa)......a small amount from the profit/loss is deducted by the fund house for their resources and other expenses.....

Answer 6

In a mutual fund you have a fund manager. He builds or joins you in a fund portfolio based on your ability to take risk. For example If you take 100 percent equity shares based MF you take 100 percent risk here. Usually they build a portfolio with Equity, government bonds , treasury bills etc to diversify and minimize risk.

In a share you are responsible for profit and loss. You don't have a fund manager who is efficient and controls your fund. Here you take the final call where in MF fund manager who is well informed will take final decision.