Investment in Mutual Fund

 Mutual Fund is an investment in which money is collected from number of investors and invested into different types of securities depending upon the objectives of each scheme.

The income earned from these investments are shared by its unit holders in proportion to the number of units owned by them. Mutual fund is one the most popular and suitable investment option for common man as it offers an opportunity to invest in diversified schemes at low cost.

Mutual fund units are issued and redeemed by Fund Management Company based on funds net asset value (NAV)

Net asset value(NAV): Net value of asset is market value of that scheme minus its liabilities.

  •  Formula of NAV=          NET VALUE OF ASSET

                                  NUMBER OF UNITS OUTSTANDING

  •  Sale price: It is the price of scheme which investor pay at the time of investment.


  • Repurchase price: Repurchase is the price at which you sell back the mutual fund units to the fund company.

Types of Mutual Fund:

  • Open ended Fund: This type of fund is available for subscription all throughout the year. This type of mutual fund does not have predefined maturity period. investor can easily buy and sell his units at its Net Asset values.


  • Close ended Fund: In this type of mutual fund its maturity period is predefined. Investment can be done directly in to the scheme at the time of the initial issue and units can be bought and sold whenever it is listed in the stock exchange.