Lesson 1 of 3 · 6 min
One basket, many buyers
How pooling turns ₹500 into a slice of fifty companies, who actually runs the money, and the SEBI category rules that make a fund name mean something.
A mutual fund pools money from thousands of people and a fund manager invests the pool — in shares, in bonds, or in a mix.
You hold units of the pool, so ₹500 buys you a slice of a basket that might contain 50 companies. The fund house (called an AMC) runs it, and SEBI regulates the whole arrangement.
Put these in order
Put your money's journey through a mutual fund in order:
- The scheme publishes that day's per-unit value (NAV)
- The value of those holdings moves every trading day
- The fund manager invests the pool in securities
- Your money joins the pooled money of other investors
- You buy units of a scheme from the fund house
Since 2017, SEBI sorts every scheme into fixed categories so the name tells you what is inside. A large-cap fund holds the 100 biggest listed companies by market value; mid-cap means companies ranked 101 to 250; small-cap is 251 onwards.
Broadly one scheme per category per fund house, so a fund cannot launch five lookalikes and advertise whichever did well.
| Group | What it holds | The main thing to know |
|---|---|---|
| Equity | Shares — large, mid, small cap, or themes | Highest growth potential, biggest swings |
| Debt | Bonds and other lending instruments | Smaller swings, but not zero — borrowers can default |
| Hybrid | A stated mix of equity and debt | The mix, not the manager's mood, is in the rules |
| Solution-oriented | Retirement and children's schemes | Come with lock-ins |
| Other | Index funds, ETFs, funds of funds | Index funds copy an index instead of picking |
Quick check
A "large-cap fund" holds shares of…
Check yourself
1 / 3
Kabir asks
You put ₹500 into an equity scheme. What do you actually hold afterwards?
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