In India, People always try to find out the best mutual fund investment plan because they have the mindset to invest in a secure platform where they can get high returns with minimum safety. But they don’t know, Is mutual fund Safe? what is mutual fund in India and how it works? – without knowing this information investing in a mutual fund is also a risky option for you and for that reason we have come up with a simple solution, that gives you all fundamentals and details about mutual fund investment.
what is mutual fund in India and how it works?
In simple words, a mutual fund is an investment where you have to invest your money in stocks, bonds, and other assets through the professional investor or agent who can manage your money with proper safety in different plans where you may earn profits or losses but your agent adjust both mutually, hence it is called as “mutual” fund.
Basically, you having two options to invest in a mutual fund :
- Active mutual fund – In this, the investment is done by the professional advisor and their management team who take decisions about how and where to invest the funds. Hence,it carry higher fees than passive mutual fund.
- Passive mutual fund – A passive mutual fund is a strategy where investors are invest small amount and get maximum profit, it is a long-term investment option. Hence, it carry lower fees than active mutual fund.
what are different types of mutual funds in India?
There are different types of mutual funds are available from which you can easily choose the best mutual fund investment plan, which are listed below:
- Debt funds
- Equity funds
- Index funds
- Money market funds
- Balanced funds
- Income funds
- Fund of funds
- Speciality funds
Types of structure base mutual funds:
- Open-Ended funds
- Closed-Ended funds
- Interval funds
Types of asset class base mutual funds:
- Equity funds
- Debt funds
- Money market funds
- Balanced or Hybrid funds
Types of investment objective base mutual funds:
- Growth funds
- Income funds
- Liquid funds
- Tax-Saving funds (ELSS)
- Capital Protection funds
- Fixed Maturity funds
- Pension funds
Types of risk base mutual funds:
- Low risk
- Medium risk
- High risk
Types of speciality base mutual funds:
- Sector funds
- Index funds
- Fund of funds
- Emerging market funds
- International funds
- Global funds
Which bank is best for mutual funds in India?
In bank sectors, banking funds are nothing but open-ended equity funds which are invest in banking stocks. Equity mutual funds are the best category in banking sectors for mutual fund investment. Following are some best mutual fund investment plans provided by various banks:
- Axis Bluechip Dir – 25.54% p.a returns.
- Canara Robeco Bluechip Eqt Dir – 24.08% p.a returns.
- BNP Paribas Large Cap Dir – 23.86% p.a returns.
- Kotak Equity Opportunities Dir – 22.43% p.a returns.
- Mirae Asset Emerging Bluechip Dir – 20.74% p.a returns.
- Tata Large & Midcap Dir – 20.84% p.a returns.
- SBI Banking & Financial Services Fund – 19.46% p.a returns.
- Tata Banking & Financial Services Fund – 18.71% p.a returns.
- Invesco India Financial Services Fund – 18.67% p.a returns.
- Sundaram Financial Services Opportunities Fund – 17.8% p.a returns.
what is direct mutual fund investment?
The fund house or AMC (Annual Maintenance Contract) is directly offered the mutual fund schemes known as direct mutual funds. In a direct mutual fund, the name “Direct” itself indicates the meaning of it, there is no involvement of any agent, distributor, or third party. The regular plan has a higher expense ratio and the direct plan has a lower expense ratio and there is no involvement of any distributor or agent hence a certain amount is saving in terms of distribution fees which is added after the returns of the scheme. Therefore, the direct plan has a higher NAV (Net Asset Value) than a regular plan which is also separate.
There is a difference between Direct plan Vs Regular plan:
You can buy the direct mutual fund through online as well as offline mode. SEBI introduce the direct mutual fund scheme in 2012. The regular plan and direct plan are manage by the same mutual fund manager. The third party is involved in regular plan. In the direct plan the returns are higher than the regular plan. The expense ratio is low in direct plan and high in regular plan, the NAV (Net Asset Value) is high in direct plan and low in regular plan. The market research is done by individual or self, here market research is done by advisor. Also, the investment advice is not available or done by own itself, in regular plan, the agent or advisor give the investment advice.
what is equity mutual fund in India?
