1. Professional Management — Investors may not have the time or the required knowledge and resources to conduct their research and purchase individual stocks or bonds. A mutual fund is managed by full-time, professional money managers who have the expertise, experience and resources to actively buy, sell, and monitor investments. A fund manager continuously monitors investments and rebalances the portfolio accordingly to meet the scheme’s objectives. Portfolio management by professional fund managers is one of the most important advantages of a mutual fund.
2. Risk Diversification — Buying shares in a mutual fund is an easy way to diversify your investments across many securities and asset categories such as equity, debt and gold, which helps in spreading the risk - so you won't have all your eggs in one basket. This proves to be beneficial when an underlying security of a given mutual fund scheme experiences market headwinds. With diversification, the risk associated with one asset class is countered by the others. Even if one investment in the portfolio decreases in value, other investments may not be impacted and may even increase in value. In other words, you don’t lose out on the entire value of your investment if a particular component of your portfolio goes through a turbulent period. Thus, risk diversification is one of the most prominent advantages of investing in mutual funds.
3. Affordability & Convenience (Invest Small Amounts) — For many investors, it could be more costly to directly purchase all of the individual securities held by a single mutual fund. By contrast, the minimum initial investments for most mutual funds are more affordable.
4. Liquidity — You can easily redeem (liquidate) units of open ended mutual fund schemes to meet your financial needs on any business day (when the stock markets and/or banks are open), so you have easy access to your money. Upon redemption, the redemption amount is credited in your bank account within one day to 3-4 days, depending upon the type of scheme e.g., in respect of Liquid Funds and Overnight Funds, the redemption amount is paid out the next business day.
However, please note that units of close-ended mutual fund schemes can be redeemed only on maturity. Likewise, units of ELSS have a 3-year lock-in period and can be liquidated only thereafter.
5. Low Cost — An important advantage of mutual funds is their low cost. Due to huge economies of scale, mutual funds schemes have a low expense ratio. Expense ratio represents the annual fund operating expenses of a scheme, expressed as a percentage of the fund’s daily net assets. Operating expenses of a scheme are administration, management, advertising related expenses, etc. The limits of expense ratio for various types of schemes has been specified under Regulation 52 of SEBI Mutual Fund Regulations, 1996.
6. Well-Regulated — Mutual Funds are regulated by the capital markets regulator, Securities and Exchange Board of India (SEBI) under SEBI (Mutual Funds) Regulations, 1996. SEBI has laid down stringent rules and regulations keeping investor protection, transparency with appropriate risk mitigation framework and fair valuation principles.
7. Tax Benefits —Investment in ELSS upto ₹1,50,000 qualifies for tax benefit under section 80C of the Income Tax Act, 1961. Mutual Fund investments when held for a longer term are tax efficient.
FAQs
The Association of Mutual Funds in India (AMFI) is an association of all the Asset Management Companies (AMCs) of SEBI registered mutual fund houses in India. AMFI was incorporated on 22nd August 1995 as a non-profit organization. As of December 2022, AMFI has 46 Asset Management Companies as its members.
What is the role of Association of Mutual Funds in India? ›
The role of AMFI, inter-alia, is to (i) address the issues and challenges concerning the mutual fund industry to facilitate ease of doing business for its members, unitholders and various stakeholders; (ii) liaison / advocacy with the SEBI/ Reserve bank of India, Government of India etc.
How many AMCs are there in India? ›
How many asset management companies are there in India? There are forty-four registered asset management companies in India. These companies manage investors' funds - invest in various securities to generate optimal returns. Always check the registration and track record of the AMC company before you invest.
What is the difference between SEBI and AMFI? ›
AMFI and SEBI (Securities and Exchange Board of India) are distinct entities in the Indian financial market. AMFI is an industry association representing mutual fund companies and working towards industry development. Conversely, SEBI is the overall regulator of the securities market, including mutual funds.
Which is the largest mutual fund organization in India? ›
List of Top Asset Management Companies in India 2024
- SBI Mutual Fund. ₹ 919,519.99 crore.
- ICICI Prudential Mutual Fund. ₹ 716,867.52 crores.
- HDFC Mutual Fund. ₹ 614,665.43 crores.
- Nippon India Mutual Fund. ₹ 438,276.85 crores.
- Kotak Mahindra Mutual Fund. ...
- Aditya Birla Sun Life Mutual Fund. ...
- UTI Mutual Fund. ...
- Axis Mutual Fund.
