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Benefits Of Mutual Fund

 
There are numerous benefits of investing in mutual funds and one of the key reasons for its phenomenal success in the developed markets like US and UK is the range of benefits they offer, which are unmatched by most other investment avenues. We have explained the key benefits in this section. The benefits have been broadly split into universal benefits, applicable to all schemes, and benefits applicable specifically to open-ended schemes.
 
Universal Benefits
 
Affordability
A mutual fund invests in a portfolio of assets, i.e. bonds, shares, etc. depending upon the investment objective of the scheme. An investor can buy in to a portfolio of equities, which would otherwise be extremely expensive. Each unit holder thus gets an exposure to such portfolios with an investment as modest as Rs.500/-. This amount today would get you less than quarter of an Infosys share! Thus it would be affordable for an investor to build a portfolio of investments through a mutual fund rather than investing directly in the stock market.
 
Diversification
The nuclear weapon in your arsenal for your fight against Risk. It simply means that you must spread your investment across different securities (stocks, bonds, money market instruments, real estate, fixed deposits etc.) and different sectors (auto, textile, information technology etc.). This kind of a diversification may add to the stability of your returns, for example during one period of time equities might underperform but bonds and money market instruments might do well enough to offset the effect of a slump in the equity markets. Similarly the information technology sector might be faring poorly but the auto and textile sectors might do well and may protect your principal investment as well as help you meet your return objectives.
 
Variety
Mutual funds offer a tremendous variety of schemes. This variety is beneficial in two ways: first, it offers different types of schemes to investors with different needs and risk appetites; secondly, it offers an opportunity to an investor to invest sums across a variety of schemes, both debt and equity. For example, an investor can invest his money in a Growth Fund (equity scheme) and Income Fund (debt scheme) depending on his risk appetite and thus create a balanced portfolio easily or simply just buy a Balanced Scheme.
 
Professional Management
Qualified investment professionals who seek to maximise returns and minimise risk monitor investor's money. When you buy in to a mutual fund, you are handing your money to an investment professional who has experience in making investment decisions. It is the Fund Manager's job to (a) find the best securities for the fund, given the fund's stated investment objectives; and (b) keep track of investments and changes in market conditions and adjust the mix of the portfolio, as and when required.
 
Tax Benefits
Any income distributed after March 31, 2002 will be subject to tax in the assessment of all Unit holders. However, as a measure of concession to Unit holders of open-ended equity-oriented funds, income distributions for the year ending March 31, 2003, will be taxed at a concessional rate of 10.5%.
 
In case of Individuals and Hindu Undivided Families a deduction upto Rs. 9,000 from the Total Income will be admissible in respect of income from investments specified in Section 80L, including income from Units of the Mutual Fund. Units of the schemes are not subject to Wealth-Tax and Gift-Tax.
 
Regulations
Securities Exchange Board of India (“SEBI”), the mutual funds regulator has clearly defined rules, which govern mutual funds. These rules relate to the formation, administration and management of mutual funds and also prescribe disclosure and accounting requirements. Such a high level of regulation seeks to protect the interest of investors.
 
Benefits of Open-ended Schemes
 
Liquidity
In open-ended mutual funds, you can redeem all or part of your units any time you wish. Some schemes do have a lock-in period where an investor cannot return the units until the completion of such a lock-in period.
 
Convenience
An investor can purchase or sell fund units directly from a fund, through a broker or a financial planner. The investor may opt for a Systematic Investment Plan (“SIP”) or a Systematic Withdrawal Advantage Plan (“SWAP”). In addition to this an investor receives account statements and portfolios of the schemes.
 
Flexibility
Mutual Funds offering multiple schemes allow investors to switch easily between various schemes. This flexibility gives the investor a convenient way to change the mix of his portfolio over time.
 
Transparency
Open-ended mutual funds disclose their Net Asset Value (“NAV”) daily and the entire portfolio monthly. This level of transparency, where the investor himself sees the underlying assets bought with his money, is unmatched by any other financial instrument. Thus the investor is in the know of the quality of the portfolio and can invest further or redeem depending on the kind of the portfolio that has been constructed by the investment manager.


Regular investing in MF schemes reached a new milestone, with SIP accounts crossing 4 crore and SIP AUM reaching an all-time high of Rs 483,964 crore
Fri, 09 Jul 2021 12:12:17 +0530


Investors have put in bids for 74.15 crore equity shares against offer size of 56.85 lakh equity shares, the subscription data available on exchanges showed.
Fri, 30 Jul 2021 11:36:54 +0530


Exxaro Tiles IPO: The company will utilise the net proceeds from fresh issue for repaying debt (Rs 50 crore), and working capital requirements (Rs 45 crore).
Fri, 30 Jul 2021 08:32:08 +0530


Devyani International IPO: Investors seem to be more excited about the issue, especially after the great success of IPOs of Zomato and Barbeque Nation Hospitality.
Fri, 30 Jul 2021 08:18:34 +0530


The net proceeds from its fresh issue will be utilised for repaying of debt (Rs 50 crore), and working capital requirements (Rs 45 crore).
Thu, 29 Jul 2021 18:15:56 +0530


Tatva Chintan traded with volumes of 78.60 lakh equity shares on the NSE and 8.99 lakh shares on the BSE
Thu, 29 Jul 2021 17:43:36 +0530


Tatva Chintan Pharma Chem IPo shares gained more than 100 percent in one of the strongest listings in 2021. GR Infraprojects rallied 108.7 percent and Indigo Paints climbed 109.31 percent on listing day
Thu, 29 Jul 2021 12:54:45 +0530


Rolex Rings IPO has, so far, received bids for 2.87 crore equity shares against an initial public offering size of 56.85 lakh equity shares
Thu, 29 Jul 2021 11:53:10 +0530


Glenmark Life is planning to raise Rs 1,513.6 crore through its IPO, which comprises a fresh issue for Rs 1,060 crore and an offer for sale of 63 lakh equity shares by Glenmark Pharma
Thu, 29 Jul 2021 11:29:06 +0530


Tatva Chintan IPO was subscribed 180.35 times. The specialty chemical company will utilise net proceeds from its fresh issue to expand its manufacturing facility in Dahej and upgrade the RD facility in Vadodara
Thu, 29 Jul 2021 10:00:23 +0530


Windlas Biotech IPO: Promoter Vimla Windlass will sell 11.36 lakh equity shares, and investor Tano India Private Equity Fund II will offload its entire stake of 40,06,067 equity shares (or 22 percent of pre-offer paid up equity) via offer for sale.
Thu, 29 Jul 2021 08:10:42 +0530


The company will separately announce price band and lot size for its IPO in coming few days. The issue will close on August 6.
Wed, 28 Jul 2021 18:55:01 +0530


The price band for the offer could be disclosed separately by the company in coming days. The issue will close on August 6.
Wed, 28 Jul 2021 13:12:35 +0530


Arihant Capital has come out with its report on Rolex Rings. The research firm has recommended to #39;#39;Subscribe#39;#39; the ipo in its research report as on July 27, 2021.
Wed, 28 Jul 2021 12:29:56 +0530


KR Choksey has come out with its report on Rolex Rings. The research firm has recommended to #39;#39;Subscribe#39;#39; the ipo in its research report as on July 28, 2021.
Wed, 28 Jul 2021 12:23:59 +0530


Considering the business growth outlook and almost stable operating margins, Choice Broking assigned a #39;subscribe#39; rating to the issue.
Wed, 28 Jul 2021 11:42:58 +0530

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