When it’s about equities, there are many advantages of investing into them via mutual funds, than going the direct way. In case of mutual funds, a large number of investors create a single pool of money which is invested into equities with the help of professional fund managers.
Some of the common and specific benefits of investing into equity mutual funds are:
- Capital appreciation – One of the primary advantages of investing into equity funds is that the growth and profits of the underlying companies has a positive impact on their stock prices, leading to appreciation in capital for all the investors. It’s not uncommon for companies to reinvest their profits for development of new products and for increasing their market share.
- *Dividend income – Investing into blue-chip companies may help you earn steady income in the form of dividends. Majority of such companies pay out dividends even in volatile market conditions, and these dividends are usually paid on a quarterly basis. Having a diversified portfolio can provide you with a steady dividend income all through the year.
- High liquidity – Since stocks are actively traded at the stock exchange, equity mutual fund investments make for highly liquid assets. It provides you the convenience of buying and selling your stocks depending on market situation.
- Portfolio diversification: With equity mutual funds you can diversify your portfolio through regularly investing. It means that you can invest into stocks of different companies, belonging to different economic sectors at different times. So, even if a particular stock drops in value, the others may help you make up for that loss depending on the market situation.
- Professionally Managed – All investments have a certain degree of risk and uncertainty associated with them. Many investors feel scared of investing as they lack sufficient knowledge, discipline, time and investment-experience. This is where equity mutual funds come into the picture.
- By investing into equity mutual funds, you get to tap into the professional expertise of seasoned experts, who manage your investments. We all know that equities are pretty complex in nature and the stocks can be purchased from companies of varying sectors, financial structure, size, promoter track record, industries and more. By going the mutual fund way, you get to benefit from the expertise of a full-fledged research team which keeps every such aspect in mind. Then there’s the fund manager who normally has decades of track record. Therefore, equity mutual funds are a suitable route that may provide you with good returns.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
*Pursuant to payment of dividend, NAV of dividend plan/option of the Scheme would fall to the extent of dividend payout and statutory levy, if any. Dividend payment is subject to the availability of Distributable Surplus and approval from Trustees. Past performance may or may not be sustained in future.