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Sunday, September 30, 2018

Mutual Funds Special Schemes


Mutual Funds Special Schemes

This category includes index schemes that attempt to replicate the performance of a particular index such as the BSE Sensex, the NSE 50 (NIFTY) or sector specific schemes
which invest in specific sectors such as Technology, Infrastructure, Banking, Pharma etc.

Besides, there are also schemes which invest exclusively in certain segments of the capital market, such as Large Caps, Mid Caps, Small Caps, Micro Caps, 'A' group shares, shares
issued through Initial Public Offerings (IPOs), etc.

Index fund schemes are ideal for investors who are satisfied with a return approximately equal to that of an index.

Sectoral fund schemes are ideal for investors who have already decided to invest in a particular sector or segment
.
Fixed Maturity Plans
Fixed Maturity Plans (FMPs) are investment schemes floated by mutual funds and are closeended with a fixed tenure, the maturity period ranging from one month to three/five years.

These plans are predominantly debt-oriented, while some of them may have a small equity component.

The objective of such a scheme is to generate steady returns over a fixed-maturity period and protect the investor against market fluctuations.

FMPs are typically passively managed fixedincome schemes with the fund manager locking into investments with maturities corresponding with the maturity of the plan. FMPs are not guaranteed products.

ExchangeTraded Funds (ETFs)
Exchange Traded Funds are essentially index funds that are listed and traded on exchanges like stocks. Globally, ETFs have opened a whole new panorama of investment opportunities to retail as well as institutional investors.

ETFs enable investors to gain broad exposure to entire stock
markets as well as in specific sectors with relative ease, on a real-time basis and at a lower cost than many other forms of investing.

An ETF is a basket of stocks that reflects the composition of an index, like S&P CNX Nifty, BSE Sensex, CNX Bank Index, CNX PSU Bank Index, etc. The ETF's trading value is based on the net
asset value of the underlying stocks that it represents.

It can be compared to a stock that can be bought or sold on real time basis during the market hours. The first ETF in India, Benchmark Nifty Bees, opened for subscription on December 12, 2001 and listed on the NSE on January 8, 2002.


Capital Protection Oriented Schemes
Capital Protection Oriented Schemes are schemes that endeavour to protect the capital as the primary objective by investing in high quality fixed income securities and generate capital appreciation by investing in equity / equity related
instruments as a secondary objective.

The first Capital Protection Oriented Fund in India,
Franklin Templeton Capital Protection Oriented Fund opened for subscription on October 31, 2006.

Gold ExchangeTraded Funds (GETFs)

Gold Exchange Traded Funds offer investors an innovative, cost-efficient and secure way to access the gold market. Gold ETFs are intended to offer investors a means of participating in
the gold bullion market by buying and selling units on the Stock Exchanges, without taking physical delivery of gold. The first Gold ETF in India, Benchmark GETF, opened for subscription
on February 15, 2007 and listed on the NSE on April 17, 2007.

Quantitative Funds

A quantitative fund is an investment fund that selects securities based on quantitative analysis.

The managers of such funds build computerbased models to determine whether or not an investment is attractive. In a pure "quant shop" the final decision to buy or sell is made by the
model.

However, there is a middle ground where the fund manager will use human judgment in addition to a quantitative model. The first Quant based Mutual Fund Scheme in India, Lotus Agile Fund opened for subscription on October 25,  2007.

Funds Investing Abroad

With the opening up of the Indian economy, Mutual Funds have been permitted to invest in foreign securities/ American Depository Receipts (ADRs) / Global Depository Receipts
(GDRs). Some of such schemes are dedicated  funds for investment abroad while others invest partly in foreign securities and partly in domestic securities.

While most such schemes invest in securities across the world there are also schemes which are country specific in their investment approach.

Fund of Funds (FOFs)
Fund of Funds are schemes that invest in other mutual fund schemes. The portfolio of these schemes comprise only of units of other mutual fund schemes and cash / money market securities/ short term deposits pending deployment. The first FOF was launched by Franklin Templeton Mutual Fund on October 17,
2003.

Fund of Funds can be Sector specific e.g. Real Estate FOFs, Theme specific e.g. Equity FOFs, Objective specific e.g. Life Stages FOFs or Style specific e.g.Aggressive/ Cautious FOFs etc.

Please bear in mind that any one scheme may not meet all your requirements for all time. You need to place your money judiciously in different schemes to be able to get the combination of growth, income and stability that is right for you.

Remember, as always, higher the return you seek higher the risk you should be prepared to take

Src: AMFI

Mutual Funds Special Schemes Reviewed by S. Chitra on September 30, 2018 Rating: 5 Mutual Funds Special Schemes This category includes index schemes that attempt to replicate the performance of a particular index suc...

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