Mutual funds investments are gaining widespread prominence over the years. They offer an open-source of earning higher income by making smaller investments. With endless benefits that come along with mutual fund investments, a huge amount of risk also involves. Keeping the risk factor aside, one of the most beneficial investment options is equity mutual funds in India. A well-planned strategy for investment can help you efficiently in taking appropriate decisions.
Some of the major advantages that accompany mutual fund investments may include:
- Offers professional management of the money invested.
- Ideal growth perspective for small investors.
- Diversifies the amount of risk to different assets.
- Provides perfect economy of scale in terms of the transaction cost.
- Convenient liquidity
- Involves a simple process of purchase.
Different types of funds
A broader type of private equity fund exists in the market that renders numerous benefits to investors. Occupying the vast corpus in the stock market, equity funds offer a well-structured scheme for investment to help you invest efficiently. The diversity of such funds varies as per your individual investment objective that may include:
Large-cap: It comprises investing large amounts of funds in such companies that offer a large capitalization market. You can effectively obtain sustainable returns as well as stability with the passage of time under such investment.
Multi-cap: Making investments in companies that belong to different sectors comes under a multi-cap equity fund. This in turn reduces the risk. With this diverse approach, you can prevent the occurrence of those events that affect any of the factors influencing your funds.
Mid-cap: This type of mutual fund incorporates the investment in the stocks of medium-sized companies that are still developing.
Thematic: It encompasses the investment of funds in different securities of any particular sector like Pharmaceuticals, IT, or more. Depending upon the industry’s performance, you can evaluate the performance of your funds. It involves a huge amount of risk along with providing extremely high returns.
Equity funds versus direct stocks
While making a comparison between an equity mutual fund and direct investment in stocks, the equities hold greater significance with their relatively consistent performance over the years. It constantly outperforms the vast stock market with a vigorous regulatory and institutional framework. Moreover, retail investors can expect the continued growth of the equities over the coming years as well. The following factors particularly support the investment in such mutual funds:
- They are capable of Wealth Creation, Wealth Protection, and Wealth Preservation for investors within a horizon of 10 years.
- They offer higher returns as compared to direct stock investments.
- It also offers significant benefits for retail investors.
- You can expect an enhanced level of corporate governance and an improved regulatory environment with mutual investments.
Private equity funds in India
The private equity mutual funds in India occupy a huge significance in its overall economic development. One of the major visible impacts of private equities in India is the accelerated growth of jobs. They offer better results in terms of profits and revenues to investors as compared to non-private equities.
Are you looking for the best mutual funds in India?
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