Benefits of diversification in mutual funds.

1. BENEFITS OF DIVERSIFICATION-
MUTUAL FUNDS
PRESENTED BY:
CHARUL JANGID
MEGHA CHOUDHARY
SHASHANK OJHA

2. CONTENTS
 Introduction
 Mutual fund
 What is diversification?
 Diversified fund
 Main categories of funds
 Benefits of diversification in mutual funds
 Concerns of diversification in mutual funds
 Conclusion

3. INTRODUCTION
Risk aversion
Low risk
Low return
Bank deposits,
PPF, NSC etc
Risk
management
Managed
risk
High return
Mutual funds

4. MUTUAL FUND
An investment vehicle that is made up of a pool
of funds collected from many investors for the
purpose of investing in securities such as
stocks, bonds, money market instruments and
similar assets. Eg :- American fund , Black rock
, HDFC mutual fund

5. “Don’t put all your eggs in one
basket”

6. WHAT IS DIVERSIFICATION?
Act or practice of
 Manufacturing a variety of products.
 Investing in a variety of securities.
 Selling a variety of merchandise etc.
so that a failure in or an economic slump
affecting one of them will not be disastrous

7. DIVERSIFIED FUND
A mutual fund allows for diversification between
many different stocks and also allows for
diversification between various sectors, styles
etc. This diversification allows investors to
reduce risk of one particular stock or sector but
also allows for more potential reward by
offering wider exposure to various stocks and
sectors.

8. MAIN CATEGORIES OF
FUNDS
Equity
funds
Bond
funds
Hybrid
funds
Money
market
funds

9. BENEFITS OF DIVERSIFICATION
IN MUTUAL FUNDS
 Economies of scale
 Liquidity
 Spreading risk
 Return
 Tax benefits

10. CONCERNS OF
DIVERSIFICATION IN MUTUAL
FUNDS
 Over diversification
 Dilution
 Cost
 Impact of market players and industry
 Less focus on particular aspect

11. Diversified funds can potentially offset the
impact of poor market performance on the
overall portfolio and also one try and remain
diversified within each type of investment.
CONCLUSION

12. THANKYOU