Investing in equities can be rewarding for those who have adequate knowledge of the stock markets and have the ability and appetite to take risks. But more often than not, retail investors lack the knowledge and even the time to research and educate themselves about the nitty gritties of stock market movements. In such cases, it is best to leave your hard earned money in the care of professional money management experts or fund managers of mutual funds.

Investing in equities can be complex

When investing in equities, you have a lot of factors to consider such as industry, sector, size and structure of the company and management track record.

All of these factors must then be juxtaposed against the overall macro economic condition to assess the potential of the stock you wish to invest in. This is as far as fundamental analysis is concerned. There are other tools for technical analysis available for the investor who has the acumen to use such tools.

Investing in mutual funds is therefore a more suitable route to participate in the stock markets, without specialized knowledge or experience.

Opting for professionally managed equity investment funds

A mutual fund scheme is a large pool of savings that is managed by a fund manager who is a market expert. Fund managers who are in charge of running mutual fund schemes have years of experience (often decades) behind them and receive constant support from a well formed research department that is at the core of every successful fund house.

Each mutual fund scheme has its objective stated upfront which determines whether it is conservative or aggressive in its style of fund management. The performance of mutual funds is also widely tracked and analysed daily. Such analysis is easily available in the public domain.