MODULE 3

UTI

Unit Trust of India (UTI) is a statutory public sector investment

institution which was set up in February 1964 under the Unit Trust of
India Act, 1963. UTI began operations in July 1964. It provides
opportunity for small-savers to invest in areas where their risk is
diversified.

The Unit-holders, if necessary, can sell their units to UTI at the prices
determined by UTI. One of the attractions is that the investment in UTI
has an income-tax rebate and the income from the UTI is exempted;
from income-tax subject to certain limits.

Objectives:
The primary objectives of the UTI are:
(i) To encourage and pool the savings of the middle and low income
groups.

(ii) To enable them to share the benefits and prosperity of the industrial
development in the country.
Functions of UTI:
The UTI functions are discussed below:
(i) To accept discount, purchase or sell bills of exchange, promissory
note, bill of lading, warehouse receipt, documents of title to goods etc.,

(ii) To grant loans and advances.

(iii) To provide merchant banking and investment advisory service.

(iv) To provide leasing and hire purchase business.

(v) To extend portfolio management service to persons residing outside

India.

(vi) To buy or sell or deal in foreign exchange dealings.

(vii) To formulate unit scheme or insurance plan in association with or

as agent of GIC.

(viii) To invest in any security floated by the Central Government, RBI

or foreign bank.

Schemes of UTI:
The familiar schemes of UTI are given below:
(i) Unit scheme—1964.

(ii) Unit Linked Insurance Plan—1971.

(iii) Children Gift Growth Fund Unit Scheme—1986.

(iv) Rajyalakhmi Unit Scheme—1992.

(v) Senior Citizen’s Unit Plan—1993.

(vi) Monthly Income Unit Scheme.

SBI MUTUAL FUNDS
SBI Mutual Fund (SBIMF) is a joint venture of State Bank of India
(SBI) with AMUNDI (France), one amongst the top fund management
firms in the world. Headquartered in Mumbai, it is managed by SBI
Funds Management Pvt. Ltd. which has a track record of over 30 years
of in fund management. The trustee company to the SBI Mutual Fund is
the SBI Mutual Fund Trustee Company Private Limited. During the
period 2016-17, SBI Mutual Fund was able to achieve a growth of
47.05% on the basis of its average Assets Under Management (AUM).
In the same year, it emerged as India’s largest Exchange Traded Funds
(ETF) asset manager with AUM of Rs.23,816 crore. The fund house has
165 branches across India and as of March 2017, it has 57,004 AMFI
certified agents. SBI Mutual Fund has more than 222 points of
acceptance in the country and their main aim is the delivery of value and
to replenish the trust of the investors. With a mammoth customer base of
more than 5.4 million investors, the SBI Mutual Fund is one of the
largest mutual funds in India.
SBI Mutual Fund is a joint venture between two financial bigwigs -
State Bank of India (the largest bank in India) and AMUNDI (one of the
leading global asset management companies in France). Established in
1987, it has the distinction of being India's first non-UTI Mutual Fund.
SBI Mutual Fund offers a wide range of investment solutions covering
all risk profiles. The fund house provides mutual fund plans across all
categories and is among the most renowned asset management
companies in India.
SBI Mutual Fund has completely lived up to its vision statement of
being the most trusted and respected asset management company in the
country. In the last three decades, it has demonstrated a robust and
consistent track record. Its expert team is highly skilled at judicious
stock selection, insightful research and optimal risk management.
This Mutual Fund Company offers a host of investment solutions -
equity schemes, debt schemes, hybrid schemes, ETFs, Index Funds, etc.
It also has solution-oriented offerings that help in the realization of
specific financial goals such as retirement planning, children education,
etc.

