MUTUAL FUNDS

Mutual fund companies are also known as Asset Management Companies. An investment in the
share market is always riskier and the individual may not be able to invest on his own. Hence, investment through a mutual fund is done. 
They collect money from a number of interested
investors and create a pool of that entire amount of money. The entire money is invested in a diversified manner in the debentures, bonds, and shares of different companies belonging to different sectors. The entire investment is managed by trained fund managers. 

Who is regulated Mutual Fund in india?
In India, a mutual fund is regulated by SEBI.
Whenever a mutual fund company comes out with a new scheme it is known as New Fund Offer. The entire investment under a mutual fund scheme is divided into units with a face value of Rs 10 each. The ratio in which the invested money moves up and down, in the same way even the value of units move. The value of one unit on a particular day is known as Net Asset Value (NAV). Investing in mutual funds for the purpose of saving is also known as Equity-Linked Saving and such schemes are known as Equity-Linked Saving Schemes (ELSS).

Mutual funds can be broadly classified into two types-
1) Close Ended
2) Open-Ended
In the case of the Close-Ended Mutual Fund Scheme, investment is possible only when the new fund offer has been announced. Investment during a fixed time period is allowed in such schemes. Hence, the number of units cannot increase in the future.
On the other hand in Open-Ended Mutual Fund Schemes investment can be done any time. As
investment is added on, even the number of units will increase accordingly.

There are two ways through which investment in Mutual fund can be done.
1. Lump Sum Investment
2. Systematic Investment Plan (SIP)
In Lump Sum Investment a huge amount is invested at once. In the Systematic Investment Plan investment is done on a monthly basis. A certain amount is invested every month. So SIP is not possible in a close-ended mutual fund scheme.

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