Mutual funds are one of the most popular investment options these days.
The concept of mutual funds was invented in Europe in early 1770s. During a bleak economic situation, Adriaan Van Ketwich, a Dutch merchant created the world's first mutual fund in 1774. He pooled money from several individuals and created a diversified fund of bonds.
The early mutual funds spread were of the closed-end variety, issuing a fixed number of shares. They spread from the Netherlands to England and France before heading to the U.S. in the 1890s. The first modern-day mutual fund, Massachusetts Investors Trust, was created on March 21, 1924.
A mutual fund is an investment vehicle formed when an Assest Management Company (AMC) or fund house pools investments from several individuals and institutional investors with common investment objectives.
A fund manager, who is a finance professional, manages the pooled investment. The fund manager purchases securities such as stocks and bonds that are in line with the investment mandate.Mutual funds are an excellent investment option for individual investors to get exposure to an expert managed portfolio. Also, you can diversify your portfolio by investing in mutual funds as the assest allocation would cover several instruments. Investors would be allocated with fund units based on the amount they invest. Each investor would hence experience profits or losses that are directly proportional to the amount they invest. The main intention of the fund manager is to provide optimum returns to investors by investing in securities that are in sync with the fund’s objectives. The performance of mutual funds is dependent on the underlying assets.
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