What are mutual funds? A Mutual Fund (MF) is formed when capital collected by various investors is invested in purchasing company shares, stocks, or bonds. Shared by thousands of investors, mutual funds’ investments are collectively managed by a professional fund manager to earn the highest possible returns. a. Liquidity Unless you opt for close-ended mutual funds, it is relatively easier to buy and exit a mutual fund scheme. You can sell your units at any point (when the market is high). Do keep an eye on surprises like exit load or pre-exit penalty. Remember, mutual fund transactions happen only once a day after the fund house releases that day’s NAV. b. Economies of scale in transaction costs Since mutual funds buy and sell securities in large volumes, transaction costs on a per-unit basis are much lower than what retail investors may incur if they buy or sell shares through stockbrokers. c. Diversification Mutual funds have their share of risks as their pe...