What is a Mutual Fund, and how does it work?
A mutual fund is essentially a "collective" investment. Instead of you picking individual stocks or bonds yourself, your money is pooled with that of other investors. BMA’s professional fund managers then use this large pool to buy a diversified portfolio of securities. In return, you are issued "units" that represent your share of the total fund.
What is "NAV"?
A fund’s Net Asset Value (NAV) represents the value per unit. The NAV is equal to the market worth of assets held in the portfolio of a Fund, minus liabilities, divided by the number of units currently issued to investors.
What is the difference between the Money Market Fund and the Stock Fund?
The primary difference lies in risk and return:
- Money Market Fund: Focuses on safety of capital and liquidity. It invests in short-term, low-risk instruments like government T-bills and bank deposits. It is ideal for those looking to preserve their capital while earning a steady, competitive return.
- Stock (Equity) Fund: Focuses on long-term growth. It invests primarily in shares of companies listed on the Pakistan Stock Exchange (PSX). While it carries higher risk due to market volatility, it offers the potential for significantly higher returns over several years.