Tag Archives: mutual funds

HDFC Asset Management Company Ltd. (HDFC AMC) is one of India's largest mutual fund companies. It is among one of the most profitable asset management companies (AMC) in the country. The company manages assets worth Rs. 4,49,766.281 crores (excluding domestic fund of funds) as of 31st March 2023.  Let us talk about the consumer product – HDFC Multi Cap Fund.  https://www.youtube.com/watch?v=tdwqQH0xkFw HDFC Multi Cap Fund  Investment Objective   The scheme's investment objective is to generate long-term capital appreciation by investing in equity and equity-related securities of large-cap, mid-cap, and small-cap companies.  Investment Strategy  The fund manager follows a mix of top-down and bottom-up approaches to stock selection. The strategy is to invest in companies that are leaders or are gaining market share due to superior execution, scale, better adoption of technology, etc.   Portfolio Composition  The fund holds 98.67% equity across large-cap, mid-cap, and small-cap stocks and 1.33% in Cash and cash equivalents. The significant sectoral exposure is Banks, which account for over 15% of the portfolio. The top five sectors hold more than 40% of the portfolio. Note: Data as of 30th April. 2023.Source: Value Research Top 5 Holdings for Multi Cap Fund  Name Weightage % ICICI Bank Ltd. 4.27 HDFC Bank Ltd. 3.94 Infosys Ltd. 2.51 Reliance Industries Ltd. 2.45 Apar Industries Limited 2.39 Note: Data as of 30th April. 2023. Source: Value Research  https://www.youtube.com/watch?v=qy_EsYNTJU4 Fund Managers for HDFC Multi Cap Fund  Mr. Gopal Agrawal (Since 10th December 2021)– Fund Manager - Collectively over 17 years of experience in Fund Management and two years in Equity Research  Mr. Priya Rajan (Since 01st May 2022) – Senior Equity Analyst and Fund Manager for overseas Investments - Collectively over 15 years of experience.  Who Should Invest in HDFC Multi Cap Fund?  Investors looking to invest in an equity portfolio with a broad representation of sectors across market cap can consider this fund. However, investors should remain invested long-term to witness wealth creation.  Why Invest in this Fund?  Multi-cap provides balanced exposure to all sizes of company stocks which makes them more diverse.  As per the data released by AMFI for Jan-Mar. 23 quarter, HDFC AMC is the third largest AMC in India.  Time Horizon  One should look at investing for a minimum of three years or more.  Investment through Systematic Investment Plan (SIP) may help in tackling the volatility of the broader equity market.  Conclusion  The HDFC Multi Cap Fund was launched on 10th December 2021 and delivered over 25% return in the last year compared to 13.74% of S&P BSE 500 TRI in the same duration as on 11th May 2023. However, we must monitor the fund's performance over the long term. Investors need to remain invested for the long term to witness wealth creation.  DisclaimerThis is not recommendation advice. All information in this blog is for educational purposes only. 

Saving money is an essential habit that can lead to financial stability and security. However, more than simply saving money is needed to achieve financial goals. Many people wonder how to double their money or ways to double their money. One option is to double your money with options, but we will explore other methods to grow your savings.   Invest in the Stock Market:   Stock market investments can provide an opportunity to double your money over time. Carefully research and choose solid companies with a track record of growth. Consider portfolio diversification to minimize risk and maximize returns.   Real Estate Investment:   Real estate can be proved a lucrative investment option for growing your savings. Whether through rental properties or property flipping, real estate has the potential to provide significant returns. Conduct thorough market research and seek professional advice to make informed decisions.   https://www.youtube.com/watch?v=sNqwEZbjEvc Start a Side Business:   Launching a side business can be an excellent way to double your money. Identify your skills and passions, and turn them into a profitable venture. Dedicate time and effort to building your business, and reinvest profits to fuel its growth.   Explore High-Yield Savings Accounts:   While traditional savings accounts offer minimal interest rates, high-yield savings accounts can provide better returns on your savings. Research financial institutions that offer higher interest rates and consider transferring your funds to these accounts to maximize your savings.   https://www.youtube.com/watch?v=tdwqQH0xkFw Invest in Bonds:   Bonds are relatively safer investment options that can help grow your savings. Government or corporate bonds provide fixed interest payments over a specified period, offering a predictable return on your investment. Consult a financial advisor to determine the best bond options for your financial goals.   Consider Peer-to-Peer Lending Platforms:   These platforms allow you to lend money directly to individuals or businesses in need, cutting out the middleman. By carefully assessing the risk and choosing reliable borrowers, you can earn higher interest rates than traditional banking products.   https://www.youtube.com/watch?v=l8Hyb77tkM8 Embrace Compound Interest:   Compound interest can work wonders for growing your savings. By reinvesting the interest earned on your investments or savings, your money has the potential to grow exponentially over time. Let compound interest do its magic by starting early.   Save and Invest Consistently:   We've all heard, "Consistency is key". And it is 100% true when it comes to growing your savings. Set a budget and allocate a portion of your income towards savings and investments regularly. Automating your savings and investment contributions ensures a disciplined approach that gradually builds your wealth over time.   https://www.youtube.com/watch?v=1ZI5xfmRB0g Maximize Retirement Contributions:   If you have access to a retirement plan sponsored by your employer, for instance, a 401(k) or a similar scheme, take full advantage of it. Contribute the maximum amount allowed, especially if your employer offers matching contributions. This helps grow your retirement savings and provides potential tax benefits.   Reduce Expenses and Eliminate Debt:   Examine your expenses closely to free up more money for savings and investments. Identify areas where you can cut back, such as unnecessary subscriptions or dining out frequently. Additionally, focus on eliminating high-interest debts like credit card balances, as they can hinder your ability to grow your savings.   What are the steps of budgeting? Read More Diversify Your Investment Portfolio:   Diversification is crucial in reducing risk and optimizing profits. Try investing in different asset classes like real estate, stocks, bonds, and even alternative investments like precious metals or cryptocurrencies. This diversification helps mitigate the impact of a single investment's performance on your portfolio.   Seek Professional Financial Advice:   If you need clarification on investment strategies or want personalized guidance, consider consulting a financial advisor. A professional can assess your financial situation, risk tolerance, and goals to create a tailored investment plan. They can also provide ongoing advice and help you stay on track towards doubling your savings.   Stay Informed and Educate Yourself:   The financial landscape is ever-evolving, and staying informed is crucial. Keep up with financial news, market trends, and investment opportunities. Educate yourself about different investment vehicles, their risks, and potential returns. With knowledge and awareness, you'll be better equipped to make informed decisions and grow your savings.   Stay Disciplined and Patient:   Growing your savings takes time and patience. Markets can fluctuate, and investments may experience temporary setbacks. Refrain from forming snap judgments based on momentary market fluctuations. Stick to your long-term plan, stay disciplined, and focus on your ultimate financial goals.   Regularly Review and Adjust Your Strategy:   Periodically review your investment portfolio and overall savings strategy. Assess the performance of your investments, make any necessary adjustments, and align your strategy with changing market conditions or personal circumstances. Regular evaluations help ensure that your savings continue to grow effectively.   Conclusion  By adopting investment strategies, consistently saving and reducing expenses, seeking professional advice, and staying disciplined, you can double your money and grow your savings. With patience and perseverance, you'll be on the path to financial success and a secure future. 

