Mutual Funds
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Mutual Funds

Additional Information


Mutual Funds have recently been proven to be a very popular investment instrument for assisting investors in earning an income or building their wealth by participating in opportunities available in various securities and markets. Various mutual funds have different objectives and meet the requirements of different sort of investors.

Investing in mutual funds ranks among the most preferred ways to create wealth over the longer term. Mutual funds offer a holistic approach enabling investors to put their money in varied mix of equities, debt, securities and derivate markets. There are diverse varieties of mutual funds that are available to invest today; these enable different categories of investors to invest funds in ways that could suit their own palate. These categories of investors can be different from each other on the basis of age, size of investments, time of investments, risk appetite, liquidity requirements and numerous other facets.

Here is some basic information Mutual Funds

What are Mutual Funds & Why Mutual Funds?

  • A mutual fund is a trust that pools investments and savings from numerous investors who may share a common financial goal. 
  • The funds are then collectively invested by experienced Fund Managers in different types of securities ranging from equities, debt, debentures to derivatives; depending upon the schemes declared objectives.
  • It gives market returns and not assured returns, as in longer-term market returns may have potential to perform better than assured return products. 

 Who can Invest into Mutual Funds? 

  • Anybody with an investible surplus or a savings intention of few hundred rupees can invest in Mutual Funds.
  • There are different sort of schemes that enable investors or savers to put money into the funds regularly on monthly basis or one time investment basis. 

 Advantages of Mutual Funds 

  •   Mutual Funds present a very cost effective way to get your money managed by professional management
  • It enables investors to diversify their investments even when investing on a smaller scale.
  • They are transparent – Convenient Administration – Have return potential
  • Vast choice of schemes provide options of liquidity and flexibility to investors
  • Mutual fund industry is well regulated and some schemes may offer Tax benefits.

 How do I grow money from a mutual fund? 

  •   Income Distribution: The fund distributes the profits it has earned in form of dividends to its investors.
  • Dividend / Coupon Dividends: The fund earns dividend income from the share and interest income from the bond it holds, which may be distributed back to its investors
  • Capital Appreciation: As the value of securities held by the fund increases the value of the fund also increases. Therefore there may be a capital appreciation when you sell your units at a higher price than your initial purchase price. Disclaimer: Mutual funds do not guarantee the same. Investments are subjected to market risks, read all scheme related documents carefully.


How do I invest in Mutual Funds?

  You can either get in touch with us or follow the steps below

Step 1 Identify your investment needs

  • What are my investment objectives and needs
  • How much risk am I willing to take?
  • What are my cash flow requirements? 

Step 2 Choose the right mutual fund.

  • The track record of performance over the last few years in relation to the appropriate Benchmark and similar funds in the same category.
  • How well the mutual fund is organised to provide efficient, prompt and personalised service.
  • Degree of transparency as reflected in frequency an d quality of their communications. 

Step 3 Select the ideal mix of schemes

  •  Investing in just one scheme may not meet all your investment needs.
  • You may consider investing in a combination of schemes to achieve your specific goals.


Tax benefits of investing in Mutual Funds

  •   The amount invested in tax-saving funds/Equity Linked Saving Schemes (ELSS) is eligible for deduction under Section 80C upto a limit of Rs.1,00,000/- (in a financial year).
  • Dividend from Mutual Fund Schemes is Tax-Free in the hands of the Investor/recipient.
  • Indexation Benefit under Long term Capital Gain in Debt schemes.


Risks associated with Mutual Funds Investment

  •   Risk is an inherent aspect of every form of investment. For Mutual Fund investments, risks would include variability, or period-by-period fluctuations in total return. 
  • Market risk: At times the prices or yields of all the securities in a particular market rise or fall due to broad outside influences. This change in price is due to 'market risk'.
  • Inflation risk: Sometimes referred to as 'loss of purchasing power'. Whenever the rate of inflation exceeds the earnings on your investment, you run the risk that you'll actually be able to buy less, not more. 
  • Credit risk: In short, how stable is the company or entity to which you lend your money when you invest? How certain are you that it will be able to pay the interest you are promised, or repay your principal when the investment matures?
  • Interest rate risk: Interest rate movements in the Indian debt markets at times can be volatile leading to the possibility of large price movements up or down in debt and money market securities and thereby to possibly large movements in the NAV.
  • Other risks associated are:
      - Investment risks
      -  Liquidity risk
      -  Changes in the government policy