SBI Mutual Fund Key Features and Advantages:

The key features of the SBI Mutual Fund can be summed up as follows:
1. SBI Mutual Fund offers around 61 schemes which are spread across
different categories. This helps meet the investment objectives of
different types of investors.
2. The SBI Mutual Fund delivers value and retains the trust of the
investors through a huge network of more than 222 points of
acceptance around the country.
3. The main philosophy of the SBI Mutual Fund is ‘growth through
innovation’. It sticks to the philosophy. The investment policies have
been set up accordingly.
4. With more than 5.4 million investors across the country, the SBI
Mutual Fund is one of the biggest investment management firms in the
country.
5. It is one of the most reliable and one of the fastest growing mutual
funds in India

WHY SHOULD I CONSIDER INVESTING IN MUTUAL FUNDS?

WHY SHOULD I CONSIDER INVESTING IN MUTUAL FUNDS?
WHY SHOULD I CONSIDER INVESTING IN MUTUAL FUND
As an investor we aim to get maximum returns on our investments to reach our desired goal.
But one may lack the time to track the market and knowledge to choose suitable investment
option. With various types of Mutual funds available one can invest in a Mutual fund that suits
his/her objective and risk appetite.

Different Types of Mutual Funds

Mutual funds offer one of the most comprehensive, easy and flexible
ways to create a diversified portfolio of investments. There are different
types of mutual funds that offer different options to suit investors diverse
risk appetites. Let us understand the different types of mutual funds
available currently in the market to help you make an informed
investment decision.

Broadly, any mutual fund will either invest in equities, debt or a mix
of both. Further, they can be open-ended or close-ended mutual
fund schemes.
> Open-ended funds
In an open-ended mutual fund, an investor can invest or enter and
redeem or exit at any point of time. It does not have a fixed maturity
period. These are funds in which units are open for purchase or
redemption through the year. All purchases/redemption of these fund
units are done at prevailing NAVs. Basically these funds will allow
investors to keep invest as long as they want. There are no limits on how
much can be invested in the fund. They also tend to be actively managed
which means that there is a fund manager who picks the places where
investments will be made. These funds also charge a fee which can be
higher than passively managed funds because of the active management.
THey are an ideal investment for those who want investment along with
liquidity because they are not bound to any specific maturity periods.
Which means that investors can withdraw their funds at any time they
want thus giving them the liquidity they need.
> Close-ended funds
Close-ended mutual funds have a fixed maturity date. An investor can
only invest or enter in these type of schemes during the initial period
known as the New Fund Offer or NFO period. His/her investment will
automatically be redeemed on the maturity date. They are listed on stock
exchange(s). These are funds in which units can be purchased only
during the initial offer period. Units can be redeemed at a specified
maturity date. To provide for liquidity, these schemes are often listed for
trade on a stock exchange. Unlike open ended mutual funds, once the
units or stocks are bought, they cannot be sold back to the mutual fund,
 instead they need to be sold through the stock market at the prevailing
price of the shares.

 Interval Funds: These are funds that have the features of open-ended
and close-ended funds in that they are opened for repurchase of shares
at different intervals during the fund tenure. The fund management
company offers to repurchase units from existing unitholders during
these intervals. If unitholders wish to they can offload shares in favour
of the fund.

various types of equity and debt mutual funds available in India:

1. Equity or growth schemes
These are one of the most popular mutual fund schemes. They allow
investors to participate in stock markets. Though categorised as high
risk, these schemes also have a high return potential in the long run.
They are ideal for investors in their prime earning stage, looking to build
a portfolio that gives them superior returns over the long-term. Normally
an equity fund or diversified equity fund as it is commonly called invests
over a range of sectors to distribute the risk.

Equity funds can be further divided into three categories:

> Sector-specific funds:
These are mutual funds that invest in a specific sector. These can be
sectors like infrastructure, banking, mining, etc. or specific segments
like mid-cap, small-cap or large-cap segments. They are suitable for
investors having a high risk appetite and have the potential to give high
returns.
> Index funds:
Index funds are ideal for investors who want to invest in equity mutual
funds but at the same time don't want to depend on the fund manager.
An index mutual fund follows the same strategy as the index it is based
on.
For example, if an index fund follows the BSE Index as the
replicating index and if it has a 20% weightage in let's say Stock A,
then the index fund will also invest 20% of its assets in Stock A.
Index funds promise returns in line with the index they mirror. Further,
they also limit the loss to the proportional loss of the index they follows,
making them suitable for investors with a medium risk appetite.

