Thus diversification by investing in various categories of mutual funds provides investors asset class diversification. Further, hybrid mutual funds such as balanced funds and monthly income plans (MIPs) provide investors with a single avenue for diversifying across the primary asset classes viz., equity and debt based on their individual risk profile.
Investing through a mutual fund is also very convenient due to the availability of low investment amounts and the ability to buy or sell them on any business day. Direct investing requires significant capital, which may not be possible for the retail investors to arrange. Also, the benefit of economies of scale is available to a mutual fund as huge volumes and transactions ensure low brokerage and other fees, which is not the case in individual investing.
Keeping individual limitations in mind, an investor should lean on the professional expertise of a fund manager. Skillful selection of securities and their management by a professional will go a longer way to ensure returns than unaided investment efforts. Investors can choose a mutual fund scheme / category