A mutual fund is financial intermediary, set up with the goal of professionally managing money pooled from a large number of investors. By pooling money together in a mutual fund, investors can enjoy economies of scale. Instead of each investor trying to undertake his or her own investment research, a team of profession can do for them together. Mutual fund are by mutual fund companies,also known as Asset Management Companies . Each AMC operates a number of funds suited to different types of investment needs.
Benefits Of Mutual Funds
- Easy Diversification : One of the basics of scale investing is to spread your money across different investments. Mutual funds are easy way to do this. Each mutual fund spreads money across a large number of investments.
- Chocie : There are mutual funds available for every kind of return of risk level and suitable for every kind of time horizon. No matter what kind of investment you want , there’s likely to be a variety of funds that suit you.
- Convinence: You can easily invest as well as withdraw from mutual fund in any amount. Investments can be made by filling up a simple form or even online with a direct debit from from your bank account. Similarly, redemptions can be made directly to your bank account and take no more than three working days.
- Transparent, well regulated industry: Mutual funds are obligated by law to release comprehensive data about their operations and investments. The SEBI regulates the fund industry very tightly and is constantly refining the applicable rules to protect investors better.
- Providing access to inaccessible assets : There are many investments you can conveniently make only through a mutual fund.