Here are a few considerations :
Diversification : Most mutual funds spread the money over a number of shares depending on the fund size. This lowers the risk from an investment loss in a few shares. Even if any one or two shares were to under perform, their impact on the NAV may be only restricted to their proportion of holding. You can’t get much diversification from buying equity shares of a company, unless you buy into a conglomerate.
Systematic Investment Plan : Small sums (starting from Rs 500) of money can be invested monthly or quarterly. A plan for systematic withdrawals is also available from some funds.
Easy entry and exit : Filling a mutual fund application or a redemption form, even online, is all that it takes while entering or exiting a mutual fund. But with equity shares, you need an account with a stockbroker (for buying & selling) and another with a depository participant (which maintains your shares in an electronic form). Some investors may find this cumbersome.
Reinvesting dividends : Funds provide for automatic reinvestment of dividends. In India, this facility is not so far available with equity shares.
Tax benefits : Equity linked savings schemes are covered under the overall limit of Rs. 1 lakh under section 80C.
Professional management : When you are investing in a mutual fund, professionals with experience in fund and portfolio management take care after your money. They are also supposed to monitor the economy and the stock markets to change the portfolio accordingly.