indexation benefit on mutual funds

All that you should be aware of Indexation benefit

As per the tax structure of our country, an investor gets the benefit of indexation on the long term gains from debt mutual funds 

Given below are the details of indexation on mutual funds in India.

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KYC- Know your customer

What is KYC? Why is it important?

Financial markets today face a larger threat of suspicious activities that have a significant negative impact. As financial crimes continue to deeply impact financial markets across the globe, there is a growing need to implement stricter procedures while collecting information on customers. 

As a move towards protecting institutions against financial threats, the Reserve Bank of India made it mandatory for all financial institutions to ensure complete verification of details of all customers transacting with them. Thus, to complete the verification, all individuals are required to follow the KYC procedure of the financial institution that they deal with.

Here, we will demystify KYC for new investors and explain why it is important for all those engaging in any form of financial activity.

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mutual funds terms

Mutual Fund terms explained

We all have heard a lot about mutual funds over the years. They have also become a go to investment product and are part of almost all the portfolios of individual investors. Despite this, there are many investors that may not know the meaning or relevance of all the terms associated with a mutual fund.

Given below are a few terms that are associated with investing in mutual funds that can help in increasing investors’ awareness.

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Medium risk funds

Mutual fund investments have varying degrees of risk depending on the portfolio composition and fund objective. While investing in mutual funds, investors are often not aware of the risk they are taking. To protect the interest of investors, the Association of Mutual Funds in India (AMFI) has categorised risk exposure of mutual funds as high, moderately high, moderate, moderately low, and low.

Every individual has a different risk appetite and therefore may choose low-risk, medium-risk, or high-risk mutual funds, fund houses must compulsorily specify the level of risk exposure an investor has while investing in a particular fund.

Here, we will discuss medium-risk mutual funds in detail and highlight some of the top-performing medium-risk fund recommendations in India.

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Systematic investment plans

All you need to know about Systematic Investment Plans(SIP)

One of the many attractive investments available today are mutual funds. They are considered to be one of the most favoured investment products by almost all age groups and have gained a huge investor base in our country over the years. The inherent advantages of mutual funds of providing higher returns at relatively lower costs and risks makes it a very lucrative investment option. One of the biggest advantages of mutual funds is the facility to invest in small portions rather than making a lump sum investment. These smaller portions are known as SIP. 

Read more to get all the details on SIPs in mutual funds.

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Asset Management company

What is an Asset Management Company (AMC)?

There are many terms that are commonly used in relation to mutual funds like NAV, AUM, etc which might make you confused. In this article, we look at breaking down one such term, is AMC.

An AMC is an Asset Management Company that invests the funds collected from the investors in various asset classes like equities, debt, cash, gold, etc. A Single AMC can introduce and manage multiple funds with varied investment objectives, risk profile, returns expectations, etc. 

There can be multiple types of AMCs managing many funds like mutual funds, index funds, ETFs, hedge funds, and many more.

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Assets under management(AUM)

What are Assets under Management (AUM) in Mutual funds? Things to know before investing

Assets Under Management, in simple terms, is the total market value of all the assets that are managed by a mutual fund at a given point. This includes the returns on investment generated by a mutual fund and also the capital available to make fresh investments.

Thus, AUM is a two-fold indicator, since it talks about performance and the size of a mutual fund. A higher or increasing AUM indicates positive mutual fund performance, or it could mean that new customers have bought additional funds or both. A decreasing AUM, on the other hand, is an indication of poor performance or a high level of unit redemption by customers. The latter may or may not be associated with the fund’s performance.  

Investors can either use AUM to compare a mutual fund performance over different time periods, or it can be compared against different mutual fund houses to understand comparative performance. 

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CAGR

Compound Annual Growth Rate (CAGR)

When you invest in asset you would like to know the growth rate of that particular investment. There are various ways of doing the calculation. Let’s learn more about Compounded Annual Growth Rate and how this is useful in measuring the growth of mutual fund investments.

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Net Asset Value (NAV) of mutual funds

What is Net Asset Value (NAV)? Is it important to monitor NAV?

Investment in mutual funds has become hugely popular over the last decade. There are many SIPs opened in each month to the turn of crores of rupees due to increased investor awareness and market conditions. While investing in mutual funds one of the crucial factors to be looked for is the NAV of the fund. 

Given below are a few details regarding the NAV of the mutual funds and it’s importance for the investors.

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How to select a mutual fund for investment?

How to select a mutual fund?

Mutual funds are seeing an influx of investors because of their attractive returns and diversification benefits. However, every investor must note that no single mutual fund scheme or schemes is ideal for everyone. A suitable mutual fund is the one which matches an individual’s investment objective and is in line with his/her risk appetite. These, along with many other factors, must be considered before investing in a mutual fund.

A common question that most new investors ask is ‘how to select a mutual fund’. Here, our experts have put together some of the basic techniques, strategies, and factors to consider while selecting a mutual fund.

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