We are AMFI Registered Mutual Fund Distributor for the last five years and are registered with almost all the leading mutual funds. We believe that investment is a process that is the sum of the team's research, analysis, insight and collective view of its investment philosophy.
Our Current Assets Under Management in Mutual Funds is about 100 crores including debt, equity, Balance and Reality funds. We sevice a huge number of High Networth Individuals and Non Resident Indians clients.
1. Identifying the Investment Objective:
Your financial goals will vary, based on your age, lifestyle, financial independence, family commitments, level of income and expenses, among many other factors. Therefore, the first step is to assess you needs. Begin by asking yourself these simple questions:
The various investment options available are :
- Professional expertise : Fund managers are professionals who track the market on an on-going basis. With their mix of professional qualification and market knowledge, they are better placed than the average investor to understand the markets.
- Diversification : Since a Mutual Fund scheme invests in number of stocks and/or debentures, the associated risks are greatly reduced.
- Relatively less expensive : When compared to direct investments in the capital market, Mutual Funds cost less. This is due to savings in brokerage costs, demat costs, depository costs etc.
- Liquidity : Investments in Mutual Funds are completely liquid and can be redeemed at their Net Assets Value-related price on any working day.
- Transparency : You will always have access to up-to-date information on the value of your investment in addition to the complete portfolio of investments, the proportion allocated to different assets and the fund manager’s investment strategy.
- Flexibility : Through features such as Systematic Investment Plans, Systematic Withdrawal Plans and Dividend Investment Plans, you can systematically invest or withdraw funds according to your needs and convenience.
- SEBI regulated market : All Mutual Funds are registered with SEBI and function within the provisions and regulations that protect the interests of investors. AMFI is the supervisory body of the Mutual Funds industry.
- Diversified Equity Mutual Fund Scheme : A mutual fund scheme that achieves the benefits of diversification by investing in the stocks of companies across a large number of sectors. As a result, it minimizes the risk of exposure to a single company or sector.
- Sectoral Equity Mutual Fund Scheme : A mutual fund scheme which focuses on investments in the equity of companies across a limited number of sectors -- usually one to three.
- Index Funds : These funds invest in the stocks of companies, which comprise major indices such as the BSE Sensex or the S&P CNX Nifty in the same weightage as the respective indice.
- Equity Linked Tax Saving Schemes (ELSS) : Mutual Fund schemes investing predominantly in equity, and offering tax deduction to investors under section 80 C of the Income Tax Act. Currently rebate u/s 80C can be availed up to a maximum investment of Rs 1,00,000. A lock-in of 3 years is mandatory.
- Monthly Income Plan Scheme : A mutual fund scheme which aims at providing regular income (not necessarily monthly, don't get misled by the name) to the unitholder, usually by way of dividend, with investments predominantly in debt securities (upto 95%) of corporates and the government, to ensure regularity of returns, and having a smaller component of equity investments (5% to 15%)to ensure higher return.
- Income schemes : Debt oriented schemes investing in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments.
- Floating-Rate Debt Fund : A fund comprising of bonds for which the interest rate is adjusted periodically according to a predetermined formula, usually linked to an index.
- Gilt Funds : These funds invest exclusively in government securities.
- Balanced Funds : The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. They generally invest 40-60% in equity and debt instruments.
- Fund of Funds : A Fund of Funds (FoF) is a mutual fund scheme that invests in other mutual fund schemes. Just as fund invests in stocks or bonds on your behalf, a FoF invests in other mutual fund schemes.
Once you are comfortable with the basics, the next step is to understand your investment choices, and draw up your investment plan relevant to your requirements. Choosing your investment mix depends on factors such as your risk appetite, time horizon of your investment, your investment objectives, age, etc.
Mutual Fund investment decisions require consistent effort on the part of the investor. Before investing in Mutual Funds, the following steps must be given due weightage to decide on the right type of scheme:
- Identifying the InvestmeIdentifying the InvestmeIdentifying the InvestmeIdentifying the InvestmeIdentifying the InvestmeIdentifying the Investment Objective
- Selecting the right Scheme Category
- Selecting the right Mutual Fund
- Evaluating the Portfolio
- "I need a regular income"
- "I need to buy a house/finance a wedding"
- "I need to educate my children," or
- A combination of all the above
The risk-taking capacity of individuals vary depending on various factors. Based on their risk bearing capacity, investors can be classified as:
- Very conservative
- Conservative
- Moderate
- Aggressive
- Very Aggressive
- A regular Cash Flow
- A lumpsum after a fixed period of time for some specific need in the future
- Or, you may have no need for cash, but you may want to create fixed assets for the future
2. Selecting the scheme category
The next step is to select a scheme category that matches your investment objectives:
| Investment Objective | Investment Horizon | Ideal Instruments |
|---|---|---|
| Short-term Investment | 1- 6 months | Liquid/Short-term plans |
| Capital Appreciation | Over 3 years | Diversified Equity/ Balanced Funds |
| Regular Income | Flexible | Monthly Income Plans / Income Funds |
| Tax Saving | 3 yrs lock-in | Equity-Linked Saving Schemes (ELSS) |
3. Selecting the right Mutual fund
Once you have a clear strategy in mind, you now have to choose which Mutual fund and scheme you want to invest in. The offer document of the scheme tells you its objectives and provides supplementary details like the track record of other schemes managed by the same Fund Manager. Some important factors to evaluate before choosing a particular Mutual Fund are:
- The track record of performance over that last few years in relation to the appropriate yardstick and similar funds in the same category.
- How well the Mutual Fund is organized to provide efficient, prompt and personalized service.
- The degree of transparency as reflected in frequency and quality of their communications.
4. Evaluation of Portfolio
Evaluation of equity fund involve analysis of risk and return, volatility, expense ratio, fund manager’s style of investment, portfolio diversification, fund manager’s experience. Good equity fund should provide consistent returns over a period of time. Also expense ratio should be within the prescribed limits. These days fund house charge around 2.50% as management fees. Evaluation of bond funds involve it's assets allocation analysis, return's consistency, it’s rating profile, maturity profile, and it’s performance over a period of time. The bond fund with ideal mix of corporate debt and gilt fund should be selected.
Points to Remember :
- Do not speculate : Always evaluate risk-taking capacity.
- Do not chase returns : Because what goes up must come down.
- Do not put all eggs in one basket : Diversification reduces the risk.
- Do not stop working on Mutual Funds : Continuous evaluation of funds is a must.
- Do not time the market : Every time is good for investments.
- Mutual Funds are subject to market risks and there is no assurance that the fund objective will be achieved.
- NAVs fluctuate depending on forces affecting the Capital market.
- Past performance may or may not be sustained in the future.
- Returns are neither guaranteed nor assured.
