Mutual funds: how they work and what to compare
Learn about pooled investing, scheme types, NAV, expenses, risk and the checks to make before investing.
A mutual fund pools money from investors and invests it according to the scheme documents. Investors receive units and the value changes with the underlying portfolio. Compare the investment objective, asset allocation, riskometer, expense ratio, exit load, portfolio concentration, track record across market cycles and whether a direct or regular plan suits your situation. Past performance is not a promise, and a fund labelled diversified can still fall in value.
Eligibility
Investors must complete the applicable KYC and onboarding requirements. Scheme eligibility, minimum amounts and transaction rules are set by the fund house and current regulations.
Potential benefits
Professional management and diversification can make market access simpler, but fees, market losses, liquidity limits and tax treatment still apply.
How to apply
Read the scheme information document and latest factsheet, confirm the risk level and costs, check the fund house and platform, then invest through an authorised channel. Keep statements and review nominees.