A mutual fund investment is an entity that pools the money of many investors -- its unit-holders -- to invest in different securities. Investments may be in shares or equity, debt securities, money market securities or a combination of these. Those securities are professionally managed on behalf of the unit-holders, and each investor holds a pro-rata share of the portfolio i.e. entitled to any pro
fits when the securities are sold, but subject to any losses in value as well. What are the benefits of investing through a mutual fund?
1)Professional Investment Management
Mutual funds hire full-time, high-level investment professionals. Funds can afford to do so as they manage large pools of money. The managers have real-time access to crucial market information and are able to execute trades on the largest and most cost-effective scale.
2)Diversification
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. Mutual fund unit-holders can benefit from diversification techniques usually available only to investors wealthy enough to buy significant positions in a wide variety of securities.
3)Low Cost
A mutual fund let's you participate in a diversified portfolio for as little as Rs.5,000/-, and Rs. 500/- for a SIP.
4)Convenience and Flexibility
You own just one security rather than many, yet enjoy the benefits of a diversified portfolio and a wide range of services. Fund managers decide what securities to trade, collect the interest payments and see that your dividends on portfolio securities are received and your rights exercised. It also uses the services of a high quality custodian and registrar in order to make sure that your convenience remains at the top of our mind.
5)Personal Service
One call puts you in touch with a specialist who can provide you with information you can use to make your own investment choices. They will provide you personal assistance in buying and selling your fund units, provide fund information and answer questions about your account status.
6)Liquidity
In open-ended schemes, you can get your money back promptly at net asset value related prices from the mutual fund itself.
7)Transparency:
You get regular information on the value of your investment in addition to disclosure on the specific investments made by the mutual fund scheme.
