Mutual fund means a cumulative amount. As we all know, if we have to invest in the stock market, then we have to invest by looking at the company’s fundamental research and good company shares. But it is difficult for an individual investor to do this. we do not have so much time and knowledge. If there is a small investor, then they do not have enough money to invest.
If Suppose my monthly income is ten thousand and I have interested to buy MRF company shares with two thousand rupees. you cannot buy MRF company shares in two thousand rupees because MRF company share price is 80,000. But if you invest in a mutual fund, you can do this.
The Mutual Fund collects all the investor’s money and invests it in the market. If one buys a company’s stock and if that company closes, the investor’s money will be drowned. but if one invests in a mutual fund it cant’s happened, because the mutual fund invests the money in more than one company.so there was no chance to drowned.
Mutual Fund Meaning-
As you all know, mutual means that together and fund means the amount of money. The money invested in the stock market of the individual investor together is called a mutual fund. If an investor does not have any information about the stock market then he should invest in a mutual fund.
Mutual Fund Work-
Mutual funds collect money from all interested investors who want to invest in the stock market. After that, the mutual fund house has a research team. The research team researches to find out a good quality company. and there has a fund manager in a mutual fund house. Who decides that in which company to invest. According to the mutual fund capitalization, there is 25 to 100 company in one fund. For this, there is no loss in mutual funds. Because a fund manager is an experienced person, so they invest money in a good sound company. When we invest in mutual funds, the same amount is distributed to all companies. Which threatens to reduce the risk.
Mutual Fund Expense Ratio-
Mutual fund expense ratio is the amount that mutual fund companies charge to the investors to manage their fund. The expense ratio is included with all of the management fees and operating costs of the fund. The expense ratio is calculated by dividing a mutual fund’s operating expenses.
The number of factors determines whether an expense ratio is relatively high or low. a good, low expense ratio is generally considered to be around 0.5 to 0.75% for an actively managed mutual fund portfolio while an expense ratio greater than 1.5% is considered high in any mutual fund.
Mutual fund Expenses ratio can vary between the different types of mutual funds. The mutual fund category, the strategy to invest, and the capitalisation of the fund all affect the expense ratio. A fund with a smaller number of assets usually has a higher expense ratio compared to a bigger number of assets due to its limited fund.
Mutual Fund expenses can make a very big difference in investor return.for that investors should compare expenses ratio when while investing any mutual fund. Investors can find the expenses ratio in financial websites.