Mutual Fund

What is a mutual fund?

  • A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal.
  • The money thus collected is then invested in capital market instruments such as shares, debentures and other securities.
  • The income earned through these investments and the capital appreciation realised are shared by its unit holders in proportion to the number of units owned by them.
  • Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.
Systematic Investment Plan (SIP)

Systematic Investment Plan (SIP) is a financial planning tool that allows you to invest in mutual funds through small, periodic installments. Moreover you can also select the tenure of your investments.SIPs help you set aside a fixed amount every month for investments thus contributing towards your financial goals.

ADVANTAGES OF SIP

  • Disciplined Investment : Through an SIP, an investor pledges to invest a fixed amount of money on a monthly basis in a mutual fund scheme for a predetermined time period. Also SIP provides the investor with the flexibility to increase the amount of his monthly installment at any time.
  • Affordable : Investments do not necessarily mean that one has to collect a substantial chunk of money to invest. One can start investing with a very small amount through an SIP.
Debt Funds

The objective of these Funds is to invest in debt papers. Government authorities, private companies, banks and financial institutions are some of the major issuers of debt papers. By investing in debt instruments, these funds ensure low risk and provide stable income to the investors. Debt funds are further classified as:

  • Gilt Funds:  Invest their corpus in securities issued by Government, popularly known as Government of India debt papers. These Funds carry zero Default risk but are associated with Interest Rate risk. These schemes are safer as they invest in papers backed by Government.
  • Income Funds: Invest a major portion into various debt instruments such as bonds, corporate debentures and Government securities.
  • MIPs: Invests maximum of their total corpus in debt instruments while they take minimum exposure in equities. It gets benefit of both equity and debt market. These scheme ranks slightly high on the risk-return matrix when compared with other debt schemes.
  • Short Term Plans (STPs): Meant for investment horizon for three to six months. These funds primarily invest in short term papers like Certificate of Deposits (CDs) and Commercial Papers (CPs). Some portion of the corpus is also invested in corporate debentures.
  • Liquid Funds: Also known as Money Market Schemes, These funds provides easy liquidity and preservation of capital. These schemes invest in short-term instruments like Treasury Bills, inter-bank call money market, CPs and CDs. These funds are meant for short-term cash management of corporate houses and are meant for an investment horizon of 1day to 3 months. These schemes rank low on risk-return matrix and are considered to be the safest amongst all categories of mutual funds.
Gold ETF

The investment objective of the fund is to seek to provide returns that closely correspond to returns provided by price of gold through investment in physical Gold. amount every month for investments thus contributing towards your financial goals.

Who can invest?

It is ideal for investors who would like to invest in Gold but doesn’t like the hassles and costs of storing and safeguarding physical gold. As the unit price would closely resemble price of gold in the market – an investor can easily encash his holding by selling his units on the stock exchange. Thus the fund offers an ideal way to invest in Gold and Gold bullion.

Systematic Transfer Plan(STP)

STP refers to Systematic Transfer Plan where in an investor invests a lump sum amount in one scheme and regularly transfers (i.e. switches) a pre-defined amount into another scheme. Every month on a specified date an amount you choose is transfered from one mutual fund scheme to another of your choice.

Systematic Withdrawal Plan (SWP):

SWP is a smart way to plan for your future needs by withdrawing amounts systematically from your existing portfolio either to reinvest in another portfolio or to meet your expenses. Your savings no longer remain idle. Your money can earn better returns if reinvested, instead of lying idle in a savings account for meeting your regular payments.