Q. “The return received in mutual fund is rightly called interest. If true, how true.”

Mutual fund returns are not called ‘interest’.

The word ‘interest’ is used only when money is being lent/borrowed.

Example: you borrow Rs 1 lakh from the bank at 10% interest, for 1 year.

So you have to pay back a sum of Rs 1 lakh + 10% interest after 1 year.

Similarly, when you invest money in an FD, you are actually giving a loan to the bank. This is why the bank pays you an interest.

In mutual funds, you are giving your money to a group of experts (fund manager + team) to invest on your behalf.

You are buying an asset, not lending your money.

Similar to buying a house—investing in it gives you returns but not interest.