| You must have read this statement many a | | | | he wants to take. Having done that, he can invest |
| times in the TV commercials and also on the | | | | in an appropriate combination of assured return |
| form that you must have filled and wondered | | | | schemes (National Savings Certificate, Public |
| what does this line mean. Let me tell you this line | | | | Provident Fund, post office schemes, bonds from |
| means. I do agree that the mutual funds are | | | | institutions) and mutual funds. |
| subject to market risk but that market risk if you | | | | Mutual Funds come under the regulation of the |
| go to consider is very minimal. Thanks to the | | | | Securities and Exchange Board of India and have |
| stringent regulations employed by SEBI (Stock | | | | to meet stringent regulations. Therefore, they |
| Exchange Board of India).. | | | | cannot just close shop and run away with |
| Please note that mutual funds do not provide any | | | | investors' money. |
| guarantee of returns or capital (initial amount you | | | | Mutual Funds comes under SEBI scanner and so |
| invested). | | | | does all the other public offering and there is a |
| Mutual funds are a good place to start because | | | | security deposit that they have to pay for getting |
| they offer you the opportunity to diversify | | | | listed. The chance of being fraudulent is negligible. |
| quickly into a range of investments | | | | With the growing number of people investing in |
| Hence, nobody can assure you of returns, or | | | | mutual funds they are making it more reliable. |
| even not suffering losses. Going strictly by the | | | | In fact, India happens to have quite stringent rules |
| book, the possibility of a fund performing | | | | and norms regarding the setting up of an AMC |
| exceptionally poorly and all your savings dwindling | | | | and making periodic portfolio disclosures (stating |
| to nothing is quite real. | | | | where their have invested their money). |
| Having said that, please remember that over the | | | | Moreover, in the set-up of a mutual fund, there is |
| long term, the possibility of such an extreme | | | | a body of trustees who are supposed to look |
| event is quite negligible. If the historical | | | | after the interest of investors whose money is |
| performance is to go by, then there are hardly | | | | being managed under different schemes. |
| any diversified equity funds which have delivered | | | | The mutual fund itself is a trust registered under |
| negative returns over the last 10 years, if one | | | | the Indian Trust Act, and is initiated by a sponsor. |
| would have invested through the SIP. | | | | The sponsor is the person who acts alone or with |
| Therefore, there is no need to be overly | | | | another corporate to establish a mutual fund. The |
| concerned. Mutual funds are a very convenient | | | | sponsor then appoints an AMC to manage the |
| vehicle for individual investors. | | | | investment, marketing, accounting and other |
| Moreover, returns tend to be commensurate with | | | | functions pertaining to the fund. |
| the kind of risk you take. Mutual fund schemes | | | | Therefore, while it may be possible for a mutual |
| are riskier than the assured return schemes like | | | | fund to inflict losses to the investors as a result |
| fixed deposits and bonds. But, they also have the | | | | of poor fund management, they just can't wind |
| potential to generate far superior returns. | | | | up their operations and run away with your |
| It is upon the investor to strike a balance | | | | money. |
| between the return he wants to earn and the risk | | | | |