Mumbai: For a common investor, there is more risk in investing directly in the stock market, because it is common to have huge fluctuations in the stock market. Due to this fluctuation, the common investor takes the wrong decision. Secondly, it is not easy to earn profit by investing in the right place in the stock market. This is a very difficult task. For this, after doing intensive research from every economic aspect, good stocks have to be selected and the decision to sell the profit book has to be taken on time, and both are difficult for a common investor. Neither he has the understanding or time to research nor does he have the ability to take the right selling decision at the right time. In such a situation, it is best for the common investor to invest through Mutual Funds. However, investors should choose only those mutual funds with a good track record, which are providing good returns to their investors.
Mutual fund houses, with the help of their team of fund managers and research analysts, do thorough research from every aspect and select good stocks and book profits on time and provide them to their investors. This is the reason why mutual funds are becoming increasingly popular in India as well and the monthly investment has crossed Rs 28,000 crore and the Total Management Fund (AUM) of equity funds has reached Rs 13.15 trillion. Similarly, monthly investment through Systematic Investment Plan (SIP) has increased to a new high of Rs 12,328 crore in March 2022. In this article, we have analyzed the Largecap Funds, Midcap Funds and Smallcap Funds which have given higher returns than their benchmark in the last 5 years starting from FY 2021-22. In many of these fund schemes, investors have got very good returns ranging from 25 to 58%. Which proves that Equity Mutual Funds are right in making good returns and wealth creation in the long run.
The investment team tracks every moment: DP Singh
DP Singh, Chief Business Officer, SBI Mutual Fund says that it takes a lot of hard work to outperform the benchmark. We track the companies in which our schemes are invested, 24 hours a day. Business, corporate governance, industry trends, government policies, economic development of companies have to be monitored everywhere. Our research and investment team is engaged in this work 24 hours a day. All this task is very difficult for the common investor. As important as investing in the right place, it is equally important to take the decision to sell on time. This is also difficult for the common investor. Whereas our research and investment team tracks every moment and takes decisions accordingly. This is the reason we are able to provide better returns to our over 2 crore investors. Another advantage of investing through mutual funds is that even though mutual funds may buy and sell shares several times, the investor is not liable to short term or long term capital gains tax. He has to pay income tax on gains from mutual funds as per his income slab.
Opportunity to invest in diversified companies with small capital: Anand Varadarajan
Anand Varadarajan, business head of Tata Mutual Fund, says that the retail investor has limited capital, in which he is able to invest in only two-four companies. In that too, if you invest in the wrong place or do not sell on time, then you have to suffer loss instead of profit. Like you went to a hotel and ordered two dishes after seeing the menu there, but you did not like its taste. Still, you eat that dish because you have little money in your pocket, but this is not the case with mutual fund investments. Here you are able to invest in many companies with small capital, because mutual fund schemes invest in different companies with different businesses. Through a single scheme, you get an opportunity to invest in 50 to 100 companies. Your investment remains diversified. Due to which the risk is low and the return potential is high. Our research and investment team keeps an eye on every business activity of those companies in which we invest, only then it is possible to get good returns. That’s why we always try to give better returns to our investors. Tata Largecap Fund and Tata Balance Advantage Fund look favorable for investment in the current market conditions.
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