Wednesday, August 21, 2013

Mutual Funds are portfolio of products

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Despite mutual fund industry being almost five decades old in India, most investors still perceive mutual funds as financial instrument. People buy mutual funds as a tool to diversify their portfolios that could have stocks, fixed deposits, insurance, bonds, PPF and many other financial instruments.


The concept of mutual fund has somehow not been fully understood by the investors. Rather than being a financial instrument, mutual fund is a vehicle to access various asset classes. So a fixed income mutual fund invests in a range of corporate bonds, debentures and government securities thus giving an investor a diversified exposure.


Mutual funds, therefore, should be treated like a portfolio of financial instruments and not just another financial product. By investing in a mutual fund, an investor gets exposure to the asset class that he wants to invest in. For instance, if somebody wants to take exposure to the midcap stocks, but does not know which stock to buy, the best vehicle is to invest in a midcap fund of a reputed fund house. By investing in such a fund, the investor automatically gets exposure to some the best midcap stocks. Moreover, the team of fund managers and research analysts of the fund house can ensure that the stocks are of top quality at all times. So in one single purchase you end up creating a well diversified and well managed portfolio.


A common misconception among investors is to regard mutual funds as risky as they invest in equity stocks. The truth is that mutual funds provide a wide range of options to the investors to invest in multiple asset classes. While equity funds are the most popular because they have the potential to provide high returns, there are many other options as well. There are a range of offerings in the fixed income space right from liquid funds to meet very short term needs, short term funds and also long term debt funds. In terms of risk profile and the return potential also, investors have a wide choice. Over the last few years, Gold funds have made a beginning in India and have become quite popular. They are a good vehicle for any investor who wants to buy small quantities of gold, and even invest periodically. Rather than buying jewellery that most investors generally do, gold funds buy bullion and therefore there is no wastage or issue of purity.


Sebi has also been discussing the possibility of launching even real estate mutual funds for the last few years. In developed markets, such funds are very popular as they can give a small investor exposure to a range of properties and thus safeguard his/her capital as well as provide superior returns.


Mutual funds are amongst the most efficient vehicles to access multiple asset classes. They provide a range of benefits to people – transparent structure, diversified portfolio, much needed liquidity, professional fund management, high quality exposures, low cost and so on. In fact this is the primary reason why mutual funds have become so popular all over the world.


The need for you therefore is to look at mutual funds as portfolio advisors and not as financial instruments.


By paying a small fee to the mutual fund, investors can hire the best investment brains or fund managers of the country to work for them. Not only that, they have full liberty to fire the investment manager at any time and choose another one, by just liquidating their investment and moving to another fund house.

Happy Investing!!

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax Plan Invest Online
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  4. Reliance Tax Saver (ELSS) Fund Invest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund Invest Online
  7. SBI Magnum Tax Gain Scheme 1993 Invest Online
  8. Sundaram Tax Saver Invest Online
  9. Edelweiss ELSS Invest Online

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Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

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