> Tax saving funds:

These funds offer tax benefits to investors. They invest in equities and
are also called Equity Linked Saving Schemes (ELSS). These type
of schemes have a 3 year lock-in period. The investments in the scheme
are eligible for tax deduction u/s 80C of the Income-Tax Act, 1961.

2. Money market funds or liquid funds:

These funds invest in short-term debt instruments, looking to give a
reasonable return to investors over a short period of time. These funds
are suitable for investors with a low risk appetite who are looking at
parking their surplus funds over a short-term. These are an alternative to
putting money in a savings bank account.

3. Fixed income or debt mutual funds:

These funds invest a majority of the money in debt - fixed income i.e.
fixed coupon bearing instruments like government securities, bonds,
debentures, etc. They have a low-risk-low-return outlook and are ideal
for investors with a low risk appetite looking at generating a steady
income. However, they are subject to credit risk.

4. Balanced funds:
As the name suggests, these are mutual fund schemes that divide their
investments between equity and debt. The allocation may keep changing
based on market risks. They are more suitable for investors who are
looking at a combination of moderate returns with comparatively low
risk.
 5. Hybrid / Monthly Income Plans (MIP):
These funds are similar to balanced funds but the proportion of equity
assets is lesser compared to balanced funds. Hence, they are also called
marginal equity funds. They are especially suitable for investors who are
retired and want a regular income with comparatively low risk.
6. Gilt funds:
These funds invest only in government securities. They are preferred by
investors who are risk averse and want no credit risk associated with
their investment. However, they are subject to high interest rate risk.

