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5. '' Relishing the small share of a big pizza ''- Against this background , explain the benefits of investing in Mutual Fund.
Ans: The Mutual Fund houses offer the following benefits to investors:
Tax Benefit: Investors can avail tax benefits if they invest in avenues like Unit -Linked Saving Schemes (ULSS)
Flexibility : Mutual Funds give flexibility of shifiting from one scheme to another and investors can change their scheme tailored to their needs.
Diversification : Under diversification , an investors can choose among a wide variety of schemes , which may be either debt, equity or balanced , so that right balanced , so that a right balance is maintained between risk and return.
Professional Assistance : Asset managers of Mutual Funds posses a deep knowledge of the market . Thus the investment made by them is professionally managed compared to the one made by a layman.
Regulatory Environment: The Mutual Fund sector in India is regulated under the Mutual Fund Act, 1993, which directly or indirectly supervises the sector to ensure its efficient functioning.
Low Cost: The cost of trading in Mutual Funds is low because of the bulk trading that takes place in this kind of instrument and thus achieves economic of scale which reduce the cost of overall trading .
Reliability: Mutual Funds are reliable as the net asset value of the investment is published daily in the newspapers . It gives an accurate picture of the market condition, which makes the Fund functioning transparent.