| Investors are nowadays getting attracted to | | | | The method of working of mutual funds are: |
| invest in equities, especially retail investors. There | | | | 1. While starting a new fund, each units of the |
| are a lot of risks in investing directly in stocks, as | | | | funds are fixed with a particular rate i.e.and the |
| there are a lot of chances of losing money. | | | | new fund offers are launched for that particular |
| Instead Mutual Funds is a good option to invest | | | | fund. |
| safely and get the advantage of the equity | | | | 2. Investors apply for these with a minimum |
| markets. | | | | investment ceiling. Entry loads of 2.5% will be |
| Mutual funds recruit experienced management | | | | charged while buying units for a particular fund. |
| professionals who have vast experience in | | | | This entry load varies and it is controlled by the |
| investment analysis. They research the profile of | | | | finance ministry. |
| the company, future earnings, promoters profile | | | | 3. Once the investors finishes applying, the units |
| and other factors before taking stake in any | | | | are allotted for the amount paid. These units are |
| particular company. | | | | allotted in electronic format. |
| Some funds may be launched by targeting a | | | | 4. The starting value of each unit is called NAV i.e. |
| particular sectors i.e. blue chip fund, pharma fund, | | | | net asset value. |
| information technology fund. These funds invest | | | | 5. The fund managers than start investing these |
| money only in particular blue chip companies, | | | | money in the companies which require liquidity |
| pharma companies or information technology | | | | after doing sufficient research. |
| companies. | | | | |