Ah! So Many Mutual Fund Schemes

The charm of investing through mutual funds lies in its simplicity. Unfortunately the process of choosing a mutual fund scheme itself has become very complicated. There are 45 asset management companies each of them offering close to 30-35 schemes and you are expected to choose a fund suitable to you from a list of some 1000 plus schemes floating in the market. Add to this the different jargons thrown at you like debt, equity, diversified, large cap, gilt, floating rate etc.

Let us first understand as to why there are so many mutual funds schemes in the offering.

It is like buying soap: If you go to a shop and want to buy soap there are almost 200 brands in various shapes and sizes and each of them selling hard at you.

Revenue/profits for the asset management companies come from the fees they charge on the total funds they manage. In industry parlance it is called as asset under management (AUM).

Like any other commercial business, asset management companies have aspirations of high growth and high profit: More the AUM more the revenues. Every asset management in its endeavour to have large AUM has launched various types of mutual fund schemes catering to different needs and segments.

That is exactly why you have so many asset management companies and schemes in the market.



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