A Mutual Fund is an investment option, which pools money from investors with common investment objectives and invests their money in equity and debt instruments. Asset management companies manage mutual funds. There are different types of funds available with these companies. For example, fund is invested in stocks under equity fund whereas fund is invested in bonds, debentures, etc. under debt fund.
Advantage of Investment in Mutual Fund
Management of Funds by Professionals: your investment is managed by experienced professionals.
Liquidity: you can get your money back at any point of time in open-ended schemes at the current Net Asset Value and this property makes mutual fund investment highly liquid.
Variety: Mutual fund provides you a lot of choices. Under mutual fund you can invest in a particular industry or different types of assets and so on. Variety of funds available such as blue-chip stocks, IT stocks, Banking Stocks, bonds, or a mix of stocks and bonds.
Diversification: Mutual fund offers you diversification either by investing in various assets or by balancing your whole portfolio.
Low Investment Threshold: Mutual fund schemes also provide low investment threshold. Because of it you can invest your money easily without any tension.
Convenience: It provides you convenience as you do not require to manage your funds and funds are managed by professionals.
Transparency: Mutual fund industry is regulated by SEBI and regulation makes this industry transparent. You can track and gather information of your investment. SEBI has made it mandatory for mutual fund companies to publish the details of their portfolio regularly.