Following are the benefits of investing in mutual funds:

• Access to expert Fund managers: Your fund is managed by expert fund managers who use superior technical and numerical methods.
• Diversification: Mutual funds intend to decrease the instability of profits through diversification as you are investing in no. of companies through a wide section of industry & sector. It avoids trader from investing “all eggs in one basket". This naturally reduces risk. Therefore, with the tiny investments, an investor gets diversified portfolio that would not be possible otherwise.
• Liquidity: Open ended schemes are given prices on daily basis and thus constantly eager to redeem from investors. This means that an investor can dispose off their investments in mutual fund at anytime without thinking about the buyer at exact price. In case of some other investment segment like bonds or stocks, buyers aren’t surely available and thus, these investment avenues are comparatively less liquid than open ended mutual fund schemes.
• Tax Efficiency: Equity-Linked Savings Scheme (ELSS) is a type of equity fund and the only mutual fund scheme which qualifies for a tax deduction of Rs. 1.5 lakh per annum under Section 80C of the Income Tax Act. An ELSS comes with a lock-in period of 3 years which means an investment made in it cannot be withdrawn before 3 years. Schemes other than equity-oriented schemes are treated in the debt category for tax purposes.Mutual Funds pay out dividends to investors on a regular basis.The best part about this benefit is that there is no maximum limit on the dividend amount for exemption.
• Low transaction costs: As mutual funds are a pool of funds according to many investors, the amount invested in securities is huge. Thus, this results in paying lesser brokerage because of economies of scale.
• Transparency: Open ended schemes prices are confirmed daily. Timely updates on value of investments are obtainable. Even the portfolio is released frequently with fund manager's outlook and investment strategy.
• Well-regulated industry: Mutual funds are wholly registered by SEBI and functions under stringent rules which are made to protect the investor’s interest.
• Small convenient investment: Usually, an investor would not be able to diversify his savings (which reduces risk) across the wide range of securities because of small invested fund size and high transaction costs. The mutual fund on the other side gives an investor to obtain diversified range of securities because it invests in wide range of stocks in one portfolio.

Therefore, mutual fund allows diversification of risk without having investor to put in large amount of funds.