Advantages of Investing in Mutual Funds

A financial instrument which pools the money of various investors and invests them in stocks, bonds etc. is termed as a “Mutual Fund”. Asset Management Companies (AMCs) manage mutual funds and in turn appoint fund managers to manage different mutual fund schemes. AMCs also ensure that the scheme investment objectives are met. They charge a fee to the investors for fund management and other services offered by AMCs. The major advantages of investing in mutual funds are as follows:

1.       Diversification of Risk – With the help of Mutual Funds, investors get the benefit of diversification as the funds normally invest in a diversified portfolio of stocks across different sectors to reduce unsystematic risks. The risk of investing in Mutual funds is far lower than investing directly in individual stocks.

2.       Small Investments – One can invest as low as Rs.6000 only (or even lower for some schemes) to buy units of a diversified equity fund. It is with a smaller capital outlay that allows investors to get the beneficial ownership of a diversified portfolio of stocks.

3.       Expertise in Investment – Professional fund managers manage mutual funds on a daily basis as they have sufficient expertise in addition to the experience in picking the right stocks to get the best risk adjusted returns.

4.       Transaction Costs – There is a lower transaction cost on a per unit basis because mutual funds buy and sell securities in large volumes.

5.       Variety of Products – Mutual funds provide investors with a variety of products to suit their risk profiles and investment objectives.

6.       Various Investment modes–Investors have flexibility to select from different investment modes such as systematic transfer plans, systematic investment plans, systematic withdrawal plans, lump sum, switches from one scheme to other etc.

7.       Disciplined Approach – Investors can maintain a disciplined approach to savings and investment with the help of a Systematic Investment Plans (SIP) in mutual funds.

Founded in 2005, ABans Group has grown from being a trading house to a dynamic and diversified business group. We provide expertise in Broking Services, Merchant Banking, Non-Banking Financial Dealings, Gold Refining and Realty and Infrastructure. In a nut shell Abans Group is a comprehensive Financial Services and Solution Provider, which aims to provide an end-to-end financial solution to all its clients.