Types of Mutual Funds based on asset class

 Equity Funds: These are funds that invest in equity stocks/shares of
companies. These are considered high-risk funds but also tend to
provide high returns. Equity funds can include specialty funds like
infrastructure, fast moving consumer goods and banking to name a
few. THey are linked to the markets and tend to
 Debt Funds: These are funds that invest in debt instruments e.g.
company debentures, government bonds and other fixed income
assets. They are considered safe investments and provide fixed returns.
These funds do not deduct tax at source so if the earning from the
investment is more than Rs. 10,000 then the investor is liable to pay
the tax on it himself.
 Money Market Funds: These are funds that invest in liquid
instruments e.g. T-Bills, CPs etc. They are considered safe investments
for those looking to park surplus funds for immediate but moderate
returns. Money markets are also referred to as cash markets and come
with risks in terms of interest risk, reinvestment risk and credit risks.
 Balanced or Hybrid Funds: These are funds that invest in a mix of
asset classes. In some cases, the proportion of equity is higher than
debt while in others it is the other way round. Risk and returns are
balanced out this way. An example of a hybrid fund would be Franklin
India Balanced Fund-DP (G) because in this fund, 65% to 80% of the
investment is made in equities and the remaining 20% to 35% is
 invested in the debt market. This is so because the debt markets offer a
lower risk than the equity market.
Types of Mutual Funds based on investment objective
 Growth funds: Under these schemes, money is invested primarily in
equity stocks with the purpose of providing capital appreciation. They
are considered to be risky funds ideal for investors with a long-term
investment timeline. Since they are risky funds they are also ideal for
those who are looking for higher returns on their investments.
 Income funds: Under these schemes, money is invested primarily in
fixed-income instruments e.g. bonds, debentures etc. with the purpose
of providing capital protection and regular income to investors.
 Liquid funds: Under these schemes, money is invested primarily in
short-term or very short-term instruments e.g. T-Bills, CPs etc. with
the purpose of providing liquidity. They are considered to be low on
risk with moderate returns and are ideal for investors with short-term
investment timelines.
 Tax-Saving Funds (ELSS): These are funds that invest primarily in
equity shares. Investments made in these funds qualify for deductions
under the Income Tax Act. They are considered high on risk but also
offer high returns if the fund performs well.
 Capital Protection Funds: These are funds where funds are are split
between investment in fixed income instruments and equity markets.
This is done to ensure protection of the principal that has been
invested.
 Fixed Maturity Funds: Fixed maturity funds are those in which the
assets are invested in debt and money market instruments where the
maturity date is either the same as that of the fund or earlier than it.
 Pension Funds: Pension funds are mutual funds that are invested in
with a really long term goal in mind. They are primarily meant to
provide regular returns around the time that the investor is ready to
retire. The investments in such a fund may be split between equities
and debt markets where equities act as the risky part of the investment
providing higher return and debt markets balance the risk and provide
 lower but steady returns. The returns from these funds can be taken in
lump sums, as a pension or a combination of the two.
Types of Mutual Funds based on specialty
 Sector Funds: These are funds that invest in a particular sector of the
market e.g. Infrastructure funds invest only in those instruments or
companies that relate to the infrastructure sector. Returns are tied to
the performance of the chosen sector. The risk involved in these
schemes depends on the nature of the sector.
 Index Funds: These are funds that invest in instruments that represent
a particular index on an exchange so as to mirror the movement and
returns of the index e.g. buying shares representative of the BSE
Sensex.
 Fund of funds: These are funds that invest in other mutual funds and
returns depend on the performance of the target fund. These funds can
also be referred to as multi manager funds. These investments can be
considered relatively safe because the funds that investors invest in
actually hold other funds under them thereby adjusting for risk from
any one fund.
 Emerging market funds: These are funds where investments are made
in developing countries that show good prospects for the future. They
do come with higher risks as a result of the dynamic political and
economic situations prevailing in the country.
 International funds: These are also known as foreign funds and offer
investments in companies located in other parts of the world. These
companies could also be located in emerging economies. The only
companies that won’t be invested in will be those located in the
investor’s own country.
 Global funds: These are funds where the investment made by the fund
can be in a company in any part of the world. They are different from
international/foreign funds because in global funds, investments can be
made even the investor's own country.
 Real estate funds: These are the funds that invest in companies that
operate in the real estate sectors. These funds can invest in realtors,
builders, property management companies and even in companies
 providing loans. The investment in the real estate can be made at any
stage, including projects that are in the planning phase, partially
completed and are actually completed.
 Commodity focused stock funds: These funds don’t invest directly in
the commodities. They invest in companies that are working in the
commodities market, such as mining companies or producers of
commodities. These funds can, at times, perform the same way the
commodity is as a result of their association with their production.
 Market neutral funds: The reason that these funds are called market
neutral is that they don’t invest in the markets directly. They invest in
treasury bills, ETFs and securities and try to target a fixed and steady
growth.
 Inverse/leveraged funds: These are funds that operate unlike
traditional mutual funds. The earnings from these funds happen when
the markets fall and when markets do well these funds tend to go into
loss. These are generally meant only for those who are willing to incur
massive losses but at the same time can provide huge returns as well,
as a result of the higher risk they carry.
 Asset allocation funds: The asset allocation fund comes in two
variants, the target date fund and the target allocation funds. In these
funds, the portfolio managers can adjust the allocated assets to achieve
results. These funds split the invested amounts and invest it in various
instruments like bonds and equity.
 Gilt Funds: Gilt funds are mutual funds where the funds are invested
in government securities for a long term. Since they are invested in
government securities, they are virtually risk free and can be the ideal
investment to those who don’t want to take risks.
 Exchange traded funds: These are funds that are a mix of both open
and close ended mutual funds and are traded on the stock markets.
These funds are not actively managed, they are managed passively and
can offer a lot of liquidity. As a result of their being managed
passively, they tend to have lower service charges (entry/exit load)
associated with them.
 Types of Mutual Funds based on risk
 Low risk: These are the mutual funds where the investments made are
by those who do not want to take a risk with their money. The
investment in such cases are made in places like the debt market and
tend to be long term investments. As a result of them being low risk,
the returns on these investments is also low. One example of a low risk
fund would be gilt funds where investments are made in government
securities.
 Medium risk: These are the investments that come with a medium
amount of risk to the investor. They are ideal for those who are willing
to take some risk with the investment and tends to offer higher returns.
These funds can be used as an investment to build wealth over a longer
period of time.
 High risk: These are those mutual funds that are ideal for those who
are willing to take higher risks with their money and are looking to
build their wealth. One example of high risk funds would be inverse
mutual funds. Even though the risks are high with these funds, they
also offer higher returns.

