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Mutual Funds

Mutual Funds are a type of funds in which the investors park their surplus cash through SIP or Lump sum mode of investment with an aim to achieve high returns on the invested amount. Through mutual fund investment, an investor enjoys the power of compounding in the long term. Saffollya offers the simplest way of investments in mutual funds with the best MF recommendations by the expert. Explore Mutual funds types, best mf schemes, pros, cons of mutual fund investments.

  • Higher returns than conventional investing
  • Well-regulated (by SEBI)
  • Professional Management
FAQs

Frequently Asked Questions

Are mutual funds investments safe?

Any particular mutual fund can be safe or unsafe for different investors. Mutual funds are subject to the market risk but can be the safest mode of investment if the investor makes informed decisions. Equity schemes possess higher risk but can provide high returns in the long term while debt schemes have a lesser risk and pay out lesser returns than the equity schemes.

How to select a better mutual fund?

Mutual funds provide a number of schemes suiting the goals and objective of investors from every category. To choose the right fund for you, you can either research for yourself or take the assistance our well trained Wealth Coaches.

What is the role of a fund manager?

The fund manager is the person in charge of the investments in a mutual fund scheme. He/She is responsible for investing the corpus of a fund into various instruments to fulfill the goal of the investor. A fund manager handles the portfolio of the fund.

What is the best time to invest in mutual funds?

Mutual fund offers various kinds of products for different asset class and risk category form very low to high. So, any time is best time to investment in mutual funds. It depends on the investment goals, risk appetite of the investors and the time horizon. In general, if the investment in mutual fund is done through SIP, timing the market is not important as the amount is invested at regular intervals at different NAV. For lump sum or one-time investment, timing is important because if NAV is low, more number of units can be bought.

How long does it take for a mutual fund investment to execute?

If purchasing or selling is done on a working day before 3 PM through online banking or offline, it will be executed on the same day. For those investing through debit/credit card, order done before 1 PM would execute the same day. Any order done after that will be executed on the next working day on the basis of the NAV of that day.

Who regulates mutual funds?

In India, mutual funds are regulated by the Securities and Exchange Board of India (SEBI). It firstly formulated regulations on mutual fund companies in 1996.

What is Net Asset Value (NAV)?

It is the price per unit of a fund at which you will buy or sell a mutual fund unit. The NAV of a mutual fund is updated in the evening before 9 PM of every working day.

Can you buy and sell mutual fund on the same day?

Mutual funds trade only once per day as the NAV of mutual funds changes only once in a day. If you buy and sell units of one particular mutual fund on the same day, then the sell order will be executed on the next working day according to the NAV of the next working day.

Mutual Funds Guide For Beginners

Mutual fund is known to be one of the best investment avenues in India. Learn about what is mutual fund, how it works and benefits of online mutual fund investment.

Mutual Funds: Types

Mutual funds are divided into various categories based on the asset class and method of investment. SEBI has stated the parameters for multiple categories of mutual funds which are discussed below. Read more…

Benefits Of Mutual Funds Investments

MF have multiple benefits which favor the statement of AMFI ‘Mutual Fund Sahi Hai.’ Due to several advantages, its popularity is rapidly increasing along with the number of investors. Read more…

Mutual Funds: Objectives

The Mutual Funds are chosen to fulfill various financial goals in a convenient and efficient manner. The objectives for which mutual funds investments are most commonly chosen are described below. Read more…

Direct Vs Regular Funds

MF’s are available to everyone in two different plans, namely direct plans and regular plans. Read more…

Methods of Investing in Mutual Funds

SIP and lump sum are the two methods of mutual funds investments. There are various advantages as well as disadvantages of MF one over the other. Read more…

How to Select MF

An investor should ask professional advice before investing in mutual fund as there are more than thousands schemes with different asset class, features and which caters different category of investors with different risk appetite and goals. Read more…

Check your Risk Appetite
Mutual Funds: Types

Based on asset classes, mutual funds are mainly divided into five categories

Equity

These are the mutual funds which invest the corpus predominantly in the equity and equity derivative instruments. The equity instruments are known to be risk prone as the value of the stocks changes depending upon the multiple factors in the economy. However, in the favourable market conditions, equity can provide exponential returns. They are further divided into the following sub-categories:

Large-cap Funds:

These are the equity funds which invest in the stocks of large-cap companies. These are the companies which are ranked among the top 100 in terms of the market capitalisation. As per the norms of SEBI, a large-cap fund has to invest at least 65% of the corpus in large-cap companies.