SEBI is the government agency in India that oversees mutual fund regulation. The Securities and Exchange Board of India (SEBI) oversees and regulates all elements of mutual funds, including their operations, investing criteria, and disclosure obligations.
Which is the best performing mutual fund in India? ›
Top 10 equity mutual funds which delivered highest returns in...
- iStock. 3/10. ...
- iStock. 4/10. ...
- BCCL - Non Copyright. 5/10. ...
- iStock. 6/10. Franklin India Opportunities Fund. ...
- Agencies. 7/10. LIC MF Infra Fund. ...
- Getty Images. 8/10. DSP India T.I.G.E.R Fund. ...
- iStock. 9/10. Two from Quant Mutual Fund. ...
- Getty Images. 10/10. Tata Small Cap Fund.
Top 10 Fund Managers in India 2024
| Fund Manager Name | Mutual Fund Name | AUM (in cr) |
|---|
| Manish Gunawan | Nippon India Mutual Fund | ₹22,395 Cr |
| Harsha Upadhyaya | Kotak Mahindra Mutual Fund | ₹50,059 Cr |
| Chandraprakash Padiyar | Tata Mutual Fund | ₹7,906 Cr |
| Ankit Agarwal | UTI Mutual Fund | ₹8,167 Cr |
6 more rowsApr 24, 2024
Navneet Munot, MD and CEO of HDFC Asset Management, will be the new Chairman of the Association of Mutual Funds in India (AMFI).
Which AMC is best for mutual funds in India? ›
BEST MUTUAL FUNDS
- JM Flexicap Fund (Direct) Growth Option. 1Out of 33. ...
- Bank of India Flexi Cap Fund Direct Growth. 2Out of 33. ...
- Quant Flexi Cap Fund Growth Option Direct Plan. 3Out of 33. ...
- ITI Flexi Cap Fund Direct Growth. 4Out of 33. ...
- Motilal Oswal Flexicap Fund Direct Plan Growth. ...
- Invesco India Flexi Cap Fund Direct Growth.
About The Top Fund Manager In India
- 1) Shreyash Devalkar. Axis AMC's Senior Fund Manager is Shreyash Devalkar. ...
- 2) Aniruddha Naha. Mr Naha is a Master of Finance and Control graduate. ...
- 3) R. Srinivasan. ...
- 4) Sankaran Naren. ...
- 5) Jinesh Gopani. ...
- 6) Sohini Andani. ...
- 8) Harsha Upadhyaya. ...
- 9) Chandraprakash Padiyar.
Top 20 in the list
| Sr. No. | Name of the ARN Holder | AUM (Rs. Crore) |
|---|
| 1 | State Bank of India | 1,44,301 |
| 2 | NJ IndiaInvest | 1,24,025 |
| 3 | HDFC Bank | 96,729 |
| 4 | Axis Bank | 69,697 |
16 more rowsNov 9, 2023
The rule of 8-4-3 for mutual funds states that if you invest Rs 30,000 monthly into an SIP with a return of 12% per annum, then your portfolio will add Rs 50 lacs in the first 8 years, Rs 50 lacs in the next 4 years to become Rs 1 cr in total value and adds further Rs 50 lacs in the next 3 yrs to reach Rs 1.5 cr.
What is the maximum tenure of a mutual fund? ›
The minimum tenure for investment in Mutual Funds is a day and the maximum tenure is 'perpetual'.
What is the 20 25 rule for mutual funds? ›
In the case of non-fulfillment with either of the above two conditions i.e. minimum of 20 investors and no single investor should account for more than 25% of the corpus of the scheme/plan, a three months time period or the end of succeeding calendar quarter, whichever is earlier, from the close of the Initial Public ...
How many mutual funds are there in India? ›
There are as many as 44 AMFI (Association of Mutual Funds in India) registered fund houses in India which together offer more than 2,500 mutual fund schemes. The wide array of funds often make it a little difficult for investors to choose the best scheme for them.
How many mutual fund agents are there in India? ›
Overall, the new ARN registrations (including corporates and their employees) jumped from 42,399 in FY 2022 to 51,453 in FY 2023. With this, the total number of individual distributors goes up to 1.22 lakh. Of the total 1.22 lakh, 50% or over 60,000 MFDs are from B30 cities.
How many mutual fund advisors are there in India? ›
As per an Edelweiss report, presently in India, there are about 3.4 crore unique mutual fund account holders and 6 crore unique demat accounts. Compare this to just about 1,300 RIAs in the country, which is abysmal.
