Mutual Fund

A mutual fund is one of the popular investment products available for investors as an investment option. A pool of investors brings in the contribution and the fund manager as per the scheme invest in Equity shares of companies, bonds, or other financial instruments. This is managed by a dedicated fund manager.

This is best suitable for investors looking to get exposure to Equity and other financial instruments but lacking the knowledge or time to invest. Investments done by Mutual fund is backed by a research team and the expertise and knowledge of the fund manager, which helps in maximizing the wealth of the investor. Further to protect the investor Mutual Fund Industry is regulated by the Securities and Exchange Board of India.

Advantages of investing in Mutual Funds:

Experts on work – Mutual funds are managed by Fund managers who are experts in the field of investment and are aware of the economic scenarios across the globe.

Low Risk – Compared to direct exposure in equity shares wherein there are chances of losing out the capital itself, diversification of funds into various companies leverages the risk impact.
Low Cost of Operation – Overall cost of investment in Mutual funds is relatively lower as one does not need to have a Demat account. Transactions related to buying and selling can be carried out via authorized retail outlets or even through the company website.
Tax Benefits – Certain funds wherein the investment meets the requisite criteria provides tax benefits to investors u/s 80 C of the Income Tax Act.

Types of Mutual Funds – There are various types of mutual funds available including Equity, Debt, and sector/theme specific like large cap, small cap, and so on.

Equity Fund –

These are purely equity-based funds. The maximum allocation of the corpus of the fund is invested in the Equity of companies. This is suitable for an investor with a slightly high-risk appetite as it could help you achieve your investment targets faster with potentially higher return generation. However one should also be ready to brace for losses in case of corrections/swings in the market. It has a direct impact on this. This is recommended for a long-term investor to avoid seasonal fluctuation in the market.

Debt Fund –

This type of fund invests in Government / Corporate backed bonds. An investor seeking protection of capital can look into these types of funds. Returns here are relatively higher than the traditional fixed deposits in the Bank. Ideal for short-term investments to avoid the dissolution of capital.

Balanced Fund –

This is a mix of Equity and Debt. This is suitable for an investor looking for a higher return than Debt funds and at the same time aiming to protect capital. Ideal for an investor with a medium to long-term time frame.

Dividend Pay-out / Monthly Income Plans –

This is suitable for an investor looking for a steady flow of income on a regular basis.

Growth Fund –

This is suitable for investors seeking more capital appreciation in the value and does not need regular cash flow.

ELSS/ Tax Savings Fund

This type of fund are suitable for those investors who are seeking tax benefits on investments. Investment made in this type of special mutual fund enables investor to claim deduction us 80C of Income tax act. However unlike other funds there is lock in period of 3 years, withdrawal cannot be done during this period.

There are wide range of Mutual Funds available today in the market. Give us call and some time to assess your profile and we shall give you the right mix of the product to help you meet Short, Medium and Long Term goals.

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