Q: Why should one invest in MF’s when they are dependent on market index?
Answer: Some MFs resemble the market index and they are called index funds. They are a good investment as they allow you to capture all the movements of the market without having to buy individual shares.
Other mutual funds are specialized in either a sector, such as pharmaceuticals, based on market capitalization, for example large cap, or a type of asset, for example gold or debt. These funds are dependent on what happens with the various shares that make up the fund, but are not following the general market index. The fund specialized in gold may roughly follow the gold index, depending on how the fund is managed.
Mutual funds give you diversification and professional management, each fund will try and outperform the benchmark it chooses. If you think you can manage your funds better, you can design your portfolio and manage it; not leave it to MFs.
From Your Expert @ InvestmentYogi