Mutual Funds


What is Mutual Fund ?

A Mutual Fund is a body corporate that pools the savings of a number of investors and invests the same in a variety of different financial instruments, or securities. The income earned through these investments and the capital appreciation realised by the scheme are shared by its unit holders in proportion to the number of units owned by them. Mutual funds can thus be considered as financial intermediaries in the investment business who collect funds from the public and invest on behalf of the investors. The losses and gains accrue to the investors only. The Investment objectives outlined by a Mutual Fund in its prospectus are binding on the Mutual Fund scheme. The investment objectives specify the class of securities a Mutual Fund can invest in. Mutual Funds invest in various asset classes like equity, bonds, debentures, commercial paper and government securities.

What is NAV?

NAV or Net Asset Value of the fund is the cumulative market value of the assets of the fund net of its liabilities. NAV per unit is simply the net value of assets divided by the number of units outstanding. Buying and selling into funds is done on the basis of NAV-related prices

What are the different types of Mutual funds?

Equity Funds/ Growth Funds
Funds that invest in equity shares are called equity funds. They carry the principal objective of capital appreciation of the investment over the medium to long-term. The returns in such funds are volatile since they are directly linked to the stock markets. They are best suited for investors who are seeking capital appreciation. There are different types of equity funds such as Diversified funds, Sector specific funds and Index based funds.

Diversified funds
These funds invest in companies spread across sectors. These funds are generally meant for risk-taking investors who are not bullish about any particular sector.

Sector funds
These funds invest primarily in equity shares of companies in a particular business sector or industry. These funds are targeted at investors who are extremely bullish about a particular sector.

Index funds
These funds invest in the same pattern as popular market indices like S&P 500 and BSE Index. The value of the index fund varies in proportion to the benchmark index.

Tax Saving Funds
These funds offer tax benefits to investors under the Income Tax Act. Opportunities provided under this scheme are in the form of tax rebates U/s 88 as well saving in Capital Gains U/s 54EA and 54EB. They are best suited for investors seeking tax concessions.

Debt / Income Funds
These Funds invest predominantly in high-rated fixed-income-bearing instruments like bonds, debentures, government securities, commercial paper and other money market instruments. They are best suited for the medium to long-term investors who are averse to risk and seek capital preservation. They provide regular income and safety to the investor.

Liquid Funds / Money Market Funds
These funds invest in highly liquid money market instruments. The period of investment could be as short as a day. They provide easy liquidity. They have emerged as an alternative for savings and short-term fixed deposit accounts with comparatively higher returns. These funds are ideal for Corporates, institutional investors and business houses who invest their funds for very short periods.

Gilt Funds
These funds invest in Central and State Government securities. Since they are Government backed bonds they give a secured return and also ensure safety of the principal amount. They are best suited for the medium to long-term investors who are averse to risk.

Balanced Funds
These funds invest both in equity shares and fixed-income-bearing instruments (debt) in some proportion. They provide a steady return and reduce the volatility of the fund while providing some upside for capital appreciation. They are ideal for medium- to long-term investors willing to take moderate risks.

Hedge Funds
These funds adopt highly speculative trading strategies. They hedge risks in order to increase the value of the portfolio.

What are the factors that influence the performance of Mutual Funds?

The performances of Mutual funds are influenced by the performance of the stock market as well as the economy as a whole. Equity Funds are influenced to a large extent by the stock market. The stock market in turn is influenced by the performance of the companies as well as the economy as a whole. The performance of the sector funds depends to a large extent on the companies within that sector. Bond-funds are influenced by interest rates and credit quality. As interest rates rise, bond prices fall, and vice versa. Similarly, bond funds with higher credit ratings are less influenced by changes in the economy.

Benefits of investing in a mutual fund?

As an investor, you would like to get maximum returns on your investments, but you may not have the time to continuously study the stock market to keep track of them. You need a lot of time and knowledge to decide what to buy or when to sell. A lot of people take a chance and speculate, some get lucky, most don t. This is where mutual funds come in.