Equity mutual funds are invested in equity stocks where investors get high returns but they also have higher risk. As per SEBI Mutual Fund Regulations, you must have to invest at least 65% of your assets in equities and equity related securities. You can invest your assets in stocks of large-cap, mid-cap, or small-cap companies which depends on the overall market condition. The investing options may be growth-oriented or value-oriented. After investing your assets towards equity securities, the remaining amount is go into money market and debt funds. And according to market movement the fund manager takes decision of buying and selling and take advantage and earn maximum of profit.
what is debt mutual fund in India?
The debt mutual fund is an investment where investor invest their hard earn money in fixed interest securities like debentures, government securities, corporate bonds, commercial paper, treasury bills, and other money market instruments. In debt mutual fund, the market is consist of different elements which expedite the buying and selling of loans in exchange for interest. Many investors are prefer to buy the debt securities because it has lower risk than equity plans. However, the equity plan or equity investment is gave high returns than debt securities. But it is a stable investment which probably help to generate the good wealth.
There are some benefits of debt mutual fund:
- Tax efficiency – The annual tax for debt mutual fund is lower. Hence, it is more tax-efficient than other traditional investment like Fixed deposit.
- Stable income – It generate the fixed income over the time but it is also subject to market risk.
- High liquidity – There is no lock-in periods in debt mutual funds. Compare to other securities, it has no exit load and any deduction charges for early withdrawals, you can withdrawal your money from funds on any day or time.
- Stability – The balance of portfolio is increase by investing in debt funds. The performance of stock market is directly linked to the equity fund because it gives higher returns, but in debt fund, you can easily variegate your portfolio and bring down the overall risk.
what is balanced mutual fund in India?
Balance mutual funds invest in both debt and equity securities and maintain the balance between the ratio of risk factors and return on investment. Hence, it is a major benefit factor in which investors get maximum profit from both security segments. It is also called as hybrid mutual fund. Hybrid funds ensure capital gains and faces the potential risk at the same time. It contains different elements in one portfolio like bonds (debt) and stocks (equity). The part of equity funds are preventing investor purchasing power. Hence, they require small quantum of capital investment where they can mostly invest in stocks. The debt securities are invest their capital in bonds and other debt securities. Mainly they deliver two purposes, one is to create an income stream and the other they help to counterbalance the vacillation of the investor’s portfolio. Typically, this is the best mutual fund investment plan for investors with low-risk endurance and develop the income that help to provide investor’s financial needs.
what is sip in mutual fund in India?
Systematic Investment Plan is a mutual fund investment where individual can invest the fixed amount of money on regular period of time like once in month, once in quarter rather than lump sum investment.Therefore, you don’t need a huge amount of money to get started with your mutual fund investment.Investing in SIP is make you to calculate your the daily and monthly money margin where you can easily save your money for your systematic Investment Plan.
Advantages of mutual fund investment:
Nowadays, mutual fund is one of the common investment for majority of people where everyone can invest their money in different mutual funds plans. Some of the benefits are listed below:
- Portfolio Management
- Dividend reinvestment
- Risk deduction
- Fair pricing
- Expert management
- Automated payments
As we discuss above, we saw all best mutual fund investment plan in India, and mutual fund investment is how much necessary for better life and for better future. You can start your investment in mutual fund at any age of your life because now you can start with Rs.500 to Lakh and more.
what are different types of mutual funds?
– Structure base mutual funds.
– Asset class base mutual funds.
– Risk base mutual funds.
– Investment objective base mutual funds.
– Specialty base mutual funds.
which banks are best for mutual funds?
– SBI banking and financial services.
– Axis bluechip dir.
– Kotak equity opportunity.
– HDFC Prudence Fund.
– ICICI prudential equity and debt fund.
what are the advantages of mutual funds?
– Portfolio Management.
– Safe investment.
– Expert Management.