Important Points for IC 89 - Management Accounting Exam
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Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities and schemes in considerations of prospects or potential of various securities in respect of appreciation, security and return on investment.
Mutual funds act as Special Purpose vehicle for mobilization of savings and investments and formation of capital for organization.
The investors of mutual funds are known as unit-holders. The unit-holders in proportion to their investment in the mutual funds share the profits or losses and capital appreciation realised by the mutual funds through various schemes.
All Mutual Fund investments are subject to market risks and investment risks such as trade volumes, settlement risk, liquidity risk, default risk including possible loss of capital.
Indian mutual funds have been organised through the Indian Trust Act, under which they have enjoyed certain tax benefits.
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