Mutual Funds

Mutual Funds are financial instruments. These funds are collective investments which gather money from different investors to invest in stocks, short-term money market financial instruments, bonds and other securities and distribute the proceeds as dividends. The Mutual Funds in India are handled by Fund Managers, also referred as the portfolio managers. The Securities Exchange Board of India regulates the Mutual Funds in India. The unit value of the Mutual Funds in India is known as net asset value per share (NAV). The NAV is calculated on the total amount of the Mutual Funds in India, by dividing it with the number of units issued and outstanding units on daily basis.

Investing in Mutual Funds

Anyone who is aware of stock market is not new to mutual funds. Mutual funds have gained in popularity with the investing public especially in the last two decades following are some of the primary benefits.

Benefits of Investing in Mutual Funds

Managing for Results that Matters

Every Mutual Fund scheme has a well-defined objective and behind every scheme, there is a dedicated team of financial experts working in tandem with specialized investment research team. These experts diligently and judiciously study companies, their products and performance, and after thorough analysis, they decide on the best investment option most aptly suited to achieve the scheme’s objective as well as investor’s financial goals.

The Success of any mutual fund portfolio

It plays a very big part in the success of any portfolio. Mutual funds invest in a broad range of securities. This limits investment risk by reducing the effect of a possible decline in the value of any one security. Mutual fund unit-holders can benefit from diversification techniques usually available only to investors wealthy enough to buy significant positions in a wide variety of securities.

Mutual Funds Provide Opportunity

Mutual Funds generally provide an opportunity to invest with fewer funds as compared to other avenues in the capital market. You can invest in a mutual fund with as little as Rs. 5,000 and also have the option of investing a little of Rs.500 every month in a SIP or Systematic Investment Plan.

Mutual Fund an Open-End Scheme

You can encash your money from a mutual fund on immediate basis when compared with other forms of savings like the public provident fund or National Savings Scheme. You can withdraw or redeem money at the Net Asset Value related prices in the open-end schemes. In closed-end schemes, lock in period is mentioned, investor cannot redeem his investment until that period.

Chose the perfect plan of mutual fund

There is no shortage of variety when investing in mutual funds. There are funds that focus on blue-chip stocks, technology stocks, bonds or a mix of stocks and bonds and with due assistance from a financial expert, the investor can choose a scheme that aptly fits his requirements, and helps him achieve maximum profitability.

Types of Mutual Funds

Equity FundsInvest money for your future
Debt or Income FundsAnalyse the market & type of saving
Balanced FundsInvest money for your future
Index FundsInvest money for your future
Liquid FundsGet more Returns for your patience

A better solution for your Financial needs

Equity funds aim to provide capital growth by investing in the shares of individual companies. Any dividends received by the fund can be reinvested by the fund manager to provide further growth or paid to investors. Both risk and returns are high but equity funds could be a good investment if you have a long-term perspective and can stay invested for at least five years.

Professional Fund Management.
Risk Mitigation
Diversification
Tax Efficiency
Regular investments

Liquid Fund
Money Market Fund
Dynamic Bond Fund
Banking and PSU Fund
Gilt Fund
Credit Risk Fund

Things to consider as an investor

The aim of debt or income funds is to provide you with a steady income. These funds generally invest in securities such as bonds, corporate debentures, government securities (gilts) and money market instruments. Opportunities for capital appreciation are limited.

Balanced funds invest with the goal of both income and capital appreciation

The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. The investor may wish to balance his risk between various sectors such as asset size, income or growth. Therefore the fund is a balance between various attributes desired, however, NAVs of such funds are likely to be less volatile compared to pure equity funds

Balanced funds are financial instruments

Balanced funds are financial instruments that invest in a mixture of both debt and equity segments in specific ratios. Also known as hybrid funds, get healthy mix of Stocks & FD-liked instruments that help in limiting the downside.

Index funds follow a passive investment strategy.

Index funds are passively managed funds i.e. the fund manager attempts to mirror the performance of a benchmark index like the BSE Sensex or the S&P CNX Nifty, by being invested in the same stocks. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index.

Exchange-traded fund

an Index Mutual Fund invests in stocks that imitate a stock market index like the NSE Nifty, BSE Sensex, etc. These funds are also known as index-tied or index-tracked mutual funds.

No lock-in period
No entry and exit load
Lowest interest rate risk
Taxation
Diversification
Good Credit Rating

Liquid funds & its benefits on investment

Liquid funds are a safe place to park your money; it is an appealing alternative to bank deposits because they aim to provide liquidity, capital preservation and slightly higher interest rates than bank accounts. Returns on these funds fluctuate much less compared to other funds as the fund manager invests in ‘cash’ assets such as treasury bills, certificates of deposit and commercial paper.

Financial Services

Systematic Investment Plan (SIP) is a method of investing in mutual funds wherein an investor chooses a mutual fund scheme and invests a the fixed amount of his choice at fixed intervals.

Makes Big Change

A systematic investment plan (SIP) is an investment vehicle offered by many mutual funds to investors, allowing them to invest small amounts periodically

Systematic Investments

It is more famously known as SIP. It is bit by bit systematic investment. Under this plan your investments are staggered. That is you invest a fix sum either monthly or quarterly in a mutual fund. Say, for example, you commit to invest a pre-specified amount (Rs 500 onwards) every month or every quarter in a mutual fund. You fix a date on which every month or every quarter the amount gets invested. The first investment has to be by a cheque and then you can either give post dated cheques (PDCs) or opt for electronic clearing system (ECS).

In ECS you give permission for the amount to be directly deducted from your bank account on the fixed due date. The units are allocated as per the then prevailing NAV on that day of the month. You get more number of units if the NAV is low and vice versa if the NAV is high.