A mutual fund is a financial instrument that pools money from multiple investors to invest in a diversified portfolio of stocks, bonds, and other securities, managed by professional fund managers.
A mutual fund company raises money from investors and invests it in various assets. Professionals manage the fund to achieve growth, and investors receive units of the fund based on their investment amount.
Fund managers are experts who research and select securities like stocks, debentures, and government bonds to maximize returns on investments.
An AMC, or Asset Management Company, is the company that manages and operates mutual funds.
A Systematic Investment Plan (SIP) is a method of investing a fixed amount of money in a mutual fund scheme at regular intervals, with units being allotted at the prevailing Net Asset Value (NAV).
Mutual funds are primarily categorized into three types: Equity Funds (invest in shares of companies), Debt Funds (invest in bonds from companies and governments), and Hybrid Funds (invest in a mix of both shares and bonds).
The Net Asset Value (NAV) is calculated by subtracting the fund's liabilities from its assets and dividing the result by the number of outstanding units.
An arbitrage fund is a type of mutual fund that generates returns by capitalizing on the price differences of securities in the cash and derivatives markets.
The price of a stock in the futures market is typically higher than in the cash market. The difference between these prices is the source of income for the arbitrage fund.
An arbitrage fund buys a stock in the cash market and simultaneously sells it in the futures market to lock in the price difference.
A nomination is the process of appointing a person (a nominee) to whom your mutual fund units will be transferred upon your death.
Only individual investors can nominate someone for their mutual fund units. Non-individual entities like trusts, companies, and partnerships cannot nominate.
Upon the investor's death, all rights and amounts related to the mutual fund holdings are transferred to the nominee. This transfer is considered a valid discharge by the AMC, even if the legal heir is different from the nominee.
Yes, you can nominate up to three people and specify the percentage of the amount each will receive. If no percentage is specified, the amount will be divided equally among the nominees.
Yes, a minor can be a nominee, but you must provide the name and address of the minor's guardian.
Yes, an NRI can be a nominee, subject to the foreign exchange regulations in effect at the time.
Yes, a nomination applies to the entire folio, so all units within it will be transferred to the nominee(s).
No, nominations in existing folios do not automatically apply to new folios created for new purchases. A separate nomination is required for each new folio.
Yes, you can cancel or change your nomination at any time before redeeming your mutual fund units.
No, a nominee cannot be registered for an account held on behalf of a minor.
Registration of nomination facilitates the easy transfer of funds to the nominee(s) upon the investor's demise. In the absence of a nominee, a claimant would have to produce documents like a Will, Legal Heir Certificate, or a No-Objection Certificate from other legal heirs to have the units transferred to their name.
Yes, you can make a nomination for your purchased Mutual Fund units.
You can nominate any individual as your nominee. However, you cannot nominate a Trust, a Society, a Body Corporate, a Partnership Firm, the Karta of a Hindu Undivided Family, or a Power of Attorney Holder.
Mutual fund companies send newsletters and information on their portfolio details to investors on a regular basis. You can also access the portfolio details on the respective mutual fund's website.
You can choose the right mutual fund based on your age, time horizon, risk profile, asset allocation, the background of the mutual fund company, and the track record of the scheme over time.
A switch is an option provided by some Mutual Funds that allows an investor to shift their investment from one scheme to another within that fund. A switching fee may be levied for this option.
The repurchase or redemption price is the price or NAV at which an open-ended scheme purchases or redeems its units from the unitholders. It may include an exit load, if applicable.
The price or NAV a unitholder is charged while investing in an open-ended scheme is called the sales price. It may include a sales load, if applicable.
An exit load is a fee charged by mutual fund houses if investors exit a scheme partially or fully within a certain period from the date of investment.
The NAV is required to be disclosed by mutual funds on a regular basis – daily or weekly – depending on the type of scheme.
Net Asset Value (NAV) refers to the price of one unit of a mutual fund scheme.
Under a Systematic Withdrawal Plan (SWP), an investor redeems a fixed number of mutual fund units at regular intervals.
Rupee cost averaging is a method to save regularly and minimize the effect of market volatility on investments. By investing through methods like SIP, you invest a fixed amount in mutual funds at regular intervals, which helps in averaging out the cost per unit.
Investing in a SIP allows you to start investing with a small amount and helps in averaging out your investment by buying units at different points in time and at different NAV levels.
You can buy units of close-ended mutual funds only when a mutual fund company launches the fund, and you have to hold your investment for a fixed tenure.
Open-ended funds can be bought and sold at any time and have no fixed tenure.
Equity Linked Saving Schemes (ELSS) are tax-saving mutual fund schemes that provide tax benefits under Section 80C of the Income Tax Act and have a lock-in period of three years.
Capital protection funds are mutual funds designed to protect your capital by investing a major portion in bonds and a small portion in shares.
Liquid funds are mutual funds that offer high liquidity, meaning the units can be sold immediately, and the invested amount can be redeemed quickly.
Sectoral mutual funds invest your money in shares of companies of one particular sector with the main objective of providing high returns from that sector.
A gilt fund is a type of mutual fund that invests only in government securities. These funds are considered safe as they carry no default risk.
Index funds are passive mutual funds that invest in the shares of companies that make up a specific index. They aim to replicate the performance of that index.
Exchange Traded Funds (ETFs) are funds that can be traded on a stock exchange, similar to shares. These funds invest in stocks, indexes, or commodities.
Hybrid mutual funds invest in both stocks and bonds. The stock portion helps to grow your wealth, while the bond portion provides stability to your portfolio.
Debt mutual funds pool money from various investors and invest it in bonds of reputable companies and government bonds.
Equity mutual funds collect money from multiple investors and invest it in the shares of different companies. The main goal of these funds is to generate good returns by investing in stocks.
A Fund of Funds is a mutual fund that invests in a variety of other mutual fund schemes.
The Key Information Memorandum (KIM) provides detailed performance-related information on the various schemes of a mutual fund company. This allows you to review the performance of different schemes and make an informed decision before investing. However, it's important to remember that a fund's past performance does not guarantee future success.
An offer document provides details about a new mutual fund scheme being introduced to the market. It includes information on the scheme's features, risk factors, loads (entry or exit fees), and the track record of the mutual fund company, among other things.
NFO stands for New Fund Offer. It refers to the launch of a new fund for investors. An NFO can also be the launch of additional units of a close-ended fund.
The performance of mutual funds is influenced by the performance of the stock market and the economy as a whole. Equity funds are heavily influenced by the stock market, which in turn is affected by the performance of companies and the overall economy. The performance of sector funds depends largely on the companies within that specific sector. Bond funds are influenced by interest rates and credit quality. When interest rates rise, bond prices fall, and vice versa. Similarly, bond funds with higher credit ratings are less affected by changes in the economy.
If you invest in Equity Linked Saving Schemes (ELSS), there is a lock-in period of three years. This means your money will remain invested with the mutual fund company for three years.
Yes, NRIs can invest in mutual funds.
You do not need a demat account to invest in mutual funds, except for Exchange Traded Funds (ETFs).
Mutual funds invest in a variety of financial instruments, such as equities, debt, and government securities. The value of these investments can fluctuate, which affects your mutual fund's Net Asset Value (NAV). However, since the risk is spread among a large pool of individuals, you individually take on lower risk through diversification while having the potential for high returns.
<p>Some of the main benefits of investing in a mutual fund include:</p>
<ul>
<li>Diversification</li>
<li>Professional management</li>
<li>Convenience</li>
<li>Liquidity</li>
<li>A variety of schemes and types</li>
<li>Tax benefits</li>
</ul