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Mutual funds is trusts which pool the savings of large number of investors and then reinvests those funds for earning profits and then distribute the dividend among the investors.
In return for such services, Asset Management Companies charge small fees. Every Mutual Fund / launches different schemes, each with a specific objective. Investors who share the same objectives invests in that particular Scheme. Each Mutual Fund Scheme is managed by a Fund Manager with the help of his team of professionals (One Fund Manage may be managing more than one scheme also).
Mutual Funds are help to achieve certain financial goals.
Asset Management Companies (AMC) are managed by professionals and carry out the specialized investment activity.
Diversification among a number of investments helps reduce the risk of any single holding.
The facility of making investments through service centers as well as through the Internet ensures convenience.
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./p>
Given its size, an AMC would be in a position to negotiate better brokerage terms for the sale and purchase of its investments.
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.
Information available through fact sheets, offer documents, annual reports and promotional materials helps provide the investor with the knowledge about their investments.