Rationale

The rationale for the mutual funds can be stated both from the individual investor’s and from the
capital market’s side. In case of individual investor there is higher return by way of dividends
and capital appreciation. Risk of loss is reduced as the funds are managed by well informed
professional managers. Risk of loss is reduced as the funds are managed by well informed
professional managers.

It is also reduced due to diversification of portfolio in terms of companies and industries.

Further, since the returns are automatically invested, the scope for capital appreciation is
enhanced.