Fact : In fact, Mutual funds are meant for common investors who may lack the knowledge or skill set to invest in securities market. Mutual Funds are professionally managed by expert Fund Managers after extensive market research for the benefit of investors. A mutual fund is an inexpensive way for investors to get a full-time professional fund manager to manage their money.

A mutual fund manager has some advantages over common investor investing in the stock market directly –

  • He is a full timer. He has complete knowledge, educational qualifications and required experience for the job at hand.
  • He has a team of analysts
  • He has state-of-the-art software for analysis
  • He has access to the company management in whose stock he wishes to invest.
  • He has evidence of having produced results in the past.

Due the above reasons, most of the times it is unlikely that a common investor would beat a fund managers performance consistently over long periods of time.

People however still invest in direct equity even though they make little money or even lose money. One of the reasons to do this is because they derive some kind of emotional kick out of investing in equity markets.