Mutual Fund Investment Plan

Mutual Fund Investment Plan

A Mutual Funds is a type of Investment of Money through which multiple people collectively invest in various assets like shares, bonds etc. and in return share the profit in equal proportion to their individual contribution. Different Types of Mutual Fund Investment Schemes in India like, SIP  Systematic Investment Plan, MIP Monthly Income Plan, SWP Systematic Withdrawal Plan, STP Systematic Transfer Plan, SIP Insure with free term insurance cover, ELSS tax saving SIP mutual fund schemes (80c), Debt Mutual Funds Investment, Balanced / Hybrid Funds, Liquid Funds money market, Gold ETF Funds. Here Listed How to choose the Top & Best SIP Plans to Invest in 2017 India for highest growth in Large Cap, Mid cap, Small cap, Multi cap funds (MF’s).

List of best sip plans for long term goals as to well as short term financial goals, like; SIP for child future, education, best investment plan for daughter marriageretirement planning. Learn How to Invest in a mutual fund for beginners, how to calculate return on SIP investment, Chennai’s PolicyandFunds.com we are the mutual funds distributor & Top and best Mutual Fund Investment Advisor, our guidance helps you to choose good returns SIP Plans in India.

Mutual Fund Investment in India

Different Types of Mutual Fund Investment Schemes in India

 

List of Mutual Funds Companies (AMC) in India
Axis Asset Management Company Ltd. Baroda Pioneer Asset Management Company Ltd. Birla Sun Life Asset Management Company Ltd.
BNP Paribas Asset Management India Pvt Ltd. BOI AXA Investment Managers Pvt Ltd. Canara Robeco Asset Management Company Ltd.
Daiwa Asset Management (India) Pvt Ltd. Deutsche Asset Management (India) Pvt. Ltd. DSP BlackRock Investment Managers Pvt. Ltd.
Edelweiss Asset Management Ltd. Escorts Asset Management Ltd. FIL Fund Management Private Ltd.
Franklin Templeton Asset Management (India) Pvt Ltd. Goldman Sachs Asset Management (India) Pvt Ltd. HDFC Asset Management Company Ltd.
HSBC Asset Management (India) Pvt. Ltd. ICICI Prudential Asset Management Company Ltd. IDBI Asset Management Ltd.
IDFC Asset Management Company Ltd. India Infoline Asset Management Co. Ltd. Indiabulls Asset Management Company Ltd.
ING Investment Management (India) Pvt. Ltd. JM Financial Asset Management Pvt Limited JPMorgan Asset Management India Pvt. Ltd.
Kotak Mahindra Asset Management Company Ltd. L&T Investment Management Ltd. LIC NOMURA Mutual Fund Asset Management Company Ltd.
Mirae Asset Global Investments (India) Pvt. Ltd. Morgan Stanley Investment Management Pvt.Ltd. Motilal Oswal Asset Management Company Ltd.
Peerless Funds Management Co. Ltd. Pine Bridge Investments Asset Management Company (India) Pvt. Ltd. Pramerica Asset Managers Private Ltd.
Principal PNB Asset Management Co. Pvt. Ltd. Quantum Asset Management Company Private Ltd. Reliance Capital Asset Management Ltd.
Religare Asset Management Company Private Ltd. Sahara Asset Management Company Private Ltd. SBI Funds Management Private Ltd.
Sundaram Asset Management Company Ltd. Tata Asset Management Ltd. Taurus Asset Management Company Ltd.
Union KBC Asset Management Company Pvt Ltd. UTI Asset Management Company Ltd.

 

What is Mutual Fund? and How its contribute with the Market?

As the name describes it is the fund that has to be mutually shared. It is a policy in which multiple people will invest in various assets like equity share, bonds etc. They will share the returns in the basis of their individual contribution. Mutual funds have many people involved. They are: Sponsor, Board of trustees, Asset management company and Custody person. Sponsor is a people who setup the mutual fund. Custodian who holds the securities.