In the previous article, we discussed what are mutual funds. & Taxation in mutual funds. In this article, we will discuss how to track mutual funds. Making mutual fund investments is just the first step. Once the investment has been made, periodically tracking it becomes equally crucial.   Most of us seek advice and do our due diligence before choosing our mutual fund investments. However, once things are done, we typically forget about them until a need arises.  Nearly everything, including your car and health, requires routine maintenance; the same is true for your mutual fund investments.   While you might not need to regularly monitor your portfolio, it is always a good idea to keep yourself informed of its growth and changes.   A fund fact sheet will help you to monitor your mutual fund investment easily. It is a progress report for your investments, similar to a report card.   What is a Fund fact sheet?   A fund fact sheet is a document that lists every scheme that the AMC or mutual fund managers. It is presented in an easy-to-read manner and is issued monthly by the fund house. It contains the following information:   Performance of the schemes: It gives the performance information in terms of beta, Sharpe ratio, standard deviation, and the compound annual growth rate or CAGR of the fund.   The fund factsheet also outlines how your investments have been distributed among different securities.  Size and investment information for each scheme that the mutual fund managers.   Reviewing the fact sheet, which is easily accessible on the mutual fund website, is a great way to keep track of your mutual fund holdings.  What are mutual funds? Read More How to track mutual funds' performance?   The mutual fund websites list their net asset value (NAV). The mutual fund company's chosen index, which is a benchmark for its performance, is available for comparison.   To know how your fund performs, you should also compare it with other funds in the same category. The performance of a mutual fund scheme cannot be assessed in isolation.   Some specialized websites track the performance of mutual funds in addition to the fund fact sheets of the schemes. Over a monthly, quarterly, or half-yearly time frame, you can monitor how your scheme is doing compared to its counterpart in the same category.   It is always good to keep an eye out for the main characteristics and adjustments listed below that could impact the funds' performance.   It is advisable to monitor the portfolio's turnover and changes in management.  While it is typical for management to change over time, a frequent change in the fund manager may be a red flag. A change in fund manager frequently results in a shift in investment style.   To ensure the investment goal is intact in such a situation, it becomes equally necessary to monitor the changes in your portfolio.    Also, the concern should be raised if your mutual fund portfolio consistently experiences high churn or turnover. High returns do not always equate to increased churn.   On the contrary, it can cause more significant damage as rising transaction costs eat into your returns. In other circumstances, more churn may also indicate a short-term concentration.   A short-term emphasis may produce more enormous profits in the near term, but in the long run, it may leave your portfolio weak and exposed to unnecessary risks.   When looking for the warning signs mentioned above, it is advisable to give any mutual fund scheme at least six months. It might be too soon to assess the scheme's performance following any adjustment after a month or a quarter.   Don't let your fund's short-term performance outriggers affect you; give it time to establish itself and achieve the investment goal.   It is good practice to keep track of your mutual fund investments on a timely basis, though not very frequently.  FAQs How to track mutual funds' performance? One way to track your investment is through the mutual fund websites list their net asset value (NAV). The mutual fund company's chosen index, which is a benchmark for its performance, is available for comparison.   To know how your fund performs, you should also compare it with other funds in the same category. The performance of a mutual fund scheme cannot be assessed in isolation. What is a fund fact sheet? A fund fact sheet is a document that lists every scheme that the AMC or mutual fund managers. It is presented in an easy-to-read manner and is issued monthly by the fund house. Who can track your mutual fund investments? It is possible to track your mutual fund investment by yourself. You can also have a financial advisor, or mutual fund portfolio tracker track your investment growth. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

One of the largest AMCs in India, DSP has been helping investors make sound investment decisions responsibly and unemotionally for over 25 years. DSP is backed by the DSP Group, an almost 160-year-old Indian financial giant.  The family behind DSP has been very influential in the growth and professionalization of capital markets and the money management business in India over the last one-and-a-half centuries.  DSP Regular Savings Fund  Investment objective The primary investment objective of the scheme is to seek to generate income, consistent with prudent risk, from a portfolio substantially constituted of quality debt securities.  Investment Process  For equities, the fund uses a bottom-up approach with a large-cap bias focusing on sectors and industries with double-digit growth.  For debt securities, the fund focuses on short-tenure corporate bonds, with a modified duration between 2.5 to 3.5 years and rated AA or above, to minimize both interest rate and credit risk.   Portfolio Composition  The portfolio had a significant allocation to debt and a relatively lower equity allocation, where 75.08% of the funds were invested in debt securities, and 24.92% were in the form of equity investments.  Note: Data as of 30th Apr. 2023. Source: DSP MF DSP World Mining Fund Read More Top 5 Equity Holdings  Name Weightage % HDFC 3.83 ICICI Bank 2.98 Axis Bank 1.93 ITC 1.16 Cipla 1.11 Note: Data as of 30th Apr. 2023.    Source: DSP MF  Performance  If you had invested 10,000 at the fund's inception, it would now be valued at Rs 22,304.   Note: Data as of 30th Apr. 2023. Source: DSP MF The fund was launched on 1st Jan. 2013, and it has generated a CAGR of 8.08% since inception, which is a good return in the conservative hybrid category as the investors' risk appetite is low.  Fund Manager at DSP Regular Savings Fund Abhishek Singh has been managing this fund since May 2021. Abhishek has a total work experience of 14 years. He joined DSP Mutual Fund in September 2018 as Assistant Vice President of the equity team. His prior experience includes working in Motilal Oswal, Idfc Securities, BNP Paribas, B&K Securities, and Edelweiss Financial Services.  He has an MBA in finance and holds a Bachelor's in Electronics Engineering.  Vikram Chopra has been managing this fund since July 2016. Vikram joined DSP Mutual Funds from L&T Investment Management and brings over 14 years of investment experience with him. He has also worked with Fidelity, IDBI Bank, and Axis Bank Ltd.   Jay Kothari has been managing this fund since December 2020. Jay Kothari, Vice President & Product Strategist -Jay has been with DSP Investment Managers since May 2005 and has been with the Investment function since January 2011. Before joining DSPIM, Jay worked for Standard Chartered Bank for a year in the Priority Banking division. Jay completed his Bachelor of Management Studies (Finance & International Finance) from Mumbai University and an MBA in Finance from Mumbai University.  Who should invest in DSP Small Cap Fund?  Consider this fund if you  Are looking to generate a steady potential income rather than chasing high returns.  Want the smoother investment journey associated with debt investing but with a possibly higher return than debt?  Are conservative and don’t like to take too much risk.  Why invest in this Fund?  Offers the potential to earn a steady income from a primarily debt-oriented portfolio with a little 'boost' of equity.  Earn potentially higher returns than investing in pure debt funds.  Potential capital preservation during falling markets due to the more significant debt allocation.  Suitable for conservative investors.  Investors can use it for doing STP into Equity Funds.  Time Horizon  One should look at investing for at least five years or even more.  Investment through Systematic Investment Plan (SIP) may help in tackling the volatility of the broader equity market.  Conclusion  The DSP Regular Savings Fund is a good option for conservative investors not chasing high returns. It provides a better option over traditional debt investing with higher returns due to little exposure to equities. Investors can consider this fund for parking funds and then do STP to equity fund to average the cost of equity investments DisclaimerThis is not recommendation advice. All information in this blog is for educational purposes only. 

