Mutual Funds

A mutual fund is a professionally-managed investment scheme, run by an Asset Management Company that brings together a group of people and invests their money in Stocks, Bonds and other securities, at a low cost.

An investor buys unit of holdings in a particular scheme of Mutual Fund in the form of 'units'. These units can be purchased or redeemed as needed at the scheme's current NAV (Net Asset Value). These NAV's keep changing, according to change in value of the fund's holdings. So, each investor participates proportionally in the gain or loss of the fund.

It is common knowledge that investing in Mutual Funds is better way to put your money to work towards fulfilling your Financial Goals/ Life Goals rather than simply letting your cash waste away in a savings account.

Advantages of Investing in Mutual Funds:

Professional Management

The money is managed by dedicated resources who are the professional Fund Managers and have the expertise and financial market knowledge.

Portfolio Diversification

As Mutual Funds manage large sum of money, they are able to spread the invested amount in various securities and in various sectors thereby reducing risk of being exposed to a few single securities/ sectors and benefit from optimum diversification.
Mutual Funds investments are easy to liquidate, any number of units can be redeemed any time as required and you get your money in your bank account in one to three working days from the date of redemption.

Mutual Funds are required to disclose their portfolio, where the investors money is invested, of every month end in the first 10-15 days of the successive month.
Regulatory Comfort

Mutual Funds are very tightly regulated and closely monitored by SEBI and have to adhere and follow the rules made by SEBI for each and every aspect of Mutual Funds.

An investor can invest in any open ended Mutual Fund scheme either through Lump sum or through SIP (Systematic Investment Plan) on a regular basis. Similarly an investor can also redeem his invested amount either fully or partially at any time from the open ended scheme.Low Cost Mutual Funds achieve economies of scale as they collect and invest large sums of money. The cost of running a Mutual Fund is divided between a larger pool of money and hence Mutual Funds are able to offer you a lower cost alternative of managing your funds.Choice of Investing Various Asset Classes An investor gets a choice of investing in various asset classes through Mutual Funds, like Equities, Debt and Gold.Benchmarks All Mutual Fund schemes have a benchmark and one of the mandate given to the Fund Managers is to generate returns that beat the respective Benchmark within the risk parameters of the scheme.Inflation Beating Returns Historically Equity and Equity oriented funds have generally given inflation beating returns as Equity asset class has given good returns in the past and mutual fund schemes have mostly outperformed their respective benchmarks.
Financial Goal-Oriented Funds

There are certain Mutual Funds Schemes which are Goal oriented and can be used by investors for achievement of their financial goals or desired outcomes. These funds help the investors to stay focussed on the goal, and allocate the amount on lump sum/ regular basis for achievement of the goals. Some examples of goal oriented funds are as follows:

  • Investment Goals
  • Risk Appetite
  • Time Period for Investment
  • Types of Mutual Funds

    Money Market Funds/ Liquid Funds
    hese Funds invest only in Money Market instruments making it generally most secure which aims at preserving the capital and giving decent return. These funds invest in Bank Certificates of Deposits, Commercial Paper, Repurchase Agreements and Bank Time Deposits
    Debt Mutual Funds, Bond/ Income Funds

    Income Funds are named appropriately: their purpose is to provide current income on a steady basis. When referring to Mutual Funds, the terms "Fixed-Income," "Bond," and "ncome" are synonymous and are a mix of Bonds, Corporate Debentures and Government Securities. While fund holdings may appreciate in value, the primary objective of these funds is to provide a steady appreciation/ regular cash flow to investors.
    Fixed Maturity Plans (FMPs)

    Mutual Funds are very tightly regulated and closely monitored by SEBI and have to adhere and follow the rules made by SEBI for each and every aspect of Mutual Funds.These are closed ended Debt Funds that invest in Debt instruments with maturities either less than or equal to maturity of the scheme. These are best suited to the conservative investors as they don't carry interest rate risk and generally offer higher post tax returns than FDs.

    Hybrid Funds

    Capital Protected Schemes
    These funds are oriented towards protection of capital and do not assure returns. The scheme invests largely in Debt Securities, wherein that much amount is invested in Debt which is likely to become equal to the original 100% amount at the end of scheme tenure given the rate of interest on securities and the balance amount is invested in Equity, which aims to provide growth.
    Equity Savings Funds

    The Funds that invest in Equity Shares are called Equity Funds. In the short term these funds are subject to market volatility and risk, whereas in the long term in the "Equity Mutual Funds" have given higher returns than any other type of investment instrument. Historically these funds have comfortably beaten inflation in the long term and the main purpose of investing in these funds is to set capital appreciation in the long term and benefit from growth in the economy and the corporate sector.
    Index Funds

    These funds invest in the same pattern as popular stock market indices like CNX Nifty and S&P BSE Sensex. Investment approach of Equity Funds can be Growth based or Value based or a blend of both.

    Growth funds

    These funds focus on stocks of the companies that have a potential for large growth.
    Value funds

    These funds invest in the companies whose stock prices don't necessarily reflect their fundamental worth/ are undervalued. They also offer potential for long term appreciation if the market recognises the true value of the stocks in which they invested.
    BSE STAR MF - List Of AMCs

    Aditya Birla Sunlife Mutual Fund
    AXIS Mutual Fund Baroda Pioneer Mutual Fund
    BNP Paribas Asset Management India Pvt.Limited
    BNP Sundaram Mutual Fund
    BOI Axa Mutual Fund
    Canara Robeco Mutual Fund
    DHFL Pramerica Mutual Fund
    DSP Mutual Fund
    Edelweiss Mutual Fund
    Franklin Templeton Mutual Fund
    HDFC Asset Management Company Ltd
    HSBC Asset Management (India) Pvt Ltd.
    ICICI Prudential Asset Management Company Ltd
    IDBI Mutual fund
    IDFC Asset Management company Ltd
    IIFL Mutual Fund
    Indiabulls Mutual Fund
    Invesco Mutual Fund
    JM Financial Mutual Fund
    Kotak Mahindra Mutual Fund
    L & T Mutual Fund
    LIC Mutual Fund
    Mahindra Mutual Fund
    Mirae Asset Global Investments(India) Pvt Ltd
    Motilal Oswal Asset Management Company Ltd
    Essel Mutual Fund
    PPFAS Mutual Fund
    Principal Mutual Fund
    Quantum Asset Management Company Ltd
    Reliance Capital Asset Management Ltd
    Sahara Mutual Fund
    SBI Funds Management Pvt Ltd
    Shriram Mutual Fund
    Tata Asset Management Ltd
    Taurus Mutual Fund
    UTI Asset Management Company Ltd
    Union Mutual Fund