Pocket Money - SEBI Investor Awareness Website - Securities and ...

as well as the market trend so that he can buy/sell sharesas necessary for best possible return.Sapnil, now, was more confused. Neither he had that kindof money to invest in several companies, nor did he havethe kind of expertise necessary. He was also not very sureif he will be able to keep the money invested for such a longtime. It was possible that when he would need to sell a share,there may not be a buyer to buy it. So, there would be noliquidity.When Sapnil told a group of his friends about Medha's advice,he found that there were several other persons, who werein the same boat.Suddenly a brilliant idea struck one of his friends. They couldpool the money they had and create a fund and then entrustthat fund to Medha to invest in stock market. Medha agreedand told that she would keep a small portion of the fund incash or invested in such a way that she would be able torepay, should anybody need to withdraw from the fund. Butthe fund would continue, so that they could get the benefitof long term investment. Medha would charge a small fee whichall the investors readily agreed to pay.Thus the friends became joint owners of the shares and othersecurities purchased from the money so gathered. Everyoneof them had a share in the shares so purchased. The aggregateamount pooled by the investors was divided into small unitsand each investor became owner of certain number of unitsin proportion to the amount invested.Thus a fund was created for the mutual benefit of the groupof people who came together to reap the benefits from stockmarket.Sapnil and his friends were now looking for a name for thisnovel fund.67