One of the largest AMCs in India, DSP has been helping investors make sound investment decisions responsibly and unemotionally for over 25 years. DSP is backed by the DSP Group, an almost 160-year-old Indian financial giant.  The family behind DSP has been very influential in the growth and professionalization of capital markets and the money management business in India over the last one-and-a-half centuries. DSP Nifty 50 Index Fund  Investment objective The primary investment objective is to invest in companies that are constituents of the NIFTY 50 Index (the underlying index) in the same proportion as in the index and seeks to generate returns that are commensurate (before fees and expenses) with the performance of the underlying index, subject to tracking error.  Investment Process   The fund replicates the Nifty 50 TR Index, i.e., invests in the same stocks and proportion as in the Nifty 50 TRI.    The portfolio is rebalanced semi-annually to adjust for any stock additions or subtractions to the index.  Portfolio Composition  Since the fund replicates Nifty 50 TRI, all the stocks invested are large-cap stocks. Hence, the fund allows investors to invest in India's top 50 companies.  Note: Data as of 30th April 2023. Source: DSP MF Top 5 Holdings  Name Weightage % Reliance Industries Limited 10.29 HDFC Bank Limited 9.25 ICICI Bank Limited 8.05 HDFC Limited 6.32 Infosys Limited 5.62 Note: 30th April 2023. Source: DSP MF Performance over the years   If you had invested 10,000 at the fund's inception, it would now be valued at Rs 17,086. Note: Data as of 28th April 2023. Source: DSP MF Since its inception, the fund has generated a CAGR (Compounded Annual Growth Rate) of 13.66%.  DSP Tax Saver Fund Read More Fund Manager at DSP Nifty 50 Index Fund Anil Ghelani has been managing this fund since July 2019 as a Co-Fund Manager. Anil has been working with DSP Group since 2003 and is Head of Passive Investments & Products. Previously, he was the Business Head & Chief Investment Officer at DSP Pension Fund Managers. Before that, he led the Risk and Quantitative Analysis team at DSP Mutual Fund, responsible for monitoring portfolio risk and buy-side credit research on companies across various sectors.  Diipesh Shah has been managing this fund since November 2020 as a Co-Fund Manager. Diipesh has a total work experience of Over 20 years. He has been working with DSP since September 2019 as a Dealer for ETF and Passive Investments. Now he is also the Fund Manager of various schemes of DSP Mutual Fund. Diipesh has worked with JM Financial Institutional Broking Limited, Centrum Broking Limited, IDFC Securities Limited, and Kotak Securities Limited as Institutional Equity Sales Trading.  Who should invest in DSP Nifty 50 Index Fund?  This fund is suitable for   A first-timer or a relatively new equity market investor.  An investor who values low-cost, passive investing.  Investors have the patience & mental resilience to remain invested for a decade or more.  Investors who do not chase funds that have the highest outperformance.  Why invest in this Fund?  It offers an affordable way to invest in the top 50 Indian companies at a relatively low cost compared to other actively managed large-cap funds.   In an era where large-cap funds are underperforming benchmarks, index funds can be a good option for exposure to large-cap equities.    Time Horizon  One should look at investing for at least ten years or even more.  Investment through Systematic Investment Plan (SIP) may help in tackling the volatility of the broader equity market.  Conclusion  The DSP Nifty 50 Index Fund provides a good option for passive investing in large-cap equities. It is better to consider index funds for large-cap investing since there is a very low probability of alpha generation in the large-cap space. Investors seeking capital appreciation through large-cap exposure can consider this fund with a time horizon of ten years or more.  DisclaimerThis is not a recommendation advice. All information provided in this blog is for educational purposes only.

Let us start from the very basics and understand what mutual funds are. After that, we'll discuss how to invest in them and discuss the advantages and disadvantages of investing in mutual funds.   What is a Mutual Fund?  A mutual fund is a financial trust that collects funds from investors and invests them into different instruments like stocks, bonds, and other money market instruments.   Fund managers manage mutual funds – they make investment decisions on behalf of the people who have trusted them with their money.   Mutual Funds are of different types, like equity mutual funds, debt mutual funds, and hybrid mutual funds depending upon the investment proportion in debt and equity.   These different types of mutual funds vary in their risk and return potential. Mutual Funds are one of the most popular investment options today.   Advantages of Investing in Mutual Funds 1. Advanced portfolio management When you purchase a mutual fund, you must pay a small fee as a part of your expense ratio. That fee is used to engage professional portfolio managers to buy and sell stocks, bonds, and other securities on your behalf – it is a tiny fee for professional assistance in managing your investment portfolio, which goes a long way in creating market-beating turns.   2. Liquidity An advantage of investing in mutual funds is the ability to redeem the units when you require them. Mutual funds, unlike fixed deposits, allow for flexible withdrawals.   However, issues such as pre-exit penalty and exit load must be taken into account before deciding to exit your position in a mutual fund.   3. Convenience and fair pricing Mutual funds are simple to purchase and comprehend. They usually have modest minimum investment values and are only traded once a day at the closing net asset value thus removing day-to-day price fluctuations and different arbitrage opportunities used by day traders.   4. Diversification An investment's Maybe. The value may or may not decrease or increase in tandem. When one investment's value rises, another's value may fall. As a result, the risk that the portfolio's overall performance would be erratic is low.  Diversification lowers the risk of putting together a portfolio, lowering the risks for investors. As mutual funds consist of a variety of assets, the interests of investors are protected even if there is a downfall in the value of other securities so purchased.   How to track the performance of mutual funds? Read More 5. Accessibility A big reason for the popularity of mutual funds is the easy accessibility from anywhere in the world.   An Asset Management Company (AMC) offers the funds and distributes them through different channels like brokerage firms, registrars, the AMCs themselves, online mutual fund investment platforms, and agents and banks.   This factor allows mutual funds to be available and easily accessible universally. Also, mutual funds are easy to buy and track performance and one-click investments.   6. Low lock-in period Tax-saving mutual funds have the most down-locking periods of only three years, which is lower when compared to the maximum of five years for other tax-saving options like FDs, ULIPs, and PPFs. Also, you will have the opportunity to stay invested even after completing the lock-in period.   Fits every financial goal: The best aspect of a mutual fund is that you can invest with as little as ₹500, and there is no upper limit for an investor.  Before investing in mutual funds, examining their income, expenses, risk-taking abilities, and specific investment goals is essential.   As a result, anyone from any walk of life is free to invest in mutual funds regardless of income.   7. Good tax-saving options Mutual funds are one of the best ways to save on taxes. Under section 80C of the Income Tax Act, equity-linked saving scheme (ELSS) mutual funds are eligible for a tax exemption of up to 1.5 lacs per year.   In India, all other mutual funds are taxable according to the type of investment and the fund's duration. For example, equity mutual funds and debt mutual funds are taxable at different rates.   Tax-saving mutual funds have the potential to out for performing other tax-saving products such as PPF, NPS, and tax-saving FDs in terms of returns.  Advantages of investments in mutual funds.  Source: pexels Disadvantages of investing in mutual fund Mutual funds do not promise set returns, so you should always be prepared for the unexpected such as a drop in the value of your mutual fund. In other words, mutual funds are subject to a wide range of price changes.   Fund managers oversee all forms of mutual funds. A team of analysts may assist the fund's management in various circumstances. As a result, you have no influence over your money as an investor.   Your fund manager makes all significant decisions regarding your fund on your behalf. However, you can look into certain vital factors, including disclosure requirements, corpus, and overall investment strategy.   Diversification is a significant advantage of mutual funds. However, the problem arises when there is over-diversification.   Over-diversification can raise funds' running costs necessitate increased due diligence, and dilute the relative benefits of diversification.   A mutual fund's value may fluctuate as market conditions change. In addition, there are fees associated with professional mutual fund management which are not present when purchasing stocks or securities directly from the market.   