Very good comparison!
Investing directly in the markets is not everyone’s cup of tea. It requires expertise and hard work. For lay investors who neither have the ability, time nor inclination to choose the right stocks to build a solid portfolio, the answer lies in mutual funds. They are increasingly being recognised as the ideal investment vehicles to ride both the stock and bond markets. They enable investors, even those with modest means, to ride the India growth story, while offering a readymade portfolio of stocks or bonds that is monitored professionally and transparently.
However, the sheer scope of the vehicle also raises a number of questions in the mind of investors. It is not just the number of mutual funds schemes on offer across multiple fund houses that can be confusing. There are many other dilemmas that investors may need to grapple with. Should they opt for actively managed funds or plain vanilla ETFs? Is it better to go for a larger fund rather than one with a smaller corpus? Will a fund with a diversified portfolio work better than one with a focused approach?