There are different type of mutual fund schemes available. In general they are broadly classified as Open ended schemes, close ended schemes and Interval schemes. Now let us see in description about the schemes. Open ended schemes offer liquidity so units can be bought and sold freely. In close ended schemes there will be a lock in investment until maturity. In same way interval schemes are different from close ended schemes. In mutual funds investors are given an option to sell their shares back to the fund during this period.

They are further categorized depending on investment goal the fund is trying to fulfill. Some are growth funds, income funds, liquid funds and balanced funds. Based on the geography there are different types like domestic funds, international funds and global funds. Investment made be done for short term, medium term and long term. The kind of asset invested determines the risk factor of the funds. These funds are further classified based on specificity of the investment made. There are Equity funds / High risk and high return funds. Debt funds / Medium and low risk, fixed income funds and Hybrid funds.

There are other funds like Tax saving funds, pension funds, fixed maturity funds, exchange traded funds, leverage or inverse funds, market neutral funds and asset allocation funds.

Mutual fund Structure

Mutual funds are basically created with the concept of trusts. The people responsible in mutual funds are:

  • A sponsoris a person who creates the mutual fund or trust and select following people
  • Board of trustees is a group of people who should be independent. The trustees, act according to the sponsors trust deed.
  • AMC (Asset Management Company) is the sole responsible for operating the fund collected from the people. The 40% of its net worth should be contributed by the sponsor.
  • Custodianis the people who is responsible to hold securities.

Mutual Fund Schemes & Fund Types

There are various types of mutual fund schemes available in India. They are broadly classified into open ended, Interval and close ended schemes.

  • Open ended schemes
  • Interval schemes
  • Close ended schemes

Open-ended mutual fund schemes offer cash because of which units can be bought and sold freely. In other case close-ended mutual fund schemes will not offer cash and have a lock-in investments until maturity of the fund. In order to provide cash these units are sometimes listed on stock exchanges or will be traded. The third one is interval schemes that are reopened for redemption for a limited time period during the scheme’s tenure. One advantage in the interval scheme is Investors are given the option to sell their shares back to the fund during this period.

Funds can be in anyone of the general categories of the fund schemes. Then further categorised depending on the investment goal of the fund. It might vary from one person to others as some investors seek capital protection and need a fixed income returns, same way others have a strong risk appetite and also prioritize high returns. The different fund types are:

  • Capital protecting funds
  • Liquid funds
  • Domestic funds
  • Balanced funds
  • International or foreign funds
  • Income funds
  • Global funds

If we want to obtain the investment objectives, funds should be invested in various asset classes through equity or debt. Investments may be created for the short-term, medium-term or long-term period. The kind of asset in which we have invested also determines the funds risk factor. Equity, debt and money market instruments are wide classifications for the asset classes. Then these funds are further classified based on the specific mention of the investment made.

Further classification of Equity funds / High-risk, high-return funds are:

  • Large-cap / Mid-cap / Small-cap funds
  • growth funds
  • Dividend yield funds
  • Diversified equity funds
  • Value
  • Index funds
  • Sectoral funds
  • Specialty funds

Further classification of Debt funds / Medium and Low-risk, fixed-income funds are:

  • Income Funds (Regular)
  • Gilt Funds
  • Fixed Maturity Plans (FMPs) – close ended
  • Money market funds or Liquid funds
  • Dynamic Bond Funds
  • Floating rate funds
  • Ultra-short-term funds or Cash funds or Treasury Management fund
  • Short-term / Medium-term Income Funds
  • Corporate Bond Funds

Further classification of Hybrid funds / Balanced-risk, balanced return funds are:

  • Monthly Income Plans (MIPs)
  • Multiple Yield Funds (close ended)
  • Capital Protection Funds (close ended)

Other classifications are:

  • Asset Allocation Funds
  • Market Neutral Funds
  • Fixed maturity funds
  • Fund of Funds
  • Exchange Traded Funds
  • Pension funds
  • Inverse / Leverage Funds

Know the basic key Terms of Mutual Funds

It is a concept where many people will contribute their investment in a single pool. Then the common fund collected will be invested in different assets. As the very name explains it is a MUTUAL FUND as the risk, reward, loss and gain will be shared by all investors. There are some terms which has to be known by the investors. They are:

Shares: Mutual fund investment is buying shares.

