Basic Comparative Analysis : Direct Equity V/s Equity Funds
Basic Comparative Analysis : Direct Equity V/s Equity Funds
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This blog post is the first lesson of a series initiated to give the actual juice to the reader who wants to know what’s behind the curtains of the investment market. As the series will continue forward the charts will move from the basics to the deeper in detail content somewhat similar to an expose.
So starting from the basics first we need to understand what the direct equity as an option has or how it’s briefly different from a equity fund.
Classic points of comparison
- In this puzzle of a life full of continuous twists and turns don't we have enough problems already? Yes we d for sure. In direct equity another task is added to your to do list of researching what stocks took a dive yesterday whereas on the other hand this very task is delegated in case of equity fund.
- Everybody doesn't know how to cook, invest or conduct business. Some may know one and may not know other and we surely know at this point one can't do it all perfectly. So when it comes to direct equity diversification by buying stocks here and their once in a while isn't gonna cut it. But equity fund comes with pre assured management by fund managers who does this for a living.
- When individual decisions are made without proper assistance or market knowledge or information which is less reliable it may eventually result in doubt about the safety or return risk associated with the investment further leading to frequent buying and selling. This increased number of transactions lead to more transaction costs and taxes which obviously have to be born by the investor. So in a nutshell direct equity lacks the perks of having a well managed portfolio.
- Change is gonna happen for sure. Now to adapt with this very change in the economic market, the fund managers read and they read a lot while they have to be on their toes to gather every single bit of tiny detail to make a decision of holding, changing or splitting the investment amount into different investment avenues. On this decision of rebalancing the portfolio not only the return is based but also the safety of the amount. Example - A single person with a routine job/ business may not have the apt time or knowledge to exploit the opportunities of different sectors like pharmaceutical, auto or oil through buying and selling stocks continuously whenever required.
- Now an individual can have it all for the stock market from regular knowledge to the time required but can still lack one key condition of technical assistance and this very aspect can ruin all the former efforts because what good is your knowledge when at the time of need the only text that pops up your computer screen is merely an error message for transaction failure.
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Gourav Ahuja
Hi, i am a gamer. I play with words. I believe in persistence no matter how hard or cumbersome the path of perfection may be and due to this constant urge of achieving what i want people often think me to be abnormal but according to me i just don’t get embarrassed easily since i am already maxed out.
