What is difference between equity trading and mutual fund?

Answer 1

Equity trading is when you buy and sell shares yourself, via a stockbroker and hold the shares directly in your name. All dividends paid out by the company in which you hold shares will be paid directly to you. A mutual fund investment is your share (in units) of pooled monies contributed by many investors. These pooled monies are managed by an investment company, which then invests them on behalf of it's unit holders, usually across a selection of publicly listed stocks, bonds, listed property and other financial derivatives ie. you hold these investments indirectly. The units you buy in the mutual fund are in your name, but the investments the fund buys with the pooled monies are held in the fund's name. As the funds assets increase or decrease in value, so will the price of your units held in the mutual fund. The fund usually pays you a distribution of profits at set periods, which can vary greatly in amount from year to year.