Key features of a mutual fund 1. Pooling Of Resources: By pooling their investments, individuals are able to gain access to a diverse array of assets through mutual funds. This collective approach enables participation in investment opportunities that may otherwise be unattainable for those investing independently. 2 . Professional Management: Mutual funds are overseen by professional fund managers with the necessary expertise to manage investors' capital effectively. These managers are equipped with the resources required to diligently monitor their investments and to rebalance their portfolios per the specific objectives of the fund. 3. Risk Diversification: Mutual funds provide investors with the opportunity to diversify their portfolios across a variety of assets, including equity, fixed income, money market instruments, and commodities. This diversification serves to mitigate the downside risks typically associated with concentrating investments in a singl...
Net Asset Value The Net Asset Value or NAV is the price at which investors buy (subscribe) or sell (redeem) units of a mutual fund. It is the market value of all the assets that are held in a fund's portfolio less its liabilities. The NAV per unit is NAV divided by the total no. of units outstanding. Formula = (Total Assets - Total Liabilities) / Total no. of units outstanding Key elements Total Assets: Includes all investments made by the fund (such as stocks, bonds, money market instruments, cash) and any income generated (like dividends or interest). Total Liabilities: Covers all expenses incurred by the fund like management fees, administrative costs, and any other payable amounts like interest payable etc. Units Outstanding: The total no. of mutual fund units issued to investors. Example Total Assets: ₹ 1,00,00,000 Total Liabities: ₹ 5,00,000 Units Outstanding: 5,00,000 NAV = (1,00,00,000 - 5,00,000)/5,00,000 ...