A mutual fund invests money in assets like stocks, bonds, and other securities. If these investments perform well, the value of the fund can increase, helping investors earn returns.
The mutual fund company, also known as the Asset Management Company (AMC), earns money by charging fees such as the expense ratio and exit load for managing the fund.
Earlier, mutual funds were also allowed to charge an entry load, but as per a circular issued by the Securities and Exchange Board of India (SEBI) on June 30, 2009, mutual fund schemes are no longer permitted to charge entry loads. (SEBI Circular No. SEBI/IMD/CIR No. 4/168230/09)
Want to understand mutual funds in simple language? Explore our Mutual Fund Investor Hub for beginner-friendly guides on SIPs, NAV, returns, expense ratios, and more.
