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Friday, November 04, 2016

4 Key Features on Mutual Funds


4 Key Features on Mutual Funds

Financial planners recommend mutual funds (MFs) to many first-time investors.

Many investors have started investing in mutual funds to meet their long-term and short term investment goals.

They put their investments into equity fund , hybrid fund or debt fund schemes for time periods ranging from as little as a day to years together.

1. How flexible are mutual funds?

There are various types of mutual funds for investment starting with a time frame of one day to years.

These investments could range from investments in money market instruments, G-Secs to equities or even a hybrid combination of instruments.

Minimum amount of investment starts from as low as Rs. 500, with no upper limit. You can invest online, offline, directly with the fund house or through an intermediary 

2. Are mutual funds liquid? How fast can you withdraw in case of an emergency?

Many investors look for easy liquidity , so that if there is an emergency they can encash easily. In case of open-ended funds, redemption request can be submitted on any working day .

Once such a request is place, you can get your money back in a time frame of 1 to 5 working days.

There are some specific schemes in money manager funds, where investors can withdraw up to Rs. 2 lakh, instantaneously throughout the year.

3. What transparency do mutual funds exhibit?

There is an element of uncertainty when an investor hands over his savings. The comfort is higher if you trust the person and know how exactly your money will be used.

In case of MFs, your money is handed over to a professional fund manager, whose entire job is to keep track of markets and look out for the best opportunities for you, that fits in line with the schemes objective. In addition, the NAV is published on AMFI (Association of Mutual Funds in India) and on each of the fund company websites on a daily basis, ensuring that you're always in the loop about your investments.

The fund house also publishes a monthly fact sheet listing all the important facts you need to know about the scheme you've invested in.

4. How do mutual funds diversify?

Mutual funds diversify the portfolio across different types of investments, multiple companies and sectors. Equity mutual funds invest in shares of various companies whereas debt funds invest in government securities, NCD, CDs, CPs bonds and other fixed income securities.

Thus as an investor, you have a diversified investment basket.

Src: ET, Prashant Mahesh
4 Key Features on Mutual Funds Reviewed by S. Chitra on November 04, 2016 Rating: 5 4 Key Features on Mutual Funds Financial planners recommend mutual funds (MFs) to many first-time investors. Many investors have ...

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