Net asset value: This is the price per share.

Lock in Period: During this period the units cant be sold.

Offer Document: Document that outline the basic features of the fund.

New fund offer: New fund/schemes launched in market by AMC.

Redemption: This is when fund is canceled or transferred.

Entry / Exit Load: It is the charges fined by asset management company on purchase or sale of units by investors.

Mutual Fund Advantages

Mutual fund  is becoming more popular in India day by day. Most of the people are investing in the mutual fund. The trend is continuing and still continues with new schemes. Some of the main reasons for why people invest in Mutual funds are:

  • Professional management
  • Choice of asset
  • Affordable investment option
  • Diversification of risk
  • Focused Investment
  • Easy Purchase and redemption
  • Tax benefit
  • High returns
  • Regulated Investment
  • Flexibility through fund switching

How to invest

Mutual funds are easily accessible to investors. If you want to apply then all you need to do is applying in following ways.

Mutual Funds AMFI (Association of Mutual Funds across India) Certified Advisor

PolicyandFunds.com – Kothandapani V, Financial Advisor) is the best trained professional in Chennai, and AMFI certified Mutual Fund Investment Advisor. Who meet customer to provide information about various mutual funds available. They help in everything from processing the application till dealing with the issues.

Mutual Fund Types

There are different types of mutual fund in India. It is based in three categories. They are : Asset class, Structure and Investment objective.

Based on Asset class
  • Equity funds
  • Debt funds
  • Money market funds
  • Balanced or Hybrid funds
  • Sector funds
  • Index funds
  • Tax-saving funds
  • Fund of funds
Based on Structure:
  • Open ended funds
  • Close ended funds
Based on Investment Objective
  • Growth funds
  • Income funds
  • Liquid funds

How to choose best Mutual Funds in India

Mutual Funds can provide you high returns on investment for extra duration’s of time limit but in the other way the risks are equally possible. Before investing in the fund just check the previous profits of the fund and invest in it. This will be a good option to consider. High returns with consistency over a years is the real point to begin considering for the best mutual funds.

Mutual funds are available in different categories such as equity (growth),  hybrid (balanced) funds and debt (income) with each type of fund that have its own advantage and disadvantage. For example, Equity based funds can give the highest returns also the risks are higher. Similarly debt based funds will give you confirmed returns with less risks. The returns may not be as much as investments made in equity funds. Hybrid funds have a combination of both equity and debt where the profits are somehow less than equity funds but will be more stable.

Mutual funds will allow you to have a wealth in fast or slower trend. This all depends according to the type of fund that has been chosen. In general, Mutual funds will always give a good return on investment if you are investing for a longer run. There are many ways to select the mutual funds in India. The first step in choosing the best mutual fund is by doing risk analysis, time duration and investment objective.

Thinks to know before investing in best Mutual Funds

To know about the best mutual funds for investing, firstly you have to begin by researching on the performance of the fund historically. The data referring to particular funds can be received  both online and offline from the respective Asset Management Company (AMC). The AMC will give a explained analysis of funds as well as information on the fund managers, charges and other  factors of investing in their mutual funds.

Some list of funds are:

SBI FMCG-G

UTI Pharma & Healthcare-G

Religare Invesco Infrastructure-G

Franklin India Prima-G

Religare Invesco Dynamic Equity-G

Franklin Infotech-G

Franklin India Ultra Short Bond Super Inst-G

Escorts Liquid-G

Kotak Asset Allocator Reg-G

DWS Equity Income-G

ICICI Pru Advisor-Cautious Reg-G

How the Mutual Fund Company is working

In the investment process of Mutual fund the Asset management company will get the amount from different investors and they will try investing in different instruments. AMC will be charging some amount for its service and so The remaining amount gained among the investors according to their investment ratios. Mutual funds will follow some policies regulated by the Association of Mutual Funds in India (AMFI).

There are certain type of mutual funds that has to be known by the investors before investing in the mutual funds. They are Equity, Hybrid, Money market, open ended, close ended and debt.