Mutual funds offer you the following advantages :

Professional management-

Qualified professionals manage your money, but they are not alone. They have a research team that continuously analyses the performance and prospects of companies. They also select suitable investments to achieve the objectives of the scheme. It is a continuous process that takes time and expertise which will add value to your investment. Fund managers are in a better position to manage your investments and get higher returns.


Diversification

The cliché, "do not put all your eggs in one basket" really applies to the concept of intelligent investing. Diversification lowers your risk of loss by spreading your money across various industries and geographic regions. It is a rare occasion when all stocks decline at the same time and in the same proportion. Sector funds spread your investment across only one industry so they are less diversified and therefore generally more volatile

More choice

Mutual funds offer a variety of schemes that will suit your needs over a lifetime. When you enter a new stage in your life, all you need to do is sit down with your financial advisor who will help you to rearrange your portfolio to suit your altered lifestyle.


Affordability

As a small investor, you may find that it is not possible to buy shares of larger corporations. Mutual funds generally buy and sell securities in large volumes which allow investors to benefit from lower trading costs. The smallest investor can get started on mutual funds because of the minimal investment requirements. You can invest with a minimum of Rs.500 in a Systematic Investment Plan on a regular basis.


Tax benefits

Investments held by investors for a period of 12 months or more in equity oriented funds are exempted for any capital gain tax . While gains on investments less than 1 year are taxed at 15% . In Debt funds , gains on investments less than 3 years are taxed as per tax slab. While for more than 3 years investments , gains  get the benefit of indexation & are taxed at 20%with indexation .


Liquidity

With open-end funds, you can redeem all or part of your investment any time you wish and receive the current value of the shares. Funds are more liquid than most investments in shares, deposits and bonds. Moreover, the process is standardised, making it quick and efficient so that you can get your cash in hand as soon as possible.


Rupee-cost averaging

With rupee-cost averaging, you invest a specific rupee amount at regular intervals regardless of the investments unit price. As a result, your money buys more units when the price is low and fewer units when the price is high, which can mean a lower average cost per unit over time. Rupee-cost averaging allows you to discipline yourself by investing every month or quarter rather than making sporadic investments.


Transparency

The performance of a mutual fund is reviewed by various publications and rating agencies, making it easy for investors to compare fund to another. As a unitholder, you are provided with regular updates, for example daily NAVs, as well as information on the funds holdings and the fund managers strategy.
Regulations. All mutual funds are required to register with SEBI (Securities Exchange Board of India). They are obliged to follow strict regulations designed to protect investors. All operations are also regularly monitored by the SEBI.

3 Reasons to stay invested for the long term

Wealth Creation

When you stay invested for the long term, you stand to benefit from the Power of Compounding. This means that the returns generated in the short term are reinvested, and further returns are generated over and above them. This enables your money to multiply at a faster pace.

Risk Reduction

Short term investors are susceptible to higher amount of risk than long-term investors as the markets tend to be more volatile in the short term as compared to the long term

Easy Approach to investing

Once the investment has been made in mutual funds with good growth potential, you do not need to track the market and make decisions on a second-by-second basis. Thus, long-term investing in Mutual Funds is ideal for you if you wish to make an investment and not worry about it!                         

Performance of Indian Equity markets over long term period


 

Remaining invested in Equities has on an average given 5 times growth over 10 years Based on an average of 10 year daily rolling returns, Equities have grown by 5.4 times ! Data Source: S&P BSE Sensex from Jan 01, 1990 until Dec 31, 2015. Past Performance may or may not be sustained in future.    

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Taking Stock | Sensex, Nifty rally 1% each; small  midcaps underperform Sectorally, the action was seen in banks, finance, public sector, and oil gas space while mild profit taking was seen in auto, telecom, healthcare, and IT stocks.
Mon, 19 Oct 2020 16:43:47 +0530


Taking Stock | Bulls back on Street as Sensex rallies over 250 points, but closes below 40K Top Nifty gainers include names like Hindalco, BPCL, Tata Steel, and JSW Steel.
Fri, 16 Oct 2020 16:18:56 +0530


