Mutual Funds - A safe way to Invest.


                                     Mutual Funds



Mutual Funds: These are funds operated by an investment company which raises money from the public and invests in a group of assets (shares, debentures, etc.) in accordance with a stated set of objectives. It is a substitute for those who are unable to invest directly in equities or debt because of resource, time or knowledge constraints. 


                                   Plans: - Direct & Regular


Regular Plan: - In this plan Mutual funds house give the Commission to the broker/agent as a distribution fee. This means some of the part of your investment or income goes In Commission and you get lesser benefits.


Direct Plan: - No fees/commission is paid. In this plan you get all the benefits or Share of your Investment.


                                              Growth & Dividend


Dividend: – In this plan Investor gets a portion of Profit monthly, quarterly, half yearly or yearly that is called Dividend.


Growth: - Profits are re-invested in growth option. Means the all the profit earned by Mutual funds house by investing in Different investment option are being Reinvested in the available investment options. So that the Investor could get a large amount of Money at Exit Time.



                                  Open Ended & Closed Ended

Open Ended: - Open ended funds are always open to investment and redemptions(withdrawal).

Key Points: -

v High liquidity – you can buy or sell units at any time excepting the units of ELSS funds as they are locked-in for 3 years from the date of investment. This is the biggest advantage if you compare open ended funds vs close ended.

v You can invest in lump sum as well as through SIPs. In fact, you can make any number of purchases in the fund.

v You can invest in open ended funds by checking the track record of the schemes performances in which you want to invest.

v Through SIPs you can take benefit of rupee cost averaging of the unit price. In case of lump sum also, you can invest based on markets level. You can add more units when the markets are down.

v You can start investing with as low as Rs 500.


 Closed Ended: - A closed ended mutual fund scheme is where your investment is locked in for a specified period of time.

Key Points: -

v No liquidity during the lock-in period. Redemption proceeds received only after the mandatory lock-in period is over

v You can invest only during the new fund offer (NFO). You cannot invest through SIPs

v Since you can buy close ended funds only during their NFO period, no track record is available

v Generally, Rs 5,000 is the minimum investment amount for investing in a close ended fund NFO.

v No averaging facility in these funds as they do not accept any investments post the NFO period is over.


                                        Types of Mutual funds


There are several types of Mutual funds these are narrated below


Debt Funds: - In this investment is made in securities which generate fixed income like treasury bills, corporate bonds, commercial papers, government securities, and many other money instruments for Interest.


Equity Funds: - These are mutual fund schemes which invests their assets in stocks of different companies.


Hybrid Funds: - These are mutual fund schemes which invest in more than one asset class i.e., equity, debt and other asset classes depending on the investment objective of the scheme. These funds invest in a mix of different asset classes to diversify the portfolio with an aim to minimize the risk involved. Hybrid funds have the potential to generate relatively better returns than debt funds while being less risky than equity funds.


ELSS: - (Equity link Savings Schemes) ELSS funds are equity funds that invest a major portion of their corpus into equity or equity-related instruments. ELSS funds are also called tax saving schemes. It allows an individual or HUF a deduction from total income of up to Rs. 1.5 lacs under Sec 80C of Income Tax Act 1961.

Thus, if an investor was to invest Rs. 50,000 in an ELSS, then this amount would be deducted from the total taxable income, thus reducing her tax burden.


Some Top Performing Funds

Large Cap

Canara Robeco Bluechip Equity Fund - Direct Plan - Growth    

Mirae Asset Large Cap Fund - Direct Plan - Growth


Mid Cap

DSP Midcap Fund - Direct Plan - Growth


Axis Midcap Fund - Direct Plan - Growth    


Kotak Emerging Equity Fund - Direct Plan - Growth

Invesco India Mid Cap Fund - Direct Plan - Growth




ELSS - Equity link Savings Schemes


Bank of India Tax Advantage Direct-Growth

Canara Robeco Equity Tax Saver Fund - Direct Plan - Growth

Kotak Tax Saver Fund - Direct Plan - Growth            


SBI Magnum Tax Gain Scheme - Direct Plan - Growth

Mutual fund investments are subject to market risks, read all scheme related documents carefully.