When buying a mutual fund, investors must pay an entry load. When investors wish to exit from a mutual fund, providers charge an exit fee.  The performance of a mutual fund does not give investors enough information about the degree of risk that the fund faces.  As a result, it is just one of the metrics used to assess the company's performance, but it is far from being comprehensive.  How to invest in a Mutual Fund via the Edufund App?  Step 1: Log in to the Edufund website or the Edufund app.   Step 2: Complete your KYC and move ahead to create your investment account.   Step 3: Choose the option of mutual fund investments.   Step 4: Analyse your risk profile on the app by answering your household income and expense, the number of dependents you have, the highest level of maturity you have in terms of investments, your period of investment, and similar questions.  Step 5: After answering the above questions, you will know what type of investor you are and the degree of risk you might be willing to take.   The Edufund website or the Edufund app will suggest some mutual funds you might want to invest in, with a recommended SIP value.  Step 6: Choose the fund and start investing. FAQs What is a Mutual Fund? A mutual fund is a financial trust that collects funds from investors and invests them into different instruments like stocks, bonds, and other money market instruments. How to invest in a Mutual Fund via the Edufund App? Step 1: Log in to the Edufund website or the Edufund app.   Step 2: Complete your KYC and move ahead to create your investment account.   Step 3: Choose the option of mutual fund investments.   Step 4: Analyse your risk profile on the app by answering your household income and expense, the number of dependents you have, the highest level of maturity you have in terms of investments, your period of investment, and similar questions.  Step 5: After answering the above questions, you will know what type of investor you are and the degree of risk you might be willing to take.   The Edufund website or the Edufund app will suggest some mutual funds you might want to invest in, with a recommended SIP value.  Step 6: Choose the fund and start investing. What are the different types of mutual funds? The different types of mutual funds are Debt, Equity, and Hybrid Funds. There are many more divisions within mutual funds that can investors should check before investing their money. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

Investors frequently struggle with deciding whether to invest directly in stocks or through mutual funds for equity investments. Equity Mutual Funds are institutions that combine investors' money to invest it in publicly listed stocks. On the other hand, buying these equities through the stock market is also possible. Direct equity investments have historically been unpredictable; they have resulted in significant returns as well as massive losses for some investors.   This article will learn the distinction between direct equity investment vs investment in mutual funds.   What is Direct Equity Investment?  Direct stock investments have a significant risk of loss but also have the potential to be very lucrative. Before investing in equities, one must thoroughly understand the underlying business and the sector in which it works.   As a result, as an investor, you will need to research the company's track record, financial performance, managerial expertise, and even external issues like governmental regulations, currency exchange rates, and changes in local and global politics.   You can gain more if you strike the correct balance between risk and return.   What are Mutual Funds?   Companies that offer mutual funds pool money from a variety of investors and save through their offered mutual fund plans. The money gathered is subsequently invested by the fund firms in a variety of financial products to provide significant returns.   Experts administer mutual funds. In essence, you own the units representing the share of the fund you own as an investor. A unit holder is another term for the investment.   The distribution of the investment's increased value and other revenue is proportional to the number of units owned by the unitholders - provided after any necessary deductions.   What are mutual funds? Read More Source: Pixabay Direct Equity Investment vs Investment in Mutual Funds While direct equity investment offers substantial returns, it is only practical for individuals who consistently understand how the equity markets operate.   Therefore, the mutual fund option is better for people who lack the time or expertise to track and understand equities markets. With regard to your investment in mutual funds, there are some advantages that you get.   From professional management of your money by mutual fund experts to low ticket size where you can start to invest with as low as Rs 500, there are many perks of investment via mutual funds.   Subject to exit loads, open-ended funds permit investors to withdraw their money at the current net asset value (NAV). This also aids in financial planning. When a person invests in shares, he is uncertain as to whether he will be able to sell the shares on the market for a reasonable price or not.   In risk management, an individual may go overboard on a particular share; however, a fund manager will have the risk management guidelines in place there are limits on how much a fund manager can invest in each stock and sector.   When you buy and sell shares before holding them for one year, you end up paying short-term capital gains of 15%. However, the fund manager may keep transacting shares at varying intervals if the investor remains invested for more than one year in an equity fund, his gains are tax-free since STT is already deducted.  Your final decision on whether to invest either in mutual funds or direct equity will depend upon how much you understand the markets and whether you have the time to trade in direct equity or not. If you lack the discipline to operate in the stock market, you should channel your money via the mutual fund route. FAQs What is the difference between investing in equity shares and mutual funds? While direct equity investment offers substantial returns, it is only practical for individuals who consistently understand how the equity markets operate.    Therefore, the mutual fund option is better for people who lack the time or expertise to track and understand equities markets.   Are mutual funds 100% safe? Mutual funds are generally looked at as safe investments, considering the diversity they offer to minimize the risk. However, any investment involves risk. Investors should consult experts and do their research before investing. Are mutual funds safer than equity? Direct stock investments have a significant risk of loss but also have the potential to be very lucrative. Before investing in equities, one must thoroughly understand the underlying business and the sector in which it works.    The mutual fund option is better for people who lack the time or expertise to track and understand equities markets. With regard to your investment in mutual funds, there are some advantages that you get. From professional management of your money by mutual fund experts to low ticket sizes where you can start to invest with as low as Rs 500, there are many perks of investment via mutual funds.   Is mutual fund and equity fund the same? An equity fund is a mutual fund that invests majorly in stocks. It can be actively or passively managed. Equity funds are also called stock mutual funds.  Consult an expert advisor to get the right plan for you  TALK TO AN EXPERT

In the previous article, we discussed the dos and don'ts of saving for your child's education in 2022. This article will discuss how to beat inflation by investing in mutual funds.  You might be the type of person who prefers to delegate some of the tasks of growth to your finances. You can lose money if your investments aren't making enough to outpace inflation.   Your savings may be deflated in value as the gradual increase in the cost of goods and services is inevitable.    For most people, the most excellent method to beat inflation is to generate returns that, on average, are higher than the average inflation rate while still leaving some tax space.  Source: pixabay The most typical way to achieve that is to invest in a mutual fund that combines stock and bond holdings.   Beat inflation with a good portfolio: A good portfolio consists of a mutual fund and an exchange-traded fund. It is diversified in nature with numerous options to maintain a healthy balance.   Everybody has their preferred building materials, tools, designs, and tactics. Ultimately, all structures tend to function similarly and share some fundamental characteristics.   It would be beneficial if you went beyond the good advice to build a mutual fund portfolio in order to increase the value of your assets. A clever design and a solid foundation are necessary for a structure to endure the test of time and inflation.   Diversify: Putting your eggs in different baskets is just one aspect of diversification with mutual funds and ETFs.   Many investors make errors in believing that diversifying their portfolio by distributing funds among many mutual funds is equivalent to doing so. Diverse does not equate to different, though. Make sure you have exposure to several mutual funds and ETFs kinds.   