Taking Stock: Rs 3 lakh crore in m-cap gone as Sensex drops 1,000 pts Sectorally, the selling pressure was seen in sectors like Teleco, Banks, Energy, IT, as well as Realty index. The Nifty Bank slipped 802 points to close at 23,072.
Thu, 15 Oct 2020 16:39:28 +0530


Taking Stock: Bulls put Nifty back above 11,900, Sensex rallies 169 points Top Nifty gainers included Bajaj Finance, SBI Life Insurance and Bajaj Finserv.
Wed, 14 Oct 2020 16:40:09 +0530


Taking Stock: Nifty rallies for 9th session; small  midcaps underperform Sectorally, the SP BSE Energy index rose 1.5 percent, followed by the SP BSE IT which was up 1.4 percent, and the SP BSE Power index closed with gains of 0.67 percent.
Tue, 13 Oct 2020 16:49:53 +0530


Taking Stock: Nifty slips from Mt 12K, FM#39;s economic package fails to boost sentiment Sectorally, action was seen in IT, healthcare, FMCG while some profit-booking was seen in metals, telecom, oil gas, and realty.
Mon, 12 Oct 2020 16:46:38 +0530


Taking Stock: Dovish RBI policy boosts market; Nifty closes above 11,900 levels Sectorally, the action was seen in Banks, Finance, Public Sector, and Capital Goods space while some profit taking was seen in Realty, Healthcare, and FMCG stocks.
Fri, 09 Oct 2020 16:21:34 +0530


Taking Stock | Terrific Thursday! Sensex back above 40,000; Nifty reclaims 11,800 Sectorally, the action was seen in IT, Healthcare, Telecom, and bankex while the selling pressure was seen in Energy, Oil Gas, and Capital Goods stocks.
Thu, 08 Oct 2020 16:37:42 +0530


Taking Stock: Nifty back above 11,700; small  midcaps underperform Top Nifty gainers included like Maruti Suzuki, Hero MotoCorp, and Titan.
Wed, 07 Oct 2020 16:28:08 +0530


Taking Stock: Sensex rallies 600 points; Nifty50 reclaims 11,600 level Top Nifty gainers included IndusInd Bank, Adani Ports, and HDFC.
Tue, 06 Oct 2020 16:22:42 +0530


Taking Stock: Sensex slips off day’s highs, closes 276 points up; Nifty above 11,500 Sectorally, the action was seen in IT, metals, healthcare and Bankex while mild profit-taking was seen in telecom, utilities, consumer durables and the energy space.
Mon, 05 Oct 2020 16:25:29 +0530


Sensex, Nifty drop 1% in September; 236 stocks in BSE 500 rise Advanced Enzyme Technologies and Adani Green Energy logged gains of 66 percent and 63 percent, respectively, in September, emerging as the top gainers in the BSE 500 index.
Fri, 02 Oct 2020 09:58:48 +0530


Taking Stock: Sensex rallies more than 600 points; Nifty above 11,400 levels The SP BSE Bankex was up 3.7 percent, followed by the SP BSE Finance which rose 3.03 percent, and the SP BSE Telecom index closed with gains of 2.02 percent.
Thu, 01 Oct 2020 16:34:59 +0530


Sensex jumps 629 points, Nifty reclaims 11,400; 5 factors that fuelled the rally The Ministry of Home Affairs (MHA), on September 30, announced the Unlock 5.0 guidelines, further relaxing curbs on activities outside of containment zones.
Thu, 01 Oct 2020 13:10:09 +0530


Taking Stock: Sensex ends 95 points higher; mid  smallcaps underperform Top Nifty gainers include Titan Company, Tech Mahindra, and Grasim Industries.
Wed, 30 Sep 2020 16:26:46 +0530


Subscribe to Equitas Small Finance Bank: KR Choksey KR Choksey has come out with its report on Equitas Small Finance Bank. The research firm has recommended to #39;#39;Subscribe#39;#39; the ipo in its research report as on October 19, 2020
Tue, 20 Oct 2020 12:30:07 +0530


Subscribe to Equitas Small Finance Bank: Arihant Capital Arihant Capital has come out with its report on Equitas Small Finance Bank. The research firm has recommended to #39;#39;Subscribe#39;#39; the ipo in its research report as on October 19, 2020
Tue, 20 Oct 2020 12:21:33 +0530


