Mutual Fund

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What is Mutual Fund?

Mutual funds are managed by professional portfolio managers who decide how to allocate the fund's assets. The main goal of mutual funds is to provide investors with a way to diversify their investments without having to manage individual securities themselves.

Net Asset Value (NAV): NAV is the price per share of the mutual fund, calculated by dividing the total value of the fund's assets minus liabilities by the number of outstanding shares. It is typically calculated at the end of each trading day.
Expense Ratio: The expense ratio is the annual fee expressed as a percentage of the fund’s average assets under management (AUM). This fee covers management costs, administrative costs, and other operating expenses. Lower expense ratios typically benefit long-term investors.
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Features

Diversification: Mutual funds pool money from multiple investors to invest in a diversified portfolio of assets (stocks, bonds, etc.), reducing the risk for individual investors by spreading investments across different sectors and instruments.

Liquidity: Mutual funds provide liquidity since investors can buy and sell shares in the fund on any business day at the Net Asset Value (NAV) price, making it easy to access funds when needed.

Professional Management: A professional portfolio manager or fund manager makes all the investment decisions. This is particularly beneficial for investors who don't have the time or expertise to manage investments themselves.

Accessibility: Mutual funds are accessible to most investors, including small investors, since many funds have low minimum investment requirements.