Mutual Fund

Type of mutual funds

• Equity Funds – Funds investing in equity stocks/shares of companies.
• Debt Funds – Funds investing in debt instrument.
• Money Market Funds – These funds invest in short term fixed income securities like government bonds, treasury bills etc.
• Balanced Funds – These are the funds which invests in mixed classes of assets like some are invested in debts and some are in equity.
• Sector Funds – These are invested in particular assets in chosen sectors.
• Index Funds – Invested in particular index of an exchange like shares representative of the BSE Sensex.
• Tax Saving Funds – Invested in equity, which qualify for tax deductions under income tax act.
• Open-Ended Funds – Funds which are open to redeemed at NAVs during the year.
• Close-Ended Funds – Funds which can be redeemed only at maturity.
• Growth Funds - Funds are invested in equities for the purpose of providing capital.
• Income Funds – Funds invested in fixed income securities like bonds, debentures etc.
• Liquid Funds – Money invested short term or very short term instruments like Treasury bills, CPs etc.

Benefits of Mutual Funds

• Professionally Managed – Mutual funds are managed by professional who are practically understands the market behaviors and possesses the thorough knowledge about market.
• Many Kind of Mutual Funds – Mutual funds are available in many varieties like stock funds, bond funds, target-date funds etc. Different fund serves the different need of investors.
• Transparency – Mutual Fund holdings are publicly available which ensures the transparency in returns.
• More Liquid – Investor can sale the mutual funds and receipts from the sale are available within 2-3 days.
• Audited Track Record – Track record of the each mutual fund is audited, thus it is better to trust the mutual fund.
• Tax benefits – Many mutual funds gives the different tax benefits to the investors.
• Safe – Investment in mutual funds are deemed as safe, as these are all regulated by SEBI (Securities Exchange Board of India).

FAQ’s

How to fill up the application form of a mutual fund scheme?

An investor must mention properly the name, address, number of units applied for and other information as required in the application form. Know your Customer (KYC) documents need to be submitted by a first time investor.

What is a direct plan?

SEBI has directed mutual funds to compulsorily launch a direct plan for direct investments, i.e., investments not routed through a distributor, from 01 January 2013.

What is a Systematic Investment Plan (SIP)?

A SIP allows an investor to invest regularly. One puts in a small amount every month that is invested in a mutual fund.

Can I invest in Cash?

Yes, cash investments up to INR 50,000 per investor, per mutual fund, per financial year can be made in mutual funds.

How much should one invest in debt or equity oriented schemes?

There are many factors which are to be considered by an investor like risk taking capacity, age factor, financial position, etc. Investors may also consult financial experts before taking decisions.

As a unit holder, how much time will it take to receive dividends/repurchase proceeds?

A mutual fund is required to dispatch the dividend warrants within 30 days of the declaration of the dividend and the redemption or repurchase proceeds within 10 working days from the date of redemption or repurchase request made by the unit holder.

When will the investor get certificate or statement of account after investing in a mutual fund?

Mutual funds are required to dispatch the certificates or statements of accounts within five working days from the date of closure of the initial subscription of the scheme.

How will an investor come to know about the changes, if any, which may occur in the mutual fund?

The mutual funds are required to inform any material changes to their unit holders. Apart from it, many mutual funds send quarterly newsletters to their investors.

The mutual funds are required to disclose full portfolios of all of their schemes on a monthly basis on their website. Portfolio disclosure on a half yearly basis is published in the newspapers. Mutual funds may also send the disclosure of half-yearly portfolios to their unit holders.

Where can I check whether there is any unclaimed amount (dividend/redemption) in my name lying with a mutual fund?

Mutual Funds provide on their website, the list of names and addresses of investors in whose folios there are unclaimed amounts (dividend/redemption).

If mutual fund scheme is wound up, what happens to money invested?

In case of winding up of a scheme, the mutual funds pay a sum based on prevailing NAV after adjustment of expenses. Unit holders are entitled to receive a report on winding up from the mutual funds which gives all necessary details.

How can investors redress their complaints?

Investors would find the name of contact person in the offer document of the mutual fund scheme who they may approach in case of any query, complaints or grievances.