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What’s Better? Investing In Equity Mutual Funds Or Directly In Stocks

Equities have out-performed other investment asset classes over the long-term in India as well as globally. With growing maturity, retail Investors in India have begun to realize this and also take into stride the short-term volatility of this asset class. Better regulatory environment and improved corporate governance have also helped bring more investors to Equities. Currently, retail equity investment in India is mostly channeled directly in stocks. I ndividual investors hold around 20% of the total equity market value, while mutual funds account for about 3%. This is almost the opposite of global trends where retail money is mostly professionally managed and mutual funds are the investment vehicle of choice for equities. Why should India be different? Does direct investing provide any benefit over investing in equity mutual funds? To answer this question, we conducted a study to compare the historical performance of Indian equity funds to that of the stock market over