Mutual fund is a trust or an investment company that pools resources from thousands of
investors who share common investment goal and then diversifies its investments into
different types of securities in order to provide potential returns and reasonable safety.
Emergence and rapid growth of mutual fund can be ascribed as diversified dimension of
Indian capital market. It has become major vehicle for mobilization of savings, especially
from the small and household savers for investments in the capital market. In the period
of globalization rapid price fluctuations are occurring for the assets like equity shares,
bonds, real estate, derivatives etc., so that sometimes it is very much difficult to get the
information and time to keep track of events and act readily for an individual investor.
Secondly, an individual also finds it difficult to keep track of ownership of his assets,
investments, brokerage dues and bank transactions, etc. In this context, a mutual fund is
the solution to all these situations.
Thus a mutual fund is the most suitable investment for the common man as it offers
an opportunity to invest in a diversified, professionally managed portfolio relatively at a
low cost. Anybody with an inventible surplus of as little as a few thousand rupees can be
invested in mutual funds. Change in the economic scenario, falling interest rates of bank
deposits, volatile nature of capital market and recent bitter experience of investors in
making direct investment emphasis the increasing importance of the intermediaries like
mutual funds. |
