Posted on 4/7/2023 11:30:00 AM

Mutual funds pool money from investors and invest them in various asset classes as per the investment objective of the scheme. The invested amount is managed by a professional fund manager who along with the help his team keeps track of market conditions and aims to make appropriate investment decisions. It is the fund manager who handles the investment portfolio and allocates the investment corpus to the right asset classes as required.

For example, for a small-cap mutual fund scheme, the fund manager would make sure that the major portion of the money invested is used to buy shares of small cap companies. How long the shares are to be held and when is the time to sell them is also taken care of by the fund manager. In this case, the fund manager plays an active role in investment decision making and such schemes are called actively managed schemes.

There are also passively managed schemes which include index schemes and Exchange Traded Funds (ETFs). These schemes replicate the benchmark index and include all the same stocks that form a part of the underlying index in the same proportion.

In the case of both actively and passively managed Schemes the investor does not need more than a basic knowledge about the stock markets as the fund manager takes care of the rest. What is more important is that the investor should be clear about their own investment goals, risk appetite and how long they want to stay invested.

Mutual funds also come with several other benefits:

 You can start investing with just a small amount through SIP (systematic investment plan).
 Mutual Fund Schemes across various categories could offer diversity which can help the investor to select a particular Scheme as per the risk appetite.
 There is a wide range of schemes to choose from to meet different investment goals.
From the above information, you might be able to understand why mutual funds could be a suitable investment option even for beginners. While it would be prudent to do a little bit of research and increase your awareness, it is not necessary to be well-versed with the working of the stock markets to start your investment journey with mutual funds.

To conclude:

When investing in the stock markets, the responsibility of managing the investment lies with the investor. Whereas, when it comes to mutual funds, a professional fund manager takes charge. Investing in mutual funds can be helpful for the investors as they don’t need to invest their most of their time and energy in researching about the market. Furthermore, when investing in shares, the investor must choose individual shares or a selection of their choosing, while in mutual funds, the entire amount is invested in a diversified set of assets tailored to the investor's investment goals and scheme objectives.

An investor education initiative by ICICI Prudential Mutual Fund

Visit to know more about the process to complete a one-time Know Your Customer (KYC)requirement to invest in Mutual Funds. Investors should only deal with registered Mutual Funds, details of which can be verified on the SEBI website ( For any queries, complaints & grievance redressal, investors may reach out to the AMCs and / or Investor Relations Officers. Additionally, investors may also lodge complaints on if they are unsatisfied with the resolutions given by AMCs. SCORES portal facilitates you to lodge your complaint online with SEBI and subsequently view its status.(
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Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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