8. Professional Fund Management: Professionals having considerable expertise, experience and resources manage the pool of money collected by a mutual fund. They thoroughly analyse the markets and economy to pick good investment opportunities.
9. Spreading Risk: An investor with limited funds might be able to invest in only one or two stocks/bonds, thus increasing his or her risk. However, a mutual fund will spread its risk by investing a number of sound stocks or bonds. A fund normally invests in companies across a wide range of industries, so the risk is diversified.
10. Transparency: Mutual Funds regularly provide investors with information on the value of their investments. Mutual Funds also provide complete portfolio disclosure of the investments made by various schemes and also the proportion invested in each asset type.
11. Choice: The large amount of Mutual Funds offer the investor a wide variety to choose from. An investor can pick up a scheme depending upon his risk/ return profile.
12. Regulations: All the mutual funds are registered with SEBI and they function within the provisions of strict regulation designed to protect the interests of the investor.
13. Flexibility: Through features such as Systematic Investment Plans (SIP), Systematic Withdrawal Plans (SWP) and dividend reinvestment plans, you can systematically invest or withdraw funds according to your needs and convenience.
14. Return Potential: Over a medium to long term, Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities.
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16. Waiting time before investment: It takes time for a Mutual Fund to invest money. Since it is difficult to invest all funds in one day, there is dome money waiting to be invested. Further, there may be a time lag before investment opportunities are identified. This ensures that the fund under performs the index. For open-ended funds, there is the added problem of perpetually keeping some money in liquid assets to meet redemption. The problem of impracticability of quick investments is likely to be reduced to some extent with the introduction of index futures.
17. Fund management costs: The costs of the fund management process are deducted from the fund. This includes marketing and initial costs deducted at the time of entry itself, called “load”. Then there is the annual asset management fee and expenses, together called the expense ratio. Usually, the former is not counted while measuring performance, while the later is. A standard 2% expense ratio means that, everything else being equal, the Fund manager under performs the benchmark index by an equal amount.
18. Cost of churning: The portfolio of a fund does not remain constant. The extent to which the portfolio changes is a function of the style of the individual fund manager. It is also dependent on the volatility of the fund size i.e. whether the fund constantly receives fresh subscriptions and redemption. Such portfolio changes have associated costs of brokerage, custody fees, and registration fees etc. that lowers the portfolio return commensurately.
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20. Receive information about the investment policies, investment objectives, financial position and general affairs of the scheme.
21. Receive dividend within 30 days of their declaration and receive the redemption or repurchase proceeds within 10 working days from the date of redemption or repurchase.
25. Receive communication from the Trustees about change in the fundamental attributes of any scheme or any other changes which would modify the scheme and affect the interest of the unitholders and to have option to exit at prevailing Net Asset Value without any exit load in such cases.
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27. To disclose your schemes’ entire portfolio twice a year, unaudited financial results half yearly and audited annual accounts once a year. In addition many mutual funds send out newsletters periodically.
51. Income group of 2 lac to 5 lac is making more investment than others, so there is scope and market for mutual fund in this market.
52. About 70% of investors are regular investors, so there is need to catch that market as well.
53. Mutual Fund, the concept is widely known, but many people are still unaware about various schemes of mutual fund, increasing awareness is also very important thing.