What is Mutual Funds
A deeper understanding of mutual funds requires breaking down their structure, management, types, benefits, risks, and fees. ### 1. **Structure of Mutual Funds** When you invest in a mutual fund, you are buying shares of a portfolio of assets managed by a professional. The money from all investors is pooled together, and the fund manager decides how to allocate this pool of resources across various financial assets. These funds typically operate in an open-end structure, meaning new shares can be issued or redeemed based on demand, allowing investors to buy or sell shares at the fund’s net asset value (NAV). - **Net Asset Value (NAV)**: This is the price per share of the mutual fund and is calculated by dividing the total value of the fund’s assets minus its liabilities by the number of shares outstanding. NAV is calculated daily, based on the closing prices of the securities in the portfolio. ### 2. **Management and Operations** Mutual funds are actively or passively managed. - **Act...