Mutual funds are financial intermediaries, which collect the savings of small investors and invest them in a diversified portfolio of securities to minimise risk and maximize returns for their participants.
Mutual funds have given a major fillip to the capital market, both primary as well as secondary. The units of mutual funds, in turn, are else tradable securities. Their price is determined by their net asset value (NAV) which is declared periodically.
The operations of the private mutual funds are regulated by SEBI with regard to their registration, operations, administration and issue as well as trading. there are various type of mutual funds, depending on whether they are open ended or close ended and what their end use of fund is.
A open-ended fund provides for easy liquidity and is a perennial fund, as it's very name suggests. A close-ended fund has a stipulated maturity period generally five years.
More summaries about the Mutua Funds