In this course we start from the very beginning. We start by defining what is a mutual fund. a mutual fund is a professionally managed investment fund that pulls money from many investors and invest in securities. Law securities basically means the stock market. The investor maybe a retail investor like you and me or institutional investor like some companies. Let's have a look at the mechanics of how the mutual fund investments work.

We will go step by step to understand the whole process. a mutual fund company also called us AMC asset management company. Now they announced mutual funds that can be a new mutual fund or the existing mutual fund. On seeing the announcement many investors want may want to invest in the mutual fund. So they gather their small amounts of money and give it to the mutual fund company or the AMC Through subscription. Now, the collected money with the AMC has got it invest in the stock markets by investing in the stock markets, they have a you What do you call number of portfolios that they purchase from the stock market the mutual fund company makes profits or losses.

Now, these profits or losses are passed on to the investors who have invested in the particular mutual fund. In the previous illustration, we use the word mutual fund houses. However, technically they are actually known as asset management companies a MCs also AMC is not only invest money out of the investors in stocks, but also in bonds, securities etc. Thank you for watching, see you in the next lecture.