GPSC Class 2 Exam Syllabus 2020 Gujarat Education Service class 2
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Syllabus for Competitive Examination For the posts ofGujarat Education service class 2
An Mutual Fund is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. One of the main advantages of mutual funds is that they give small investors access to professionally managed, diversified portfolios of equities, bonds and other securities, which would be quite difficult (if not impossible) to create with a small amount of capital.
1. How do Mutual Funds work?
A mutual fund is formed when an asset management company (AMC) pools investments from various individual and institutional investors with common investment objectives. A fund manager professionally manages the pooled investment by strategically investing in capital assets to generate maximum returns for the investors. Fund managers are professionals in the field of finance with an excellent track record of managing investments and have an in-depth understanding of markets. The fund houses charge expense ratio, which is the annual maintenance fee to manage investments of individuals. The investors make money through regular dividends/interest and capital gains. They can either choose to reinvest the capital gains via a growth option or earn a steady income by way of a dividend option.
2. Why should you invest in Mutual Funds?
Investing in mutual funds is a paperless and straightforward process. Investors can monitor the market and make investments as per their requirements. Moreover, switching between funds and portfolio rebalancing helps to keep returns in line with expectations.