1) Investors with common financial objectives pool their money
2) Investors, on a proportionate basis, get Mutual Fund Units for the sum contributed to the poll.
3) The money collected from investors is invested into share, debentures and other securities by the fund manager.( professional )
4) The fund manager realises gains or losses, and collects dividend or interest income.
5) Any capital gains or losses from such investments are passed on to investors in proportion of the number of units held by them
Mutual Funds are one of the best vehicles for the people who don’t have either the expertise or the time to take care of their own investments.