Choose growth or foreign stocks and ETFs: Growth stock mutual funds and ETFs often perform at their peak during the mature stages of a market cycle when the economy is expanding at a steady clip.   The growth strategy depicts what businesses, consumers, and investors are doing at once during a prosperous period. They spend extra money to ensure that future growth is higher than anticipated.   Increased inflation may result in a decline in the value of the currency. As money invested in overseas assets can eventually transform into more money at home, international stock funds and ETFs can serve as a hedge (an asset that seeks to limit total losses).   Use inflation-beating bond funds: Bond prices move in the opposite direction of interest rate movements; bonds can lose value when inflation increases.   With inflation, interest rates typically increase. When inflation rises, there are ways to invest in bonds, bond funds, and ETFs.   Find funds that pay dividends: Over time, dividends can significantly boost the total return that investors experience and they typically work in tandem with capital gains to outperform inflation.   The expansion of mutual funds that invest in dividend-paying stocks is well known. These funds are good purchases for investors looking to generate income from their portfolios.   The best-performing mutual funds have outperformed inflation over the long run, even though they cannot guarantee the return of your principal.   In conclusion, taking the time to think about some of the numerous investments may help you eventually avoid the harmful effects of inflation. FAQ What is the best investment to beat inflation? For most people, the most excellent method to beat inflation is to generate returns that, on average, are higher than the average inflation rate while still leaving some tax space.   The most typical way to achieve that is to invest in a mutual fund that combines stock and bond holdings.   Can SIP beat inflation?   A systematic investment plan is a vehicle to invest in mutual funds. Your investment’s potential to beat inflation depends on the type of mutual fund you choose to put your money into.   What is the easiest way to beat inflation?   Beat inflation with a good portfolio: A good portfolio consists of a mutual fund and an exchange-traded fund. It is diversified in nature, with numerous options to maintain a healthy balance.    Everybody has their preferred building materials, tools, designs, and tactics. Ultimately, all structures tend to function similarly and share some fundamental characteristics.    It would be beneficial if you went beyond the good advice to build a mutual fund portfolio in order to increase the value of your assets. A clever design and a solid foundation are necessary for a structure to endure the test of time and inflation.  How do you escape money from inflation?   Diversify: Putting your eggs in different baskets is just one aspect of diversification with mutual funds and ETFs.    Many investors make errors in believing that diversifying their portfolio by distributing funds among many mutual funds is equivalent to doing so. Diverse does not equate to different, though. Make sure you have exposure to several mutual funds and ETFs kinds.    Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

Incorporated on December 10, 1999, HDFC Asset Management Company Ltd. is among India's most popular fund houses. HDFC Mutual Fund launched its first scheme in July 2000, and ever since it has been ambitious about offering a stable performance of funds across all the variants of schemes it offers.   The HDFC Mutual Fund is managed by HDFC Asset Management Company (HDFC AMC) Limited. HDFC Trustee Company Limited is the trustee of the mutual fund. The HDFC Mutual Fund is sponsored by the Housing Development Finance Corporation Limited (HDFC Ltd.) and Standard Life Investments Limited.  https://www.youtube.com/watch?v=U1nfBwXH15M HDFC Small Cap Fund  Investment Objective: The primary objective is to provide long-term capital appreciation /income by investing predominantly in Small-Cap companies.   Investment Process:   The stock selection entirely focuses on quality companies with good financial strength and reasonable return on equity.  Investment is made at sensible valuations in companies trading at reasonable multiples (P/E, P/B, EV/EBITDA, etc.)  The scheme aims to maintain a reasonably diversified portfolio at all times. The scheme may also invest some of its corpus in debt and money market securities. Credit quality, liquidity, interest rates, and their outlook will guide investment in debt securities.  Portfolio Composition  The portfolio holds significant exposure in equity & equity-related stocks at 92.01%, and significant sectoral exposure is to Banks, which account for roughly 9.75% of the portfolio.  Note: Data as of March 31, 2023. Source: HDFC MF Top 5 Holdings for HDFC Small Cap Fund  Name Weightage % Sonata Software Ltd 5.25 Bank of Baroda 4.16 Bajaj Electricals Ltd 3.89 Firstsource Solutions 3.34 Green Eastern Shipping Co Ltd  2.87 Note: Data as of March 31 2023. Source: HDFC MF  Performance  Note: Data as of March 31, 2023.  Source: Value Research Fund manager  Mr. Chirag Setalvad (Since June 28, 2014) has over 25 years of experience, of which 18 years in Fund Management and Equity Research and three years in Investment Banking. Before HDFC, he worked at New Vernon Advisory Services and started his career at ING Barings in India.   Mr. Priya Ranjan (Since May 01, 2022) does have a Collectively over 15 years of experience. Senior Equity Analyst and Fund Manager for Overseas Investments. He also holds eight years of experience in Credit Cards and Consumer Finance Collections, Client Relationship Management & Team Management.  Who should invest in HDFC Small Cap Fund?  Investors looking to generate higher returns by taking exposure to small-cap equities can consider this fund. However, investors need to understand the aggressive risk exposure of this fund.  Why invest in this Fund?  This high-risk, high-return strategy offers the potential to 'earn big' returns.  It can help you beat the impact of rising prices over the long term.  The fund allows investors to earn good returns as they confer more growth  Time Horizon  One should look at investing for at least 3-4 years or even more.  The fund is an open-ended fund. One can invest any time in this fund.  Conclusion  The HDFC Small Cap Fund has a proven track record of over 15 years, with an Asset Under Management of ₹14,962.63 Cr. The fund holding a significant portfolio in equity provides a much higher rate of return in the long run.  DisclaimerThis is not recommendation advice. All information in this blog is for educational purposes only. 

Parag Parikh Financial Advisory Services is a unique fund house that draws its inspiration from the Hammurabi Code. King Hammurabi (18th Century BC) is recognized as the world's first coder of social laws. Hammurabi's law stated that if a house collapses, causing the occupant's death, it is the builder's liability, and he must be executed. To demonstrate this conviction in their asset management methodology, the management motivated company insiders to buy units in the Parag Parikh Flexi Cap Fund. Presently, company insiders hold 4.653 crore units, and the total amount they have invested is INR 156.41 crores. The management believes that when their own stake is involved in the fund, they will take informed decisions and never indulge in reckless behavior. The promoter of PPFAS Asset Management Company (PPFAS AMC) is Parag Parikh Financial Advisory Services Pvt. Ltd. (PPFAS Ltd.). PPFAS Ltd. is a 1992-incorporated boutique investment advisory firm. It is also one of the oldest SEBI Registered Portfolio Management Service (PMS) providers in India. The PPFAS mutual fund's investment methodology is much different from other mutual fund houses operating in India. While most other companies run after algorithms, momentum, and technical analysis, PPFAS mutual fund relies on conventional metrics like cash flow, debt, price earnings, etc., to pick stocks with tremendous growth potential. Another unique thing about PPFAS mutual fund is that it stops accepting lump sum deposits from the public when equity valuations are extremely high. Generally, when the market is at its peak, retail investors get carried away and pour in money. While eventually, the market consolidates, investors grapple with monumental losses. PPFAS mutual fund's innovative fund management style intends to reduce losses and generate profits consistently. PPFAS AMC is headed by Mr. Neil Parag Parikh, who is the Chairman and Chief Executive Officer of the company. He holds 15,61,216 units in the Parag Parikh Flexi Cap Fund. The Investment Manager of PPFAS Mutual Fund is PPFAS Asset Management Private Limited. The company was registered on 08/08/2011. Parag Parikh Financial Advisory Services Private Limited holds 100% shares in the company. PPFAS mutual fund's Asset Under Management (AUM) grew to INR 2,871.87 Crore in the financial year 2019-20 from INR 1,961.51 Crore in the previous financial year. In the financial year 2018-19, the AMC had 80,289 investors investing in its various mutual fund schemes. The figure increased to 1,84,789 in the financial year 2019-20. PPFAS Asset Management Private Limited's operating income increased to INR 1,832.12 lakhs in the financial year 2019-20 from INR 1,538.31 lakhs in the previous year. The AMC's Profit before Depreciation, Tax, and Exceptional & Extraordinary