WhyMutual Fund Investments
A mutual fund is an investment vehicle where multiple investors pool their money to be professionally managed, offering a diversified portfolio of stocks, bonds, or other securities to potentially generate returns.
Professional Management
Key advantage of Mutual Funds is their professional management, where skilled experts select investments to optimize risk-adjusted returns.
Diversification
Diversifying your investments across different asset classes is crucial to mitigate risks. Mutual funds offer instant diversification, simplifying the process by pooling your money into a range of assets or stocks.
Tax Benefit
Mutual funds, particularly ELSS Funds, offer substantial tax benefits, allowing investors to reduce their taxable income by up to Rs. 1.5 lakh under Section 80C, making them a tax-efficient choice compared to standard fixed-income investments.
High Liquidity
Open-ended mutual funds rank as the second most liquid investment option after bank deposits, offering superior liquidity compared to life insurance, infrastructure bonds, and government savings schemes. This liquidity advantage allows investors to easily redeem their units when needed.
Transparency
Investors in Mutual Funds enjoy transparency through daily public disclosures of Net Asset Values (NAVs) and monthly Fund Factsheets detailing portfolio holdings and fund manager investments. This transparency enhances investor awareness.
Returns
Mutual funds offer the potential for higher returns compared to traditional options due to their market-linked performance. While they lack capital protection, thorough research can help you select funds aligned with your financial goals for timely investments.
TypesMutual Funds
Mutual funds can be categorized in various ways, including their structure, asset class, and investment objectives. Furthermore, they can also be grouped based on their level of risk.
Open-ended funds:
These funds offer flexibility by allowing investors to buy or sell units at any time, throughout the year, at the prevailing net asset value. Open-ended funds are ideal for those who value liquidity.
Close-ended funds:
Close-ended funds have a predetermined unit capital and permit purchases only during a specified subscription period. Redemption is typically limited to the maturity date, but these funds can provide liquidity as they are traded on stock exchanges.
Interval funds:
Interval mutual funds offer a blend of features from both open-ended and close-ended funds. Investors can transact during specific intervals or trading windows, providing a middle-ground option for those seeking flexibility in their investments.
Equity funds: Equity funds invest in company shares, and their performance is linked to the stock market. While they offer potential for high returns, they also come with higher risk. These funds can be further categorized into types like Large-Cap Funds, Mid-Cap Funds, Small-Cap Funds, Focused Funds, or ELSS, among others. Consider investing in equity funds if you have a long-term investment horizon and a high risk tolerance.
Debt funds: Debt funds allocate capital to fixed-income securities such as corporate bonds, government securities, and treasury bills. Debt funds provide stability and regular income with relatively lower risk. They can be further classified based on duration, including low-duration funds, liquid funds, overnight funds, credit risk funds, and gilt funds, among others.
Hybrid funds: Hybrid funds invest in both debt and equity instruments to achieve a balance between the two. The allocation ratio may be fixed or variable, depending on the fund manager's strategy. Common types of hybrid funds include balanced and aggressive funds. Multi-asset allocation funds invest in at least three different asset classes.
Solution-oriented funds: These mutual fund schemes are designed for specific goals, such as saving for children's education or marriage, or planning for retirement. They typically come with a minimum lock-in period of five years.
Other funds: Index funds track specific stock indices, while fund of funds fall into this category as well.
This classification helps investors choose funds that align with their investment objectives and risk tolerance.
Growth Funds:These funds primarily invest in high-performing stocks with the aim of capital appreciation, making them attractive for long-term investors seeking high returns.
Tax-saving Funds (ELSS):Equity-linked saving schemes invest in company securities and offer tax deductions under Section 80C of the Income Tax Act, with a minimum investment horizon of three years.
Liquidity-based Funds:Some funds are categorized by liquidity. Ultra-short-term and liquid funds suit short-term goals, while retirement funds have longer lock-in periods.
Capital Protection Funds: These funds invest partially in fixed-income instruments and the rest in equities, aiming to ensure capital protection with minimal loss potential, although returns are taxable.
Fixed-Maturity Funds (FMF): FMFs invest in debt market instruments with the same or similar maturity periods as the fund itself, providing a structured approach to investment.
Pension Funds: Designed for long-term investors, pension funds are typically hybrid funds offering steady returns over time to support retirement goals.
Very-Low-Risk and Low-Risk Funds: These are typically short-term investments, such as liquid or ultra-liquid funds, which aim to mitigate market risk. However, they offer relatively lower returns.
Medium-Risk Funds: This category includes funds like hybrid funds, which invest in a combination of equity and debt instruments to strike a balance between risk and returns.
High-Risk Funds: High-risk funds have a significant exposure to equities, making them more susceptible to market fluctuations. They offer the potential for higher returns, but they also carry greater risk.
Systematic Investment Plan SIP
A Systematic Investment Plan (SIP) is a financial strategy provided by Mutual Funds, allowing individuals to invest a fixed sum into a Mutual Fund scheme at regular intervals, such as monthly or quarterly, rather than making a lump-sum investment. The invested amount can be as low as INR 500 per month and is akin to setting up a recurring deposit. It offers convenience by enabling investors to authorize their bank to deduct the specified amount each month.
Top 10 Mutual Funds by Returns
| Logo | Fund Name | Start Date | AUM (Crore) | TER (%) | 1 Year Return (%) | 3 Year Return (%) | 5 Year Return (%) | 10 Year Return (%) | Alpha | Beta |
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Top Performing Mutual Funds
Mutual Fund investments are subject to market risks, read all scheme related documents carefully
Suited for investors with a horizon of at least 3-4 years, aiming for the potential of significant returns, while being willing to tolerate the possibility of increased investment losses.
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SIP (Systematic Investment Plan) offers the advantage of regular, disciplined investing and the potential for compounding returns, helping investors achieve their long-term financial goals with ease
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No 42 Putheri
Kanchipuram
Tamil Nadu 631502
info@smartfundinvestment.com
+91 9843790800