Subscribe to Equitas Small Finance Bank: ICICI Direct ICICI Direct has come out with its report on Equitas Small Finance Bank. The research firm has recommended to #39;#39;Subscribe#39;#39; the ipo in its research report as on October 19, 2020
Tue, 20 Oct 2020 12:16:25 +0530


Likhitha Infrastructure shares locked in upper circuit on listing day: Should investors hold or book profit? The current market capitalisation of the company stood at Rs 269.44 crore, with promoters#39; shareholding in the company at 74 percent post issue.
Fri, 16 Oct 2020 12:23:28 +0530


Equitas Small Finance Bank may launch IPO on October 20, to raise Rs 532 crore At the time of filing DRHP in December 2019, promoter Equitas Holdings held 95.49 percent stake in Equitas Small Finance Bank.
Mon, 12 Oct 2020 13:01:55 +0530


Stellar Listing: Mazagon Dock Shipbuilders debuts at Rs 216, a 49% premium The bumper listing was in line with analysts#39; expectations given company#39;s strong orderbook position, attractive valuations and hefty IPO subscription.
Mon, 12 Oct 2020 10:00:35 +0530


Tepid Listing: UTI AMC opens first day trade at Rs 490, a 12% discount Given the tepid response to IPO and consistent redemption pressure from investors in the mutual fund industry for last three months, the listing was on expected lines.
Mon, 12 Oct 2020 10:00:30 +0530


Angel Broking off to a poor start, closes at 10% discount on debut day Angel Broking has the second weakest listing of 2020. It traded with volumes of 8,94,431 equity shares on the BSE and 85,46,238 shares on the NSE.
Mon, 05 Oct 2020 17:05:58 +0530


Angel Broking lists at discount, what should investors do? If someone wants to buy Angel Broking, they should wait for a decent correction before adding this counter, Gaurav Garg of CapitalVia Global Research said.
Mon, 05 Oct 2020 13:57:55 +0530


Weak Listing: Angel Broking debuts at Rs 275, a 10% discount The listing was in line with analysts#39; expectations citing valuations concerns, muted revenue growth despite robust client additions and rising competition in the broking industry.
Mon, 05 Oct 2020 09:59:37 +0530


CAMS IPO | Stock settles at Rs 1,401.60, a 14% premium over its issue price Hemang Jani of Motilal Oswal Financial Services advised investors to hold the company for the long term given its business model and healthy financials
Thu, 01 Oct 2020 18:26:20 +0530


Chemcon Speciality Chemicals ends 72% higher from its issue price of Rs 340 per share The listing premium was definitely higher than Happiest Minds Technologies (111 percent premium)
Thu, 01 Oct 2020 17:58:19 +0530


Subscribe to UTI Asset Management Company: Ajcon Global Ajcon Global has come out with its report on UTI Asset Management Company. The research firm has recommended to #39;#39;Subscribe#39;#39; the ipo in its research report as on September 29, 2020
Wed, 30 Sep 2020 19:28:54 +0530


Subscribe to UTI Asset Management Company: Hem Securities Hem Securities has come out with its report on UTI Asset Management Company. The research firm has recommended to #39;#39;Subscribe#39;#39; the ipo in its research report as on September 29, 2020
Wed, 30 Sep 2020 19:24:05 +0530


Subscribe to Mazagon Dock Shipbuilders: Anand Rathi Anand Rathi has come out with its report on Mazagon Dock Shipbuilders. The research firm has recommended to #39;#39;Subscribe#39;#39; the ipo in its research report as on September 29, 2020
Wed, 30 Sep 2020 19:14:29 +0530


Mutual Fund industry adds 5.6 lakh folios in July, debt funds gain traction  According to data from Association of Mutual Funds in India, the number of folios with 45 fund houses rose to 9,21,05,737 at the end of last month, from 9,15,42,092 at June-end, registering a gain of 5.63 lakh folios.
Fri, 14 Aug 2020 15:07:08 +0530

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