items grew to INR 638.29 lakhs from INR 618.53 lakhs. And the Reserves & Surplus increased to INR 3,061.16 lakhs from 2,715.15 lakhs. Important information about PPFAS Mutual Fund Mutual Fund NamePPFAS Mutual FundInvestment ManagerPPFAS Asset Management Private LimitedEstablished10th October 2012Date of Incorporation8th August 2011Sponsor Parag Parikh Financial Advisory Services Limited 81/82, 8th Floor, SakharBhavan, Ramnath GoenkaMarg, 230 Nariman Point,Mumbai-400021TrusteePPFAS Trustee Company Private LimitedChairman and Director, PPFAS Asset Management Private LimitedNeil Parag ParikhChief Executive OfficerNeil Parag ParikhDirectorRajeev Thakkar Shashi KatariaIndependent DirectorsKamlesh Somani Rajesh Bhojani Arindam GhoshChief Financial OfficerShashi KatariaCompliance OfficerPriya HarianiInvestor Service OfficerAalok MehtaStatutory AuditorsCVK & Associates, Chartered Accountants 2, Samarth Apartments, D S Babrekar Road,Off Gokhale Road (North), Dadar (West),Mumbai 400 028Tel. No: +91-22-24468717,+ 91-22-24451488Fax. No: +91-22-24466139BankersHDFC Bank Limited 81/82, 8th Floor, Sakhar Bhavan, Ramnath Goenka Marg, 230 Nariman Point - 400021Registered Address, PPFAS Asset Management Pvt.Ltd.81/82, 8th Floor, Sakhar Bhavan, Ramnath Goenka Marg, 230 Nariman Point Mumbai - 400021Phone 22-61406555 / 1800-266-7790Fax022-61406590Emailmf@ppfas.comWebsitehttps://www.amc.ppfas.comRegistrar & Transfer AgentComputer Age Management Services Ltd. Address: 7th Floor, Tower II, Rayala Towers, 158, Anna Salai, Chennai - 600002 Phone: 1800-3010-6767 / 1800-419-7676 Fax: 044-30407101 Email: enq_h@camsonline.com Website: www.camsonline.com Three top-performing Parag Parikh mutual fund schemes  1. Parag Parikh Flexi Cap Fund (formerly known as Parag Parikh Long Term Equity Fund) The Parag Parikh Flexi Cap Fund, with a NAV of 38.8948 (Regular Growth) (as of 13th April 2021), is the top-performing fund in the 'Equity: Flexi Cap' category. This open-ended fund was launched on 28th May 2013 and has given trailing returns of 70.41% in one year (as of 13th April 2021). The fund considers the NIFTY 500 TRI as its benchmark.  Key information Minimum InvestmentINR 1,000Minimum Additional InvestmentINR 1,000Minimum SIP InvestmentINR 1,000Minimum WithdrawalINR 1,000Exit Load2% for redemption before 365 days; 1% for withdrawals between 366 and 730 days; Nil for redemption after 731 daysReturn Since Inception (28th May 2013):18.81% (as of 13th April 2021)AssetsINR 8,182 Crore (as of 31st March 2021)Expense Ratio1.86% (as of 28th February 2021) 2. Parag Parikh Liquid Fund The Parag Parikh Liquid Fund, with a NAV of 1,150.8854 (Regular Growth) (as of 14th April 2021), is the top-performing fund in the 'Debt: Liquid' category. This open-ended fund was launched on 11th May 2018 and has given trailing returns of 3.10% in one year (as of 12th April 2021). The fund considers the CRISIL Liquid TRI as its benchmark.  Key information Minimum InvestmentINR 5,000Minimum Additional InvestmentINR 1,000Minimum SIP InvestmentINR 1,000Minimum WithdrawalINR 1,000Exit LoadNil for redemption after 6 daysReturn Since Inception (11th May 2018):4.92% (as of 14th April 2021)AssetsINR 1,243 Crore (as of 31st March 2021)Expense Ratio0.26% (as of 28th February 2021) 3. Parag Parikh Tax Saver Fund The Parag Parikh Tax Saver Fund, with a NAV of 14.5112 (Regular Growth) (as of 14th April 2021), is the top-performing fund in the 'Equity: ELSS' category. This open-ended fund was launched on 24th July 2019 and has given trailing returns of 59.68% in one year (as of 12th April 2021). The fund considers the NIFTY 500 TRI as its benchmark.  Key Information Minimum InvestmentINR 500Minimum Additional InvestmentINR 500Minimum SIP InvestmentINR 1,000Minimum WithdrawalINR 500Exit LoadNil (Lock-in period - 3 years)Return Since Inception (24th July 2019):24.12% (as of 13th April 2021)AssetsINR 179 Crore (as of 31st March, 2021)Expense RatioINR 179 Crore (as of 31st March 2021) How can you invest in PPFAS Mutual Fund via EduFund? EduFund is a one-stop app for investing in the top-rated schemes of the PPFAS mutual funds. All transactions on EduFund are secured with international-standard authentication and encryption. Hence, hackers or malware can never infringe upon your financial privacy. Investing in PPFAS mutual fund is a straightforward six-step process Step 1: Open Google Play Store or Apple App Store, type 'EduFund,' and download the app. Step 2: Create an account by entering details such as name, email, and mobile phone number. Step 3: Browse the various PPFAS mutual fund schemes, view the Net Asset Value (NAV), and check the returns, expense ratio, nature (open-ended/ close-ended), date of launch, returns since inception, and other details. Choose the scheme that best suits your financial goals. Step 4: Choose an amount to invest. You can start with a lump sum of INR 5,000 or a SIP (Systematic Investment Plan) of INR 500. EduFund provides you with two options - Growth and Dividend. The dividend option will suit you more if you want to get a regular income. In contrast, the growth option is better if you are investing for getting a lump sum amount after a few years.  Step 5: When you invest in a scheme, the units get credited to your EduFund account within four (4) days. You can check the current value, NAV, balance, and other details in the app. You can also invest more, withdraw money, or switch to another fund. In case you need further help, EduFund's expert advisors are available to help you with the selection process.  Step 6: You are all set to witness the growth of your capital.  Three best-performing fund managers at PPFAS Mutual Fund 1. Mr. Rajeev Thakkar Mr. Rajeev Thakkar, Chief Investment Officer and Equity Fund Manager, at PPFAS mutual fund, joined the company in 2001. His professional journey started in 1994. He has extensive experience in asset management and capital markets. His specialties include investment banking, fixed income, Portfolio Management Services, and broking operations. Before joining PPFAS AMC, he worked as Manager of Fixed Income Securities at DIL Vikas Finance Limited for two years. He also worked with Prime Securities as Manager of Investment Banking for five years. Mr. Thakkar did his schooling at St. Xavier's High School and a Bachelor of Commerce from Narsee Monjee College of Commerce and Economics. He is also a Chartered Accountant (The Institute of Chartered Accountants of India) and CFA Charter (CFA Institute, USA). Mr. Thakkar manages the Parag Parikh Flexi Cap Fund. 2. Mr. Raunak Onkar Mr. Raunak Onkar, Research Head of, PPFAS mutual fund, joined the company in January 2012. Before joining PPFAS AMC, he worked with Parag Parikh Financial Advisory Services Limited as an Analyst and Intern (Research Trainee) between May 2008 and January 2012. He has more than ten years of experience in Equity Research, Portfolio Management, Research, Capital Markets, Valuation, Business Analysis, Investments, Finance, Hedging, Asset Management, and Mutual Funds. His educational qualifications include a Bachelor of Science in Information Technology and a Master in Management Studies Finance (University of Mumbai).  3. Mr. Raj Mehta Mr. Raj Mehta, Fund Manager, of PPFAS mutual fund, joined the company in August 2012 as a Research Trainee. Before joining PPFAS AMC, he worked with K.P. Mehta & Co. as an Article Assistant. His specialties include Equity Research Analysis, Financial Analysis, Financial Modelling, Auditing, Accounting, and taxation. Mr. Mehta did B.Com and M.Com from Narsee Monjee College of Commerce and Economics. He is also a CFA Charterholder and Chartered Accountant. He participates in various TV channels and writes for several financial publications.  Why should you invest in PPFAS mutual fund? PPFAS is a unique mutual fund house that offers only three schemes. They identify value-oriented stocks with solid fundamentals and invest. The best thing about PPFAS mutual fund's flagship scheme Flexi Cap Fund is that it invests in high-quality Indian and international companies that have delivered steady returns irrespective of market conditions. The fund managers at PPFAS AMC have a consistent track record of generating gravity-defying returns. Another exciting thing about PPFAS mutual fund is that it stops accepting lump sum public deposits when they find that the valuations are too stretched. Hence, you should consider investing in a PPFAS mutual fund scheme if you want to make decent profits over the long term. EduFund brings PPFAS mutual fund schemes to your fingertips. You can start investing with as little as INR 5,000 and benefit from the market upswings.  