FAQs

A mutual fund is a financial instrument that collects money from several investors like you, and invests it in various investment options like shares, bonds, etc. This fund is managed by experts.

Depending on where your money is invested, mutual funds can be classified into three types: Equity, Debt and Hybrid. Equity mutual funds invest in shares of companies listed on the stock exchange. Debt mutual funds invest in bonds of reputed companies and government bonds. Hybrid mutual funds invest in both, shares and bonds.

A mutual fund company collects money from many investors, and invests it in various options like shares, bonds, etc. This fund is managed by professionals who understand the market well, and try to achieve growth by making strategic investments. Investors get units of the mutual fund according to the amount they have invested.

Some of the major benefits on investing in a mutual fund are: - Diversification - Professional management - Convenience - Liquidity - Variety of schemes and types - Tax benefits

NFO stands for a New Fund Offer. When a new fund is launched for investors, it is known as a NFO. A NFO could also be the launch of additional units of a close-ended fund.

A fund of fund is a kind of mutual fund that invests in a variety of mutual funds.

Equity mutual funds collect money from several investors like you, and invest this amount in shares of various companies. The primary objective of equity mutual funds is to invest in shares of different companies and generate good returns.

Debt mutual funds collect money from several investors like you, and invest this amount in bonds of reputed companies and government bonds.

A Systematic Investment Plan (SIP) is a convenient method of investing in mutual funds. Under this plan, an investor contributes a fixed amount towards the mutual fund scheme at regular intervals, and gets units at the prevailing NAV.

Investing in SIP offers two major benefits: - You can start investing with a small amount - You can average out your investment, as SIP involves buying units at different points of time and at different NAV levels

Under a Systematic Withdrawal Plan (SWP), an investor redeems a fixed number of mutual fund units at regular intervals.

Exchange Traded Funds (ETFs) are funds that can be traded on a stock exchange, just like shares. These funds invest in shares, indexes or commodities.

Index funds are mutual funds that invest in shares of companies comprising a particular index. These funds intend to replicate the performance of a particular index.

Rupee cost averaging is one method to save regularly and minimise the effect of market volatility on investments. By investing through methods like SIP, you invest a fixed amount in mutual funds at regular intervals. So, you get more units when the NAV is low and fewer units when it is high. Eventually, your average cost per unit is brought down.

NAV stands for Net Asset Value of a mutual fund. This is basically the price of one unit of a mutual fund.

NAV can be calculated as follows: Assets of the fund – Liabilities of the fund / Number of outstanding units for that fund

Mutual fund companies have to declare the NAV of their funds at least once a week. However, most companies declare it at the end of every working day.

A gilt fund is a kind of mutual fund that invest your money only in government securities. These funds are considered to be safe as they bear no default risk.

Sectoral mutual funds invest your money in shares of companies of one particular sector. The main objective of these funds is to provide high returns from one particular sector that has the potential to grow.

Liquid funds are mutual funds that offer high liquidity. This means, the units of these funds can be sold immediately, and the invested amount can be redeemed quickly.

Capital protection funds are mutual funds designed to protect your capital. These funds put a major portion of the investment in bonds, and a small portion in shares. Over time, the portion invested in bonds grows to the size of your original investment. So even if the portion invested in shares does not do well, your capital is still protected.

Open-ended funds can be bought and sold at any time; they have no fixed tenure.

You can buy units of close-ended mutual funds only when a mutual fund company launches the fund. Once you buy them, you have to hold your investment for a fixed tenure.

Redemption price is the price that you receive on selling each unit of your mutual fund investment.