How to choose the right mutual fund

With so many different types of mutual funds available in the market,
picking one that suits specific investment needs the most is not an easy
task. The simplest advice that can be given in that regard is to first
understand your own needs. The next step would be to figure out what
your goal is? Is it to build wealth quickly, at a moderate pace or at a
slow pace. Once that is decided the last main thing to consider is the risk
you are willing to take. The highest returns are general observed to come
from the funds offering the highest risks. So if you want returns quickly
and are willing to take risks than that is the fund to go for. If your
objective is to build wealth slowly then going in for a medium or low
risk mutual fund is ideal.
 Since mutual funds always come with a factor of risk associated with
them, no matter how small, it is imperative that investors read their
policy documents carefully before investing. It would also be a good
idea to read the document to ensure that they, the investors, have
understood exactly what they have invested in and all the facilities that
are available to them with that investment.
What are the things I should check for before investing in a particular fund of my choice?
 As a start, read the objective of the fund and see that is matches your investment
goals.

 Then check your scheme document for details on how the investment is being
planned, on what basis are the securities being decided and what the overall logic and
thought process behind the fund’s investment strategy is.

 Once you are convinced of the strategy, track the past returns of the fund to see how
the strategy has worked and how the fund has performed in different market
situations. While this does not guarantee future performance, it gives you a fair
estimate.

 The fund managers often diversify their portfolio to minimise risks and maximise
returns. Read the scheme information document for information on risks.
 Diversify your investment portfolio and don’t invest all your money in a single fund.

 When choosing different funds to invest in, allocate your money in growth as well as
income schemes, based on your age, income and risk handling ability.

SELECTION OF A FUND
Mutual fund investing requires patience, efforts as well as risk appetite.
Besides investing your money in the right securities/assets, mutual funds
also offer various other benefits such as diversification and asset
allocation, which should be taken into consideration while choosing a
scheme.
Choosing the right mutual fund looks easy, but it cannot be done without
sticking to some basic criteria. Before investing in any fund, you must
first identify your goals for the investment. Identifying a goal is an
essential step before scouring the mutual fund universe for the right
scheme for you.

Risk and return are directly proportional; so you need to balance your
desire for returns against the ability to tolerate risk. Besides, a potential
investor must decide how long to hold on to a fund. In this article, we
will discuss some of these criteria required in mutual fund selection.

1. Investment objective and style

There’s an objective that every mutual fund, without exception, follows.
This objective can help investors determine if investing in that scheme
would help her meet the investment objective. As for the style, one can
choose from largecap, midcap, smallcap or microcap, multicap and
flexicap funds depending on your risk appetite.

2.Investment strategy
As an investor, one should also consider the investment strategy of the
fund. Most investors ignore this aspect, but it holds crucial importance in
the success of your investment portfolio. It determines the approach that
a fund house adopts while taking investment decisions and picking
stocks for the scheme. If the investment strategy of the fund house is not
in line with your investment goal, then a conflict of interest may arise.
3. Fund performance

Looking at how the fund manager performed versus its benchmark in the
past can indicate whether or not she has a good track record as a stock
picker. Investors should review the portfolios of the funds the fund
manager oversees and how often she goes for a portfolio churn. This can
 give the good snapshot of the fund manager’s ability as a stock packer
and a good money manager.