EduFund offers you the following distinct features: Customized Financial Plans - EduFund tracks all mutual fund schemes offered by mutual fund houses in India. It uses over 1 lakh data points and 400 financial situations to display the best mutual fund schemes for you. For every financial goal, you can get a personalized investment plan exclusively for you. Talk to a Financial Counsellor - EduFund's financial counselor employs time-tested methods to help you find the best scheme that suits your financial profile and goals. You can get free counseling about all your fund-related queries. Explore International Instruments - Besides Indian mutual funds, EduFund also provides you access to US Dollar ETFs and International mutual funds. You do not need any special account to invest in international financial instruments. EduFund's app is a one-stop destination for everything related to investments. Get Free Calculators - Your goals are unique. EduFund simplifies the more challenging task of calculation. You may use various free tools like the SIP calculator, College Savings Calculator, etc., to easily figure out the amount you will need to fulfill your goals and select the right mutual fund. EduFund uses bank-like security protocols to ensure 100% safe transactions. FAQs How can I invest in PPFAS mutual fund? Step 1: Open Google Play Store or Apple App Store, type 'EduFund,' and download the app. Step 2: Create an account by entering details such as name, email, and mobile phone number. Step 3: Browse the various PPFAS mutual fund schemes, view the Net Asset Value (NAV), and check the returns, expense ratio, nature (open-ended/ close-ended), date of launch, returns since inception, and other details. Choose the scheme that best suits your financial goals. Step 4: Choose an amount to invest. You can start with a lump sum of INR 5,000 or a SIP (Systematic Investment Plan) of INR 500. EduFund provides you with two options - Growth and Dividend. Why should you invest in PPFAS mutual fund? The fund managers at PPFAS AMC have a consistent track record of generating gravity-defying returns. Another exciting thing about PPFAS mutual fund is that it stops accepting lump sum public deposits when they find that the valuations are too stretched. What are some popular funds by PPFAS mutual fund? Parag Parikh Liquid FundParag Parikh Flexi Cap FundParag Parikh Tax Saver Fund Consult an expert advisor to get the right plan TALK TO AN EXPERT

In the early article, we discussed financial planning. In this article, we will try to under the taxation in the mutual fund system that applies to mutual funds investments.  Factors determining the taxation of Mutual funds  To know the taxation structure, first, you need to identify which type of mutual funds you have invested in and whether the fund you hold is an equity mutual fund or a debt-oriented mutual fund.   Along with this, the type of income that you are generating from the fund, whether a capital gain or dividend income - both these types of income are taxable in different ways.  Finally, your holding period is crucial in knowing the taxes applicable to your mutual funds' portfolio.  Earnings in mutual funds There are usually two ways in which money is earned in mutual funds: one through the selling of the mutual fund (capital gain) and the other through dividend income.   For example, if you are holding units of a mutual that you purchased at a NAV (Net Asset Value) of Rs. 100, and you sell it when its NAV of Rs. 150, you make a capital gain of Rs. 50; it is worth noting that capital gains tax accrues on the mutual funds' units only after redemption.   The tax will be payable when you file your income tax returns for the coming fiscal year.  The second way to earn from mutual funds is dividend income – the fund declares dividends for the holders based on the surplus that it has for distribution dividends are taxable as soon as the dividend amount hits the bank accounts of the investors.   Source: Pexels Tax on capital gains  Here, there are again two parts to the story – whether the realized capital gains have come from equity mutual funds or debt mutual funds.   An equity mutual fund has an equity exposure of greater than 65%. For equity mutual funds, if the gains have been realized within 12 months of holding, then the applicable tax rate is flat at 15% on the gains (irrespective of your income tax bracket).   When the holding period exceeds 12 months, the capital gains of Rs. 1,00,000 are exempt from taxes. Any amount upwards of Rs. 1,00,000 is taxable at 10%, along with the provision of indexation benefits.  For debt mutual funds (funds with greater than 65% exposure to debt instruments) - the holding period is considered short-term if it is less than 36 months; anything more than that is long-term.  For the short term, the tax rate is in accordance with your income tax slab. On the other hand, for debt funds held for more than 36 months, the gains are taxable at a flat rate of 20% post-indexation (plus, some cess and surcharge are added).  A possible third case is hybrid funds (funds with a mix of debt and equity) it is simple, their tax treatment is supposed to be on the basis of the fund's exposure to debt and equity.  If the hybrid fund is equity-focused: LTCG is charged at 10% on capital gains exceeding Rs. 1 lakh (without indexation), and STCG is charged at 10%. If the hybrid fund is debt focused: LTCG is charged at 20% with indexation benefits, and STCG is charged per income tax slab.  Tax on dividends  Now, when it comes to taxation of dividends paid out on mutual funds, it is done by adding the dividend to the investor's taxable income, and then the individual income tax slab rate is applicable; this is in accordance with the amendments made by the union budget of 2020.  Earlier, dividends were tax-free in the hands of investors since the companies paid the Dividend distribution tax (DDT) before sharing the profits with the investors.   Dividends (received from domestic companies) of up to Rs. 10,00,000 per year were tax-free in the hands of the investors during this period. Dividends above Rs. 10 lakhs were subject to a dividend distribution tax of 10%.  STT Aside from the dividends and capital gains taxes, there is also a securities transaction tax (STT).   When you acquire or sell mutual fund units of an equity or a hybrid mutual fund, the government charges an STT of 0.001%. It is important to note that selling units of debt funds are exempt from the STT.  Important points to note  There are tax-saving equity funds as well. Investments made under the ELSS (Equity-linked savings schemes) qualify for tax exemption under section 80C of the Income-tax Act (exemption up to Rs. 1,50,000).   Please note that ELSS schemes come with a lock-in period of 3 years – that is, investors cannot redeem the units before three years. LTCG (long-term capital gains tax) is not applicable for gains up to Rs. 1,00,000.   For LTCG more than Rs 1 lakhs, the applicable tax rate is 10% without indexation.  Taxation in the case of SIP (Systematic Investment plans)  Let us understand this with the help of an example  An investor invests Rs. 10,000 every month from April 2021, and another investor invests Rs. 60,000 lump sum at the same time.   When both of them redeem their funds simultaneously, Rs. 10,000 will qualify for tax exemption for the SIP investor because the investment made in 2021 would exceed one year as of May 2021. In contrast, the entire capital gain isn’t taxable for the lump sum. Investing in the long term can be more tax-efficient than holding the units for a short duration. FAQs How much amount is taxed in mutual funds? If the investor claims redemption in less than 1 year of investment, it would fall under the Short-term Capital Gains (STCG) category. The tax rate would be 15% on the gains earned by the investor. If the investor holds the investment for more than a year, (say April 2020 – May 2021), the gains would be taxed at long-term capital gains (LTCG) tax of 10% Is SIP in mutual funds taxable? Yes, SIP in the mutual fund is taxable. The tax amount differs based on the duration and returns generated Which mutual funds are tax-free? Profits from the sale of ELSS fund units are considered long-term capital gains and have tax exemption. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

In the previous article, we talked about what is dollar-cost averaging. In this article, we will try to understand what is NAV and some important points related to NAV   What is NAV? The full form of NAV is Net Asset Value. This term refers to the price of a unit of a mutual fund. To give context, mutual funds are schemes that collect money from investors and invest the money into varied asset classes, from debt to equity.   Mutual funds are broken down into units that are when you purchase a mutual fund, you receive units of it. NAV represents the assets held by the mutual fund.   According to the SEC (Securities and exchange commission), mutual funds and unit investment trusts (UITs) should calculate the respective NAV once a day.  How is NAV calculated?  Net Asset Value = Value of assets – Value of liabilities, where 'value of assets' represents the value of securities in the mutual funds' portfolio, and 'value of liabilities is the value of all the expenses and liabilities incurred by the fund.  On a per-unit basis, the formula is   NAV = ( Value of assets – Value of liabilities ) / Total number of outstanding units.  Is NAV important?   The answer is No! NAV is fairly irrelevant in cases of mutual funds – new mutual funds have a lower NAV than old ones.   Before buying mutual funds, you should consider the size of the AUM (Assets under management), the past performance of the fund, the managers' experience, and the alpha, and the beta. Source: Pexels Invest in funds with lower NAV: A common myth about NAV  Let's take an example. Suppose you invest INR 10,000 in two schemes (A & B). The Nav of scheme A is INR 50. while the Nav of scheme B is INR 100. For your investment in scheme A, you will get 200 units(10000/50). And, for your investment in scheme B, you'll get 100 units. Now, after 1 year, both the schemes generate a return of 20%. This implies that the NAV of schemes has also appreciated by 20%. So now the NAV of scheme A will be INR 60 (20% * 50 + 50). Similarly, the NAA of scheme B will spur to INR 120(20% * 100 + 100). The final investment value in scheme A is INR 12000(200 units * 60) and in scheme B also it stands at INR 12000(100 *120). Thus, a fund with a lower NAV doesn’t signify that it’s a good investment or an underpriced one. Same for investors who think that funds with higher NAV are good investments.    