MUTUAL FUNDS - Everything you should know!!

         MUTUAL FUNDS - Everything you should know!!

Definition: 

A mutual fund is an investment security that enables investors to pool their money together into one professionally managed investment.

Mutual funds can invest in stocks, bonds, cash or a combination of those assets.

The underlying security types, called holdings, combine to form one mutual fund, also called a portfolio.

The value of the mutual fund company depends on the performance of the securities it decides to buy

Mutual funds give small or individual investors access to diversified, professionally managed portfolios at a low price.

Mutual funds are divided into several kinds of categories, representing the kinds of securities they invest in, their investment objectives, and the type of returns they seek. 

History:

In 1772–1773 :
The first modern investment funds were established in the Dutch Republic. 
By Abraham van Ketwich and his aim was to provide small investors with an opportunity to diversify.

In 1890s
It was introduced to the United States as well.

In 1924s
The first open-end mutual fund with redeemable shares was established.

After the Wall Street Crash of 1929, the US Congress passed a series of acts regulating the securities markets in general and mutual funds.

How Mutual Funds Work:

 

Advantages of Mutual Funds :

• Simplicity
• Diversification
• Expert Management
• Liquidity
• Convenience
• Reinvestment of Income
• Range of Investment Options and Objectives
• Affordability

Types of Mutual Funds:

• Money market funds
• Fixed income funds
• Equity funds
• Balanced funds
• Index funds
• Specialty funds
• Fund-of-funds