What is a mutual fund? How is it different from other funds?

A mutual fund is an investment vehicle that allows you to use the services of professional investment managers to manage your money.

A mutual fund is formed like a trust. Therefore , your money is not handed over to someone else, but kept in a trust whose beneficiaries are the investors themselves.

This structural advantage makes it safer than any other structure like a chit fund.

Mutual funds invest in a select set of securities chosen by managers and the value of fund fluctuates with the value of underlying securities. This value is known to the investor as the net asset value (NAV) on a daily basis.

An investor can move in or out of the fund at a price linked to the NAV, the facility being unique to a mutual fund structure.