Mutual Funds

You must have heard the phrase “Mutual Fund Sahi Hai”. Mutual Funds investment is a time-tested strategy to grow wealth by participating in India’s growth story. While Equity funds are aimed at growing wealth, mutual fund also provides an option for preservation and income generation by investing in Debt Funds.

SNR Investment Advisers is a registered Mutual Fund Distributer with Association of Mutual Funds of India (“AMFI”) and empanelled with various Assets Management Companies offering Mutual Funds schemes under different categories e.g., Equity, Debt, Balanced etc. We provide complete handholding helping our clients to invest in Mutual Funds of their choices.

“Investment in securities market are subject to market risks. Read all the

related documents carefully before investing"

What Are Mutual Funds?

A mutual fund is an investing vehicle that collects money from a number of investors and invests the same in equities, bonds, government securities, money market instruments.

The money collected in mutual fund scheme is invested by professional fund managers in stocks and bonds etc. in line with a scheme’s investment objective against a smaller fee. The fees and expenses charged by the mutual funds to manage a scheme are regulated and are subject to the limits specified by SEBI.

Mutual funds are ideal for investors who:

a. lack the knowledge or skill / experience of investing in stock markets directly.

b. want to grow their wealth, but do not have the inclination or time to research the stock market.

c. wish to invest starting with small amounts.

Mutual Funds can be categorised primarily in following categories depending upon risk and return criteria:

· Equity

· Debt

· Hybrid

· Others – Index Fund & ETF, Fund of funds

WHY INVEST IN MUTUAL FUNDS?

Mutual funds provide certain distinct advantages over investing in individual securities. Mutual funds offer multiple choices for investment across equity shares, corporate bonds, government securities, and money market instruments, providing an excellent avenue for retail investors to participate and benefit from the uptrends in capital markets.
The main advantages are that you can invest in a variety of securities for a relatively low cost and leave the investment decisions to a professional manager.

RISKS OF INVESTING IN MUTUAL FUNDS.

Mutual Fund Investments are subject to many risks as well and it is advised to be apprised of all those risk factors before one decides to start Mutual Fund Investment journey. A summary of such risks is given below:

· Mutual Fund Investment carry risk of investment value reduction based on various factors such Market performance, Government policies, global factors, Interest rates, emotional reasons etc.

· There is no fix guarantee of return and past performance may not be repeated.

However, in general investment in good mutual funds are bound to give good returns over long period of times.

Types of Mutual Funds

Equity

Hybrid

Equity

An Equity mutual fund invest primarily in equity and related instruments with focus on long term capital appreciation. However, equity mutual fund tends to volatile in short term and suitable for investors with higher risks appetite and long investment horizon. Equity Mutual Fund can be categorisation in various categories as per SEBI Guidelines based on investment in various class of stocks e.g. i. Large Cap Fund – Invest at least 80% Investment in Large Cap Stocks:ii. Mid Cap Fund – Invest at least 65% Investment in Mid Cap Stocksiii. Large & Mid Cap Fund iv. Small Cap Fund v. Multi Cap Fund vi. Flexi Cap Fund vii. ELSS – Tax Saving Fund (with 3 years lock in) In addition, equity funds can further be categorised as Dividend Yield Fund, Value Fund, Contra Fund, Focussed Fund, Sector/Thematic Fund etc.An important point to mention here is that sectoral funds are focused on a particular sector e.g., Banking, Pharma, IT, etc. so investments are less diversified and are riskier than other mutual funds schemes. Investors with a deep understanding of a particular sector only are advised to invest in Sector funds.

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Debt

Hybrid

Equity

Debt fund are scheme with focus on capital preservation and income generations. Debt Fund primarily invest in bonds or other debt securities issued by governments, public financial institution, corporates such as Treasury bills, Government securities, Debentures, commercial papers etc. As per SEBI Guidelines, Debt fund can be categorised

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Hybrid

Hybrid funds seek to find a ‘balance’ between growth and income by investing in both equity and debt. The risk and return of the fund will depend upon the equity exposure taken by the portfolio - Higher the allocation to equity, greater is the risk. Hybrid funds can be categorised based on exposure inclination towards Debt or Equity:· Equity oriented hybrid funds (Aggressive Hybrid Funds) are ideal for investors looking for growth in their investment with some stability.· Debt-oriented hybrid funds (Conservative Hybrid Fund) are suitable for conservative investors looking for a boost in returns with a small exposure to equity.

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Other

Hybrid

There are various other types of Mutual Funds which can be invested upon based investors’ understanding and requirement. Some of them are listed below:·

Multi Assets Fund· Arbitrage Funds· Index Funds· Exchange Traded Funds (ETFs)· Fund of Funds (FoF)· Gold Exchange Traded Funds· International Funds