Mutual Fund Investments

What are the Mutual Funds?

Mutual funds are investment vehicles that pool money from various investors to purchase a diversified portfolio of stocks, bonds, or other securities. It is a trust that collects money from a number of investors who share a common investment objective. Then, it invests the money in equities, bonds, money market instruments and/or other securities. Each investor owns units, which represent a portion of the holdings of the fund. Key features includes:

Diversification

Mutual funds spread investments across various assets, reducing risk.

Profesional management

Skilled fund managers make investment decisions.

Affordability & transparency

Low initial investments and cost-effective to a wide range of investors. Regular reporting on holdings and performance offers clarity.

Liquidity & Variety

Investors can buy or sell fund shares easily. Mutual funds offer options like equity, debt, hybrid, and sector-specific funds.

Equity Funds

An Equity Fund is a Mutual Fund Scheme that invests predominantly in shares/stocks of companies. They are also known as Growth Funds.

Equity Funds are either Active or Passive. In an Active Fund, a fund manager scans the market, conducts research on companies, examines performance and looks for the best stocks to invest. In a Passive Fund, the fund manager builds a portfolio that mirrors a popular market index, say Sensex or Nifty Fifty.

Furthermore, Equity Funds can also be divided as per Market Capitalisation, i.e. how much the capital market values an entire company’s equity. There can be Large Cap, Mid Cap, Small or Micro Cap Funds.

Also there can be a further classification as Diversified or Sectoral / Thematic. In the former, the scheme invests in stocks.

ELSS Fund (Tax Saving Fund)

ELSS Funds

An ELSS is an Equity Linked Savings Scheme, that allows an individual or HUF a deduction from total income of up to Rs. 1.5 lacs under Sec 80C of Income Tax Act 1961.

Thus if an investor was to invest Rs. 50,000 in an ELSS, then this amount would be deducted from the total taxable income, thus reducing her tax burden.

These schemes have a lock-in period of three years from date of units allotment. After the lock-in period is over, the units are free to be redeemed or switched. ELSS offer both growth and dividend options. Investors can also invest through Systematic Investment Plans (SIP), and investments up to ₹ 1.5 lakhs, made in a financial year are eligible for tax deduction

Hybrid Funds

A hybrid mutual fund is an investment vehicle that combines elements of both equity (stocks) and debt (bonds) securities within a single portfolio. These funds aim to offer investors a balanced approach by diversifying their investments across asset classes, thereby potentially reducing risk while seeking reasonable returns. Hybrid funds come in various forms, such as balanced funds, which maintain a fixed allocation between stocks and bonds, and dynamic asset allocation funds, which adjust their portfolio mix based on market conditions. This diversity makes hybrid funds suitable for investors with varying risk tolerance and investment objectives.

Liquid Funds

A liquid mutual fund is a type of mutual fund that primarily invests in highly liquid and low-risk securities such as government bonds, certificates of deposit, and money market instruments. It is designed for short-term investments, offering easy access to funds, often with no exit loads, and aims to provide stable returns while preserving the capital. Liquid funds are favored by investors looking for a safe parking spot for surplus cash, as they offer liquidity and minimal interest rate risk. They are a suitable choice for those seeking a better return than traditional savings accounts and quick access to their investments.

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We are leading Mutual Fund Distributors with financial professionals dedicated to helping individuals and organizations make informed investment decisions. With their expertise, they empower investors to achieve their financial goals and maximize returns.
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