Subbu's Solution

How mutual funds investment differs from investing in equity. What are the advantages and disadvantages?
Let me explain this using a table to make it simple for you.
Equity Mutual FundsEquity
Mutual fund is a pooled vehicle. Investors pool in their savings into a mutual fund`s Equity schemeThis is an investment made directly into equity by the investor. Eg. Buying shares of a listed company.
There is a professional fund manager managing investmentsInvestor will have to do his/her own research
Risks are of two types when investing in Equities
1. Permanent loss of capital.
2. Volatility in the price of the investment that you hold
Mutual funds NAV can be volatile, and therefore risky. Risk is mitigated because it is well diversified.
Investing in individual equities can be risky. The risk could come from loss of capital as well as the volatility in the price of the stock.
Investment in Mutual Fund will have access to professional fund manager.
Mutual funds are regulated by SEBI.  A mutual fund house is an asset manager therefore they strive to manage the assets prudently.  Investors can start their investments in equity mutual fund with as less as Rs. 500 through Systematic Investment Plan, which may not be possible with equity.
There is no additional expense incurred like management fee in mutual fund.  However replicating such performance at all times is very difficult
There is element of cost associated with mutual fund investments such as expense ratio, exit loads.
You need research skill.
The cost of going wrong on investment can be very high.
Tracking market performance diligently may not be possible.


Subbu's Solution is authored by I. V. Subramaniam. I. V. Subramaniam is a director of Quantum Asset Management Company Private Limited. The responses expressed here are strictly for information and explanation purpose only. The responses are meant for general reading purpose and not to be considered as an investment advice / recommendation. The responses are not intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or units of the Mutual Fund. Readers are advised to seek independent professional advice and arrive at an informed investment decision before making any investments. The Sponsor, The Investment Manager, The Trustee, their respective directors, employees, affiliates or representatives shall not be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the information contained in the responses.

Risk Factors: Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Please visit - to read Scheme Specific Risk Factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the scheme's objective will be achieved and the NAV of the scheme(s) may go up or down depending upon the factors and forces affecting securities markets. Investment in mutual fund units involves investment risks such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the Sponsor / AMC/ Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited (AMC). The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.

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