Cost associated with investing

Net Asset Value is the main key to calculate the fund value. NAV is nothing but the net of expenses on every unit. This is calculated by AMC by end of business days. IN order to collect money from us the AMC will have certain step called annual fee where they will get money in order to cover brokerage, advertising and salary expense. They follow another thumb rule of the larger the fund the smaller the annual fee. AMC’s may also charge you loads as this will be the sales charge. It is always best to read the fine print for details on the fee structure.

Asset Allocation

As a start we have to have an clear ideas on what has to be done and what kind of portfolio we want. Asset allocation route would help you to invest in a number of funds that reflect your risk profile.

Comparing funds

When looking for a mutual fund, check its past history of the fund from shareholder pattern or by checking performance online. Check with top 5 funds in the asset class that matches with your financial goals, time frame and risk profile.

List of Best Performing Mutual Funds

Now we know the basics of the mutual fund. Next we can be taken to know more about the best mutual funds. The below mentioned list is in no particular order and aimed only at showing funds across different categories.

Best performing Equity based Mutual Funds

Name Fund type Average return
UTI Transportation and Logistics Fund  Open Ended 43.34
ICICI Prudential Exports and Other Services Fund Open Ended 40.52
SBI Small & Midcap Fund Open Ended 38.9
Franklin India Smaller Companies Fund Open Ended 37.39

Best performing Debt based mutual funds

Name Fund type Average return
SBI Magnum Gilt Fund Long Term  Open Ended 12.02
ICICI Prudential Long Term Fund Open Ended 11.93
Birla Sun Life Medium Term Plan Open Ended 10.33
Franklin India Ultra Short Bond Fund Open Ended 9.92

Best performing Hybrid Mutual Funds

Name Fund type Average return
Tata Retirement Savings Fund  Open Ended 21.4
LIC Nomura MF Children Fund Open Ended 13.96
Birla Sun Life Dynamic Asset Allocation Fund Open Ended 13.26
SBI Magnum Monthly Income Plan Open Ended 12.13

Tax Saving Mutual Fund

Nowadays investing in the mutual fund is becoming popular. There are trained and skilled professionals to manage the investment done on the mutual funds by the investors. Mutual fund generally gives a good ROI than any other traditional modes like fixed deposit. While investing in the mutual will make the investors to select an open or close ended scheme. The investors can even wait and invest in the right thing which in return will give an good return. In general the high risk investment will provide a high return. Simillarly the medium and low risk investment will provide a medium and low investment.

As a person making an investment and enjoying the return will be a fruit full job. But there is a big question raised regarding the taxes that the investors pay on their income. Now we all be wondering if there is any tax benefits out of investing in mutual fund. It will be always yes only if the investor is investing in a tax saving mutual fund.

What is tax saving mutual fund?

They are nothing but the usual mutual fund which will have a added bonus that investment made in them have a tax benefits. They get a tax benefts under a section 80c of the IT act.

How do Tax Saving mutual Fund work?

If a person is investing in a mutual find then it will be added to a pool. The funds are generally invested in the equity market because if one incur loss then other can help us to mitigate the loss. ELSS scheme  have came up with a lock in period of 3 years. This means the amount cant be withdrawn untill the date range ends. When it comes to withdrawal then the investor can see how many units have gotton unlocked and reedem them at NAV. NAV is the amount you will get for each unit.

Benefits of Tax Saving Mutual Funds

  • Investments are eligible for tax benefits.
  • Long term capitan gain are not taxed.
  • Investment in this kind will be useful to plan for future expense
  • When you cant withdraw the principle we will be able to withdraw the dividents.

Top tax saving mutual funds in India

  • IDBI Equity Advantage Direct-G
  • IDBI Equity Advantage Direct-G
  • Axis Long Term Equity Direct-G
  • Birla SL Tax Relief 96 Direct-G
  • Birla SL Tax Plan Direct-G
  • Birla SL Tax Relief 96-G
  • Franklin India Taxshield Direct-G
  • Kotak Tax Saver Direct-G
  • Axis Long Term Equity-G
  • Birla SL Tax Plan-G

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