What is a Mutual fund?

A mutual fund is a pool of money contributed by individuals who have similar financial goals. The money collected is then invested in various securities such as equities, debentures/bonds and/or money market instruments.The whole concept of mutual fund is such that it is a perfect win-win-win situation for the investors - Asset Management Company - companies in which the money is finally invested.

A good habit such as investing that too in mutual fund can be a very important step towards disciplined and informed investing. If one has to really benefit from the Mutual Funds then they need to give due time to understand these benefits and experiance it . You can know more on this through our section - Benefits of Mutual fund Investment.

The market of Mutual fund has seen a total turn around in last one and half decade because of the entry of private players. Since 1964 when the first Mutual Fund (UTI) was launched in the market the movement of Mutual Fund Market has been quiet slow. But things changed in last 15 years or so. There has been total turnaround and the investors who had limited investment opportunities till date under licence raj is suddenly flooded with series of funds of every dimensions.

The Mutual fund market grew exponentially with almost all large financial institutions coming out with their series of mutual funds. The global players also entered the Indian market with joint-ventures and now alone. Many are planning to enter the indian mutual fund market in due course of time. You can know more through 'Indian Mutual Fund Industry' section.

Mutual fund by nature is such an instrument which can be called as 'indirect investment in capital markets'. You dont directly invest in stocks and bonds rather you put money in a mutual fund which invest on the behalf of all the investors.

With the tag of a emerging economy Indian stocks rallied at the stock exchanges and crossed all expectations, setting up new standards for the stock market. Suddenly the whole world wants to invest in india. This led to a very volatile situation where neither the small investor nor the large HNI's were comfortable taking such enormity of risk. So many investors moved toward mutual funds rather than investing directly in stocks.

The goverment also supported this growth of Mutual Fund industry through its regulatory bodies. SEBI plays the role of an regultor for mutual fund industry making sure that ethical standards are maintained and investor rights are protected.