Mutual funds are investment vehicles that pool money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities. Managed by professional fund managers, they offer individual investors access to diversified, professionally managed portfolios, which they might not achieve on their own.

Key Features of Mutual Funds:

1. Diversification: Mutual funds invest in a wide range of securities, reducing the risk associated with individual investments.
2. Professional Management: Experienced fund managers handle the buying and selling of securities.
3. Liquidity: Shares in mutual funds can typically be bought or sold on any business day.
4. Affordability: Investors can start with relatively small amounts of money.
5. Variety: There are many types of mutual funds, including equity funds, bond funds, index funds, and money market funds, catering to different investment objectives.

Types of Mutual Funds:

1. Equity Funds: Invest primarily in stocks.
2. Bond Funds: Invest in bonds and other fixed-income securities.
3. Money Market Funds: Invest in short-term, low-risk securities.
4. Index Funds: Aim to replicate the performance of a specific index.
5. Balanced Funds: Invest in a mix of equities and bonds.

• Professional management.
• Diversification.
• Economies of scale in transaction costs.
• Simple reinvestment of income.

Mutual funds are regulated by the Securities and Exchange Board of India (SEBI) in India and similar regulatory bodies in other countries, ensuring transparency and investor protection.