Advantages of investing in Mutual Funds

• Professional Management:
  Asset Management Companies (AMC) are managed by professionals and carry out the specialized investment activity.
• Diversification:
  Diversification among a number of investments helps reduce the risk of any single holding.
• Convenient Administration:
  The facility of making investments through service centers as well as through the Internet ensures convenience.
• Return Potential:
  By allocating the right asset mix Mutual Funds offer a chance of higher potential returns. The high concentration of risky assets would lead to a higher return and vice-versa.
• Low Costs:
  Given its size, an AMC would be in a position to negotiate better brokerage terms for the sale and purchase of its investments.
• Liquidity:
  Open-ended schemes offer liquidity through on-going sale and repurchase facility. Thus the investor does not have to worry about finding a buyer for their investments.
• Transparency:
  Information available through fact sheets, offer documents, annual reports and promotional materials helps provide the investor with the knowledge about their investments.
• Flexibility:
  Mutual Funds offer flexibility in terms choosing a scheme that matches the investment to an investor's investment objective.
• Choice of Schemes:
  The investors can chose from various kinds of schemes available to them. The investors with a higher appetite for risk can go for more aggressive schemes while those needing a fixed sum every month can go for MIPs and so on.
• Tax Benefits:
  For equity funds, dividends received from equity schemes of Mutual Funds (i.e. schemes with equity exposure of more than 65%) are completely tax-free. Neither does the Mutual Fund have to pay dividend distribution fee nor does the investor have to pay income tax.
• Well Regulated:
  Mutual Funds in India are well regulated with SEBI monitoring the activities of the mutual funds.