 Experience of the fund manager

 This plays a significant role in generating returns. Before investing
in a mutual fund, a smart investor should look at the past track
record of the fund manager. Actually, a fund performance is often
impacted by the fund manager’s expertise and tenure.

 Expense ratio
This is what indicates the cost of investing in an equity fund. The higher
the expense ratio, the more it will affect the fund performance directly. It
comprises brokerage fees and other costs that fund houses charge from
investors.

 Ratio and performance analysis

One needs to compare the risk and performance of a fund by finding out
average returns, Sharpe Ratio and Treynor Ratio and Standard
Deviation. They measures the fund’s risk exposure and the alpha created
vis-à-vis risk and the average return.
 Entry & Exit loads
Entry & exit loads are the cost components that impact an investor
directly. Entry load refers to the fee charged by a fund house from an
investor when she starts investing in the fund. Exit load refers to the fee
charged by the fund house upon exiting the scheme. It is a fraction of the
NAV that you receive and, thus, leaves a hole in your investment value.
As an investor, you must look out for mutual fund schemes that have
zero or minimal entry and exit ..
The selection of a mutual fund scheme for an investor will depend upon
the need that the investor has from the investment. The investor may
need long term appreciation in the value of his investment, or the
investor may need periodic income from the investment, or the investor
may be looking for an avenue to park funds and need an investment with
high liquidity. It is considered a good practice to first understand the risk
exposure that is appropriate for an investor. Based on that, decide how
the investor’s investments should be distributed between different asset
classes.
As a structured approach, the sequence of decision making is as follows:
Step 1 – Deciding on the asset class such as equity, debt, gold and
others, based on the investor’s need for growth, income or liquidity.
Step 2 – Selecting a scheme category based on strategy and style within
the scheme type, based on the risk taking ability of the investor. For
example, large-cap or mid-cap funds, diversified or focused funds, short-
term or long-term debt funds each have different risk and return features.
Step 3 – Selecting a particular scheme from a category based on its
performance.
Step 4 – Selecting the right option within the scheme.

Pedigree of the fund house

When you invest in a mutual fund, you are trusting the fund house to
manage your money. This is why the pedigree of the fund is important.
Decisions taken by the fund house and the fund manager may have a
direct impact on your investment's performance and the realisation of
your financial goals. Hence, it is important to do a check on the fund
house, history of existence, track record across schemes before selecting
a scheme.

Consistency in past performance

Before you choose a scheme, check how the scheme compares with
others on the stated benchmarks. Do not select funds only on the basis of
their performance over a 6-months to 1-year period. Instead, choose
funds that have performed consistently and given steady returns over 3,
5 or 10 years by beating their benchmarks. Funds that have not just
performed well when the markets are doing well, but the ones that
remain steady even during a slump, are the ones to watch out for.
For example, let's say you have to choose between two funds A and B.
Fund A gives more than 80% return in the first year due to a good bull
run in the market, but witnesses a sharp decline in the NAV the next
year due to volatile markets. On the other hand Fund B has been giving
consistent returns over a three year period. Which one would you
choose?

While past performance is no measure or guarantee for future returns, a

fund house giving consistent returns denotes efficient processes and
sound management practices. In the above example, Fund B may be a
better choice with the fund house demonstrating efficiency, risk
measures and sound investment processes.

Investment strategy and objectives

You should read the scheme related documents thoroughly and
understand the investment objective (which is nothing but the
investment goal and the underlying rationale e.g. growth, income) of the
mutual fund scheme and know the kind of securities in which your
money will be invested. Evaluate the objectives and see if they are in
line with your risk profile and investment goals.

