#1 What should I opt for – SIP or Bulk Investments?

With an uncertain equity market scenario, if you pump in a lump sum amount of money, you could either gain or lose extremely. It would then become a kind of a gambling.

Instead, we suggest if you invest small amounts regularly, you can cut down the volatility risk and average out your total cost of acquisition.

#2 Should I evaluate past performance of a mutual fund and look for consistency?

Past performance is no guarantee for the future performance of the holding. However, it is one of the best ways of assessing how well a fund has performed in comparison to its stated objectives. Evaluate the mutual funds on their performance for a short span, but consistency.

#3 What is the Balanced Mutual Fund Scheme?

Balanced Mutual Fund Schemes diversify your asset by investing in stock and fixed income securities proportionately. Balanced mutual funds aim to provide both higher growth at low risk by periodically distributing a part of the income and capital gains they earn.

#4 What is Close-ended Mutual Fund Scheme?

Close-ended Mutual Fund Schemes have a specified maturity period. At the initial issue, an investor can invest directly in the scheme. Thereafter, units of the mutual fund scheme can be bought or sold on the stock exchanges. The basic characteristic of close-ended mutual fund schemes is that they are generally traded at a discount to NAV; but closer to maturity, the discount narrows.

#5 What is Gilt Mutual Fund?

Gilt mutual funds invest exclusively in government securities. These funds hence have no default risk. NAVs of gilt funds fluctuate due to change in interest rates and other economic factors.

#6 What is the Growth Mutual Fund Scheme?

Growth Mutual Fund Schemes are also known as equity schemes or high-risk schemes. The objective of these schemes is to deliver higher returns over the medium to long-term. These schemes invest a major portion of their fund in stocks.

#7 What is Income Scheme?

Income Schemes or debt schemes aim to deliver regular and steady income to the unitholders. These schemes generally invest in fixed income securities like bonds and corporate debentures.

#8 What is the Index Fund?

Index fund consists of only those stocks that constitute the index. It attempts to replicate the performance of a particular index. The portfolio of these holding will be identical to the stocks index weight.

#9 What is Interval Scheme?

Interval Schemes combine the features of open-ended and close-ended schemes. The holdings may be traded on the stock exchange or may be open for sale/redemption during pre-determined dates at NAV related prices.

#10 What is the Money Market Scheme?

Money Market Schemes ensures easy liquidity, moderate income, and safety of the capital investment. These schemes generally invest in safe and short-term instruments like treasury bills, certificates of deposit, commercial paper and inter-bank call money.

#11 What is Offshore Fund?

Offshore funds invest in foreign companies or corporations. These funds are regulated by the provisions of the country under which they have been registered. These funds are regulated by RBI directive.

#12 What is an open-ended mutual fund scheme?

Open-ended schemes do not have a fixed maturity period. These funds are available for subscription/redemption on an on-going basis at NAV related prices.

#13 What is a sector fund?

Sector funds invest in the securities of only those sectors as specified in the offer documents such as pharmaceuticals, infrastructure, fast-moving consumer goods, petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors.

#14 What is Tax-Saving Fund?

Tax-saving funds offer tax rebates under Sec.88 of the Income Tax Act. Contributions made to any Equity Linked Savings Scheme (ELSS) are eligible for rebate @20% for a maximum investment of Rs10,000/- per financial year.


Spread the love

Leave a comment

Your email address will not be published. Required fields are marked *