A mutual fund is like a pool where many people invest their money together.
These investors may not have the time, experience, or knowledge to select stocks on their own, so the mutual fund company appoints professional fund managers to manage the investments.
The fund manager collects money from many investors and carefully invests it in stocks, bonds, or other assets based on the objective of the mutual fund scheme.
Each mutual fund scheme has units, similar to shares in the stock market, and a value called the Net Asset Value (NAV).
The NAV changes daily depending on the performance of the underlying investments.
When you invest in a mutual fund, you receive units based on the current NAV.
The total value of your investment is calculated by multiplying the number of units you hold by the current NAV.
Since stock prices and other investments change daily, the value of your mutual fund investment can also go up or down.
For example, the HDFC Mutual Fund Top 100 Fund is a mutual fund scheme that invests in large companies.
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