Mutual funds are managed by professional fund managers who regularly monitor market trends and economic trends for taking investment decisions. They also have dedicated research professionals working with them who make an in depth study of the investment option to take an informed decision.
Diversification reduces risk contained in a portfolio by spreading it. It is about not putting all your eggs in one basket. As mutual funds have huge corpuses to invest in, one can be part of a large and well-diversified portfolio with very little investment.
With features like dematerialized account statements, easy subscription and redemption processes, availability of NAVs and performance details through journals, newspapers and updates and lot more; Mutual funds are sure a convenient way of investing.
One of the greatest advantages of Mutual funds investment is liquidity. Open-ended funds provide option to redeem on demand, which is extremely beneficial especially during rising or falling Markets.
Mutual funds have a pool of money that they have to invest. So they are often involved in buying and selling of large amounts of securities that will cost much lower than when you invest on your own
Investment in mutual funds also enjoys several tax advantages. Dividends from Mutual Funds are tax-free in the hands of the investor (This however depends upon changes in Finance Act). Also Capital Gain accrued from Mutual Fund investment for a period of over one year is treated as long term capital appreciation and is tax free.
Indian Mutual fund industry also presents several other benefits to the investor like: transparency - as funds have to make full disclosure of investments on a periodic basis, flexibility in terms of needs based choices, very well regulated by SEBI with very strict compliance requirements to investor friendly norms.1
A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realised are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund:
There are many entities involved and the diagram below illustrates the organisational set up of a mutual fund:
To know more details about how to invest in mutual fund you can email to: info@srishirdicapital.com