Diversification
Mutual funds, by their character itself, provide diversification across
stocks, sectors, and asset classes. Thus, you can use mutual funds to
diversify your portfolio adequately. When you are investing in equity
schemes, choose from top performing diversified equity schemes.
Ensure that there is good spread of large-cap and mid-cap stocks in such
schemes, and the fund has been consistent in performance for a
minimum of three years. On the other hand, when you are choosing a
debt fund, the first thing to do is to choose a fund that matches your
investment horizon. Along with that you will have to consider the fund
manager's view on the direction of interest rates and the sensitivity of
your fund towards interest rate movement. The idea of diversification is
to ensure that your risks are well spread across asset classes, market
sectors and the style of fund management.
Goals and their time horizon
Mutual fund schemes must be chosen carefully in accordance with one's
goals, time horizon, risk tolerance and overall financial plan. In fact,
based on these parameters every investor must follow an asset allocation
plan. Once you know how much you need to invest across different asset
classes such as equity and debt, you must choose funds that match your
tenure. If your goal is less than three years away, you should consider
investing in a debt oriented fund. For a medium-term goal that is
typically between 3 - 5 years, you can consider hybrid equity funds that
have exposure to both equity and debt. For long-term goals, equity
mutual funds offer a good option.

Keeping the above factors in mind, you can choose a mutual fund
scheme that is right for you and participate in the capital markets to reap
the benefits of good returns.

1. Can I sell my stocks back to the mutual fund if it is a close-ended scheme?

No, you cannot sell your units or stocks back to a close-ended mutual fund after a
purchase has already been made. However, you can choose to sell the units based
on their ongoing prices through the stock market.
2. What are interval funds?
These types of funds carry the characteristics of both close-ended and open-ended
schemes. Such plans are usually selected when you want to repurchase units of the
shares at various intervals during the entire investment period. The asset
management company (AMC) generally offers to repurchase the units from existing
customers throughout these intervals.
3. If I want to make a safe investment in mutual funds and want fixed returns, which
type of scheme should I invest in?
For an investor looking for fixed returns when making a safe investment in mutual
funds, the best option is to invest in a debt fund. Such a fund invests in debt
instruments such as government bonds, company debentures, and any other fixed
income asset. However, you should consult a financial advisor before investing.
4. If I am looking for regular income after my retirement, which mutual fund will be
best suited for me?
If you want regular returns around the time of your retirement by investing in a
long-term mutual fund, then the pension funds might be the right option for you.
However, it is better if you consult a financial advisor before making an investment.
5. Which mutual fund invests in other mutual fund schemes?
The fund of funds schemes usually invests in other mutual fund schemes to help
investors achieve their investment goals.
6. Which mutual funds offer tax benefits along with high returns?
If your primary investment goal is to receive tax benefits, then the best option for
you is to invest in Tax-Saving Funds or ELSS. Such types of schemes
predominantly invest in equity shares while the returns of this plan offers tax
benefits to the unitholders under the Income Tax Act, 1961. Featuring a high-risk
factor, these funds offer high returns based on their performances.
7. I want to invest in a mutual fund that will offer protection to my invested amount.
Which mutual fund scheme should I choose?
Capital Protection Funds are the best bet for individuals who want to ensure
protection of their principal invested amount. Under such schemes, the funds are
split between investment in equity markets and fixed income instruments.
8. Is there any type of mutual fund that will allow me to earn a profit when the market
is down?
If you want to generate earnings when the markets fall, you can opt for an Inverse
or Leveraged Fund. As opposed to traditional mutual funds, these types of funds
carry a high-risk factor since they provide substantial earnings only when the
markets are down, and tend to go into loss when the markets are doing well. You
should only opt for such schemes if you are willing to risk incurring massive losses.
9. Based on the risk factor, what are the types of mutual funds available in the market?
Depending on the level of risk associated, there are 3 types of mutual funds
available in the markets:
o High risk
o Medium risk
o Low risk
10.What are commodity focused stock funds?
Commodity focused stock funds are mutual fund schemes that primarily invest in
the stocks of companies which operate in the commodities market such as
manufacturers of commodities and mining companies. These schemes generally
provide returns in line with the performance of the commodity in question.