Investing directly in shares is no cake walk. It requires experience and expertise which most retail investors lack.
Every mutual fund scheme has a Fund Manager who along with a dedicated team of financial experts handle the investments of the scheme. They diligently and judiciously study economy and markets, scan individual companies and financial instruments and after thorough analysis decide the best investment options for the fund.
It plays a very big part in the success of any portfolio. Mutual funds invest in a broad range of securities. This limits investment risk by reducing the effect of a possible decline in the value of any one security.
The unitholders of a mutual fund can benefit from diversification techniques usually available only to investors wealthy enough to buy significant positions in a wide variety of securities.
Mutual Funds generally provide an opportunity to invest with fewer funds as compared to other avenues in the capital market. You can invest in a mutual fund with as little as Rs. 5,000; or have the option of investing as little as Rs.500 every month in a SIP or Systematic Investment Plan.
Investors can redeem their units anytime unlike fixed deposits and similar financial instruments. Some schemes may have lock in period and exit loads but here too after expiry of such period, units can be redeemed anytime.
Mutual funds invest in a variety of instruments. There are funds that focus on blue-chip stocks, sector specific stocks, bonds, gold or a mix of stocks and bonds and with due assistance from a financial expert. The investors can choose a scheme that aptly fits their requirements and helps them achieve maximum profitability.
