Mutual Fund
A pooled investment vehicle that collects money from many investors and invests it in securities according to a stated objective.
Formula
Investor's Value = Units Held x Net Asset Value per Unit
Unit
₹
In depth
A mutual fund gives small investors access to diversification and professional management that would be impractical to assemble individually, at the cost of an annual fee. In India funds are trusts regulated by SEBI, with the assets held by a custodian separately from the asset management company — which is why a fund house failing does not put the securities at risk. The investor owns units of the scheme, not the underlying securities directly, and cannot direct what the fund buys. The fee is charged whether the fund performs or not, which is why the expense ratio deserves as much attention as the strategy.
Worked example
A fund holds ₹5,000 crore of securities and ₹20 crore of liabilities across 40 crore units, giving a NAV of (5,000 - 20) / 40 = ₹124.50. An investor with 800 units holds 800 x 124.50 = ₹99,600.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Mutual Fund” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.