InterviewSolution
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What Are The Advantages Of Investing In A Mutual Fund? |
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Answer» INVESTORS are EXPOSED to reduced investment risk due to portfolio diversification, economies of scale in transaction cost and professional management. LIMITED Risk Investors are exposed to reduced investment risk due to portfolio diversification, economies of scale in transaction cost and professional management. Diversified investment Small investors can participate in larger basket of securities and share the benefits of efficiently managed portfolio by experts, and are freed from maintaining records of company share certificates, and tracking tax RULES. Mutual fund investments are LESS risky due to portfolio diversification, which is possible mainly due to large funds available at their disposal. Small investors can never spread their risks across such a wide portfolio, as can mutual funds. Freedom from tracking investments Investors do not have to track their investments regularly, as the tracking is done by experts who buy and sell securities for them. Investors are only required to track the performance of the mutual fund. Professional management Mutual funds are run by professionals, with experience in portfolio management. Analysts employed by mutual funds analayse data and information available in a manner that cannot be matched by the lay investor. Tax benefits Income tax benefits are granted to investors in mutual funds, making it more tax efficient as compared to other comparable investment avenues. Investors are exposed to reduced investment risk due to portfolio diversification, economies of scale in transaction cost and professional management. Limited Risk Investors are exposed to reduced investment risk due to portfolio diversification, economies of scale in transaction cost and professional management. Diversified investment Small investors can participate in larger basket of securities and share the benefits of efficiently managed portfolio by experts, and are freed from maintaining records of company share certificates, and tracking tax rules. Mutual fund investments are less risky due to portfolio diversification, which is possible mainly due to large funds available at their disposal. Small investors can never spread their risks across such a wide portfolio, as can mutual funds. Freedom from tracking investments Investors do not have to track their investments regularly, as the tracking is done by experts who buy and sell securities for them. Investors are only required to track the performance of the mutual fund. Professional management Mutual funds are run by professionals, with experience in portfolio management. Analysts employed by mutual funds analayse data and information available in a manner that cannot be matched by the lay investor. Tax benefits Income tax benefits are granted to investors in mutual funds, making it more tax efficient as compared to other comparable investment avenues. |
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