Mutual Funds
Mutual Funds
Mutual Funds are most demanded product in the market which has tax savings features with Excellent Returns connected to Market. In fact, it is a time tested approach of creating wealth by putting investment into diversified portfolio. Mutual Fund has different risk portfolio as per the risk appetite of the customers, Large Cap Fund, Mid Cap Fund, Small Cap Fund, Multi Cap Fund, Debt Fund.
You may start SIP (Systematic Investment Plan)
to meet the financial needs and desired goals of yours
Mutual Fund schemes could be ‘open ended’ or close-ended’ and actively managed or passively managed
A. OPEN-ENDED AND CLOSED-END FUNDS:
An open-end fund is a mutual fund scheme that is available for subscription and redemption on every business throughout the year, (akin to a savings bank account, wherein one may deposit and withdraw money every day). An open ended scheme is perpetual and does not have any maturity date
A closed-end fund is open for subscription only during the initial offer period and has a specified tenor and fixed maturity date (akin to a fixed term deposit). Units of Closed-end funds can be redeemed only on maturity (i.e., pre-mature redemption is not permitted). Hence, the Units of a closed-end fund are compulsorily listed on a stock exchange after the new fund offer, and are traded on the stock exchange just like other stocks, so that investors seeking to exit the scheme before maturity may sell their Units on the exchange.
B. ACTIVELY MANAGED AND PASSIVELY MANAGED FUNDS:
An actively managed fund is a mutual fund scheme in which the fund manager “actively” manages the portfolio and continuously monitors the fund's portfolio, deciding on which stocks to buy/sell/hold and when, using his/her professional judgement, backed by analytical research. In an active fund, the fund manager’s aim is to generate maximum returns and out-perform the scheme’s bench mark
A passively managed fund, by contrast, simply follows a market index, i.e., in a passive fund , the fund manager remains inactive or passive inasmuch as, he/she does not use his/her judgement or discretion to decide as to which stocks to buy/sell/hold , but simply replicates / tracks the scheme’s benchmark index in exactly the same proportion. Examples of Index funds are an Index Fund and all Exchange Traded Funds. In a passive fund, the fund manager’s task is to simply replicate the scheme’s benchmark index i.e., generate the same returns as the index, and not to out-perform the scheme’s bench mark
SIP - Systematic Investment Plan
Systematic Investment Plan or SIP is a method of investing in mutual funds wherein an investor chooses a mutual fund scheme and invests the fixed amount of his choice at fixed intervals.
SIP investment plan is about investing a small amount over time rather than investing one-time huge amount resulting in a higher return
How Does SIP work?
Once you apply for one or more SIP plans, the amount is automatically debited from your bank account and invested in the mutual funds you have purchased at the predetermined time interval
At the end of the day, you will be allocated the units of mutual funds depending on the NAV of the mutual fund
With every investment in an SIP plan in India, the additional units are added to your account depending on the market rate. With every investment, the amount being reinvested is larger and so is the return on those investments.
It is at the discretion of the investor to receive the returns at the end of the SIP’s tenure or at a periodic interval.
ELSS Funds:
Investors look for investment opportunities that can help them generate wealth, get regular returns, and/or save taxes. While there are numerous investment schemes available in the market, most of them offer returns that are taxed according to the Income Tax rules. This is where ELSS funds step in. Equity Linked Savings Scheme or ELSS Funds are tax-saving equity mutual funds. Here, we will explore ELSS Tax Saving Mutual Funds and talk about all the aspects that you need to know about them.
