A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. These investors may be retail or institutional in nature. Mutual funds have advantages and disadvantages compared to direct investing in individual securities.

When you buy a mutual fund, your money is combined with the money from other investors and allows you to buy part of a pool of investments. A mutual fund holds a variety of investments which can make it easier for investors to diversify than through ownership of individual stocks or bonds.

To prevent the conflict of interest that exists between “advising” of investment products and “selling” of investment products by the same entity/person, there should be clear segregation between these two activities. The investment adviser should act in the best interest of the client and should not receive a commission from the product manufacturer. Further, the investment adviser shall act with due skill, care, and diligence and shall ensure that his advice is offered after thorough analysis and taking into account the available investment alternatives and matching them with client’s suitability and needs. Thus, entities engaged solely in the business of “advising” on investment products shall not be permitted to sell any products to prevent conflict of interest.

Portfolio Management Services (PMS) is a professional service offered by experts for portfolio management. In this service, The Portfolio Manager manages client portfolio on their behalf. The prime objective of PMS is to help the client in getting the highest returns. Historically, some of the PMS has generated exorbitant wealth for the investors. E.g If you had invested Rs 25 Lakh in Porinju Veliyath’s Equity Intelligence PMS five years ago, your investment would be worth around Rs 1.25 crore today.