What is Mutual Fund?

Q: How is a mutual fund different from a stock?

A stock represents ownership in one specific company. A mutual fund holds a diversified portfolio of multiple securities (stocks, bonds, etc.). When you buy a mutual fund unit, you get exposure to all the underlying securities proportional to your investment — instant diversification.

A Mutual Fund in India is constituted as a Trust under the Indian Trusts Act. The AMC manages the investments; the Trustee Company safeguards unitholder interests; SEBI regulates the framework.

Types by Asset Class

Equity Funds: ≥65% in equities — higher risk, higher potential returns, taxed as equity
Debt Funds: <65% equity — invest in bonds, G-Secs, money market instruments
Hybrid Funds: Mix of equity and debt (aggressive/balanced/conservative)
Solution-Oriented: Retirement funds, children's funds — specific goal-based mandates

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Relevant NISM series

Series V-ASeries V-B

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FAQs about Mutual Fund

How is a mutual fund different from a stock?add

A stock represents ownership in one specific company. A mutual fund holds a diversified portfolio of multiple securities (stocks, bonds, etc.). When you buy a mutual fund unit, you get exposure to all the underlying securities proportional to your investment — instant diversification.

A Mutual Fund in India is constituted as a Trust under the Indian Trusts Act. The AMC manages the investments; the Trustee Company safeguards unitholder interests; SEBI regulates the framework.

Types by Asset Class

Equity Funds: ≥65% in equities — higher risk, higher potential returns, taxed as equity
Debt Funds: <65% equity — invest in bonds, G-Secs, money market instruments
Hybrid Funds: Mix of equity and debt (aggressive/balanced/conservative)
Solution-Oriented: Retirement funds, children's funds — specific goal-based mandates

info

Relevant NISM series

Series V-ASeries V-B

See Mutual Fund in exam questions

1,200+ NISM practice questions. Free to start.

Start Practice Free

Types by Asset Class

Related Terms

NAV

SIP

AMC

AUM

Expense Ratio

ARN

FAQs about Mutual Fund

Where to go from here

Master every term that matters

What is Mutual Fund?

Types by Asset Class

Related Terms

NAV

SIP

AMC

AUM

Expense Ratio

ARN

FAQs about Mutual Fund

Where to go from here

Master every term that matters