June 07 , 2012
These are equity mutual funds, without a specific sector or theme to their portfolio. Thus, they have a broad mandate to invest in a basket of stocks as per their fund manager's analysis. They try and beat the index in performance, and charge a management fee for the same.
This is somewhat like ordering a bread basket at dinner. You don't have strong preferences of bread yourself, and don't want to spend too much time thinking about it - you would rather focus on your conversation. You might end up loving the Naan, and not liking the Butter Roti much, but you don't mind it as long as the overall meal was good.
While choice of equity funds itself is a function of risk profile, diversified equity funds are useful if you are short on time and energy to do further research yourself. Let the experts do their thing, while you relax.
Thinking about retirement some 20 years away, without wanting to plan too much for it? You may start a long term systematic investment into this type of fund. Fill it (the form), submit it, forget it!