What matters is the performance of the scheme and not the NAV.  When is NAV updated?   Unlike stock prices, NAV is not updated on a real-time basis – the reason for this is that a mutual fund has many assets in its kitty, and tracking all of them is a complicated task. Hence, SEBI mandates the mutual funds to update the NAV every day by 9 pm (different mutual funds update their NAV at different times before 9 pm).  Which NAV value is taken while buying and selling a mutual fund?   If a mutual fund unit’s purchase happens before 3 pm, the investor will receive the units at the NAV of the same day at 9 pm, whereas purchases made after 3 pm are calculable at the next day's NAV.   The ruling remains intact even when the mutual fund units’ selling happens. Transactions before 3 pm are settled on the same-day NAV, and transactions post 3 pm are carried out on the next day's NAV.   In case of purchase/sale done on holiday, the order is carried out at the NAV of the next working day.   How do stock markets affect the NAV of a mutual fund?   Different mutual funds hold different types of assets; they have different levels of exposure to equity and debt markets. The relevance of the exposure to the stock markets will determine how much the SENSEX and NIFTY will affect the NAV of a mutual fund.  If a mutual fund has invested in companies that are part of SENSEX, NIFTY, or both, it is more likely to imitate their movements. Also, multi-cap mutual funds invest in companies of various sizes, so they may or may not be affected by SENSEX or NIFTY depending upon the number of large-cap investments they have.   NAV vs Stock price are they the same?  The answer is NO! As we saw above, NAV is not affected by demand, but stock price movements do depend on demand and supply.   Instead of calling NAV and stock price the same, we can say they're similar - the reason being that NAV reflects the book value of the mutual fund, and stock prices, do the same for companies; the book value for companies would include assets of the company and the profits it made.   However, another vital metric behind stock price is demand – if many people want the stock, its price may shoot up (the stock becomes over-valued), and the reverse may happen (the stock becomes under-valued).  How do AUM and NAV differ?  NAV and AUM are two different things. Unlike NAV, AUM is of prime importance, and it should be factored into consideration before purchasing a mutual fund.   AUM (Assets under management) is the total value of assets that the mutual fund manages; it includes both the assets held and the cash possessed by the fund.   How does NAV fluctuate?  NAV can fluctuate with the change in the value of assets held by the mutual fund. Since mutual funds have varied investment instruments, the value of the holding will change depending upon the change in prices of the instruments.  So, if the value of the assets held by a mutual fund is lower than the previous day, the NAV will also be lower and vice versa.  Some key takeaways   The Net Asset Value is a fund's assets minus liabilities and expenses.   It represents (on a per-share basis) the price the investors can transact in the mutual fund units.   The NAV moves in the same direction as the value of securities the mutual fund holds.   The NAV itself offers no justification for a fund being "good" or "bad" to invest in.   A fund's mutual fund units may trade at levels different from the NAV.  FAQs What is NAV? The full form of NAV is Net Asset Value. This term refers to the price of a unit of a mutual fund. To give context, mutual funds are schemes that collect money from investors and invest the money into varied asset classes, from debt to equity.   How is NAV calculated? Net Asset Value = Value of assets – Value of liabilities, where 'value of assets' represents the value of securities in the mutual funds' portfolio, and 'value of liabilities is the value of all the expenses and liabilities incurred by the fund.  On a per-unit basis, the formula is   NAV = ( Value of assets – Value of liabilities ) / Total number of outstanding units. Is NAV important?   The answer is No! NAV is fairly irrelevant in cases of mutual funds – new mutual funds have a lower NAV than old ones.   Before buying mutual funds, you should consider the size of the AUM (Assets under management), the past performance of the fund, the managers' experience, and the alpha, and the beta. Does NAV change daily? Unlike stock prices, NAV is not updated on a real-time basis – the reason for this is that a mutual fund has many assets in its kitty, and tracking all of them is a complicated task.   Hence, SEBI mandates the mutual funds to update the NAV every day by 9 pm (different mutual funds update their NAV at different times before 9 pm).    What is NAV, and how does it work? The full form of NAV is Net Asset Value. This term refers to the price of a unit of a mutual fund. To give context, mutual funds are schemes that collect money from investors and invest the money into varied asset classes, from debt to equity.    According to the SEC (Securities and exchange commission), mutual funds and unit investment trusts (UITs) should calculate the respective NAV once a day. Net Asset Value = Value of assets – Value of liabilities, where ‘value of assets’ represents the value of securities in the mutual funds’ portfolio, and ‘value of liabilities is the value of all the expenses and liabilities incurred by the fund.    On a per-unit basis, the formula is    NAV = ( Value of assets – Value of liabilities ) / Total number of outstanding units.   Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

In this article, we will discuss direct mutual funds vs growth mutual funds. We'll try to understand what they offer in terms of risk and return and their composition.  Growth mutual funds As the name suggests, growth mutual funds invest in stocks of companies that have the potential to grow rapidly, thereby outpacing the market.   The main aim for investment in a growth mutual fund is capital appreciation, for which investors do not receive any dividends because the earnings are used as reinvestments in the company.   With high returns, growth mutual funds also bring about asymmetric risks. So, growth mutual funds are more suited for investors with a high-risk appetite.   Investors with a conservative approach and those with less knowledge of the market should keep away from these investments.   Growth mutual funds are highly volatile. The value of the investment might fluctuate widely, especially during market corrections.  In terms of taxation, these funds are subject to a long-term capital gains tax of 10% on profits over 1 lakh rupees (for investments held for more than one year).   Investment in growth funds allows you the diversification of companies that can multiply your money in a shorter amount of time.  Direct mutual funds On the other hand, direct mutual funds were introduced by SEBI (Securities and Exchange Board of India) in January 2013.  The direct mutual fund plans aim to eliminate mediator involvement by channelizing your money into the fund. The absence of a mediator will add to your responsibilities as a buyer to do good research about your buying fund.   Because the transactions are done directly, the commission is absent, and as a result, the expense ratio for direct mutual funds is lower than the regular plans.   The lower expense ratio acts as a bonus for the investor, saving them the cost. However, people usually avoid direct mutual funds owing to a lack of research & awareness and end up paying a higher expense ratio (usually higher by 1 percent) and hurting their returns in the long run.  Source: Personalfn In the figure above, we assume that a fund generates 12% CAGR, then Rs. 1,00,000 lakh invested in a direct fund would amount to Rs. 3,47,855 after ten years and Rs. 3,23,073 in a regular fund we see a big difference of +7.7%. In the long term, the difference is non-ignorable.  Now, to say which one is better than the other is difficult. It depends on your willingness to spend time on what you do and your risk appetite. Use your due diligence to make your investment. FAQs What are growth mutual funds? Growth mutual funds invest in stocks of companies that have the potential to grow rapidly, thereby outpacing the market.   The main aim for investment in a growth mutual fund is capital appreciation, for which investors do not receive any dividends because the earnings are used as reinvestments in the company. What are direct mutual funds? Direct mutual funds were introduced by SEBI (Securities and Exchange Board of India) in January 2013.  The direct mutual fund plans aim to eliminate mediator involvement by channelizing your money into the fund. The absence of a mediator will add to your responsibilities as a buyer to do good research about your buying fund. Is the expense ratio for direct mutual funds less than regular? Yes, because the transactions are done directly and the commission is absent, the expense ratio for direct mutual funds is lower than the regular plans.   Consult an expert advisor to get the right plan for you  TALK TO AN EXPERT