It is a professionally managed type of collective investment scheme that pools money from many investors and invests typically in investment securities (stocks, bonds, short-term money market instruments, other mutual funds, other securities, and/or commodities such as precious metals).
In accordance with the fund’s investment objective the mutual fund will have a fund manager that trades (buys and sells) the fund’s investments.
The LIC mutual fund have very fluid stocks are and are used for buying or redeeming and/or selling shares at a net asset value.
Shares of several companies and receive dividends in lieu of them and the earnings are distributed among the share holders which is posses by Mutual funds.
How it Works?
Depending on their fund management pattern Mutual funds can be either or both of open ended and closed ended investment companies.
Without a limit on the number as opposed to a closed-end fund an open-end fund offers to sell its shares (units) continuously to investors either in retail or in bulk.
Closed end funds have limited number of shares.
It has diversified investments spread in calculated proportions among securities of various economic sectors.
It gets their earnings in two ways.
First is the most organic way, which is the dividend they get on the securities they hold.
Second is by the redemption of their shares by investors will be at a discount to the current NAVs (net asset values).
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