A mutual fund is a type of investment vehicle that pools together money from multiple investors to purchase a diversified portfolio of stocks, ETFs, bonds, or other securities.
The value of a mutual fund is specified as NAV or net asset value. The s NAV of a fund is obtained by dividing the total value of the fund’s holdings by the number of shares. The NAV fluctuates with the market value of the underlying securities.
Mutual funds are managed by a professional money manager or a team of analysts, who make decisions about what securities to buy and sell in the fund’s portfolio. The buy and sell decision for each security in the mutual is solely based on the investment approach that each mutual fund house follows.
The goal of a mutual fund is to provide investors with a diversified portfolio and professional management, while also allowing for the potential to earn higher returns than they would be able to achieve by investing in individual securities on their own.