Mid-cap Funds:

These mf schemes invest in the equity instruments of firms which are ranked between 100th to 250th according to the market capitalisation. A minimum of 65% of the corpus should be invested in these mid-cap companies.

Small-cap Funds:

It is the most aggressive category of the mutual fund as a minimum of 65% of the corpus is invested in the emerging companies ranked after 250 in the market capitalisation.

Multi-cap Funds:

This category can take the advantage of rise and fall in every category of equity MF. At least 65% of the corpus is invested in the equity market.

Large and Mid-cap Funds:

It is a newly introduced category in which a minimum of 35% is invested each in large and mid-cap companies.

Dividend Yield Funds

These rely on the stocks that yield periodic dividends. It is also a recently introduced category.

ELSS Funds

It is the tax saving mutual funds category which invest a minimum of 80% in the equity and its derivatives. They have a lock-in period of 3 years.

Sectoral Funds

These schemes invest a minimum of 80% of the corpus in equity instruments of companies which are associated with a particular sector.

Thematic Funds

This category of mutual funds online invest more than 80% of the corpus in equity instruments of companies which have a flavor of a particular theme.

Focused Funds

These funds are focused on a specific number of stocks. A maximum of 30 stocks can be chosen for more than 65% of the corpus.

Value/Contra Funds

Value and contra funds follow specific investment strategies of value and contrarian investment, respectively with a minimum of 65% of the corpus.

Risk-return Matrix of Equity funds in India

Debt

Debt funds belong to the conservative category of mutual funds which invest the corpus in the securities thus providing fixed income. The instruments can be corporate & government bonds and money-market instruments which get matured in different tenures. They provide a steady and consistent growth of the amount invested but the returns are limited. It has 16 subcategories based on the maturity period and portfolio selection, namely:

Overnight Funds

As the name suggests, the securities of this category of mutual funds mature in 1 day.

Liquid Funds

These schemes invest in debt securities and money market instruments which get mature within 91 days.

Ultra Short Duration Funds

Maturity period of instruments of this category is 3 to 6 months.

Low Duration Funds

Maturity period of instruments of this category is 6 to 12 months.

Money Market Funds

These MFs invest only in the money-market instruments and have a maturity period of up to 1 year.

Short Duration Funds

Mutual Fund Schemes of this category have portfolio of debt instruments with an average maturity period of 1-3 years.

Medium Duration Funds

Mutual Fund Schemes of this category have portfolio of debt instruments with an average maturity duration of 3-4 years.

Medium to Long Duration Funds

These funds have portfolio with a maturity period of 4-7 years.

Long Duration Funds

This category has portfolio with maturity duration of more than 7 years.

Dynamic Bond Funds

This category of debt mutual funds has no boundations on portfolio selection and the securities can be include of any maturity period.

Corporate Bond Funds

These funds are bound to invest at least 80% of the corpus in corporate bonds.

Credit Risk Funds

In this category, a minimum of 65% of the corpus is invested in corporate bonds of below the highest-rated instruments.

Banking and PSU Funds

A minimum of 80% of the corpus is allocated in debt instruments of banks and PSUs.

Gilt Funds

More than 80% of the total corpus is invested in G-secs.

Gilt with 10 year Duration

More than 80% of the total corpus is invested in G-secs with maturity duration of 10 years.

Floater Funds

These MF invest more than 65% of the corpus in floating rate instruments.

Hybrid

This category allows the investor to take the benefits of multiple asset classes through a single scheme. They generally have a mixed portfolio of equity and debt instruments. Based on the inclination towards different asset classes, they are divided into different subcategories, which are:

Conservative Hybrid Funds

This conservative category has 75-90% of the corpus allocation in debt instruments while 10-25% in equity instruments

Balanced Hybrid Funds

In the new balanced hybrid category, equal allocation of 40-60% each can be done in equity and debt instruments and no arbitrage is allowed.

Aggressive Hybrid Funds

It has 60-80% of the corpus in equity instruments while 20-35% in debt instruments.

Dynamic Asset Allocation Funds

In this category, the allocation of the corpus between equity and debt is shifted dynamically according to the market conditions.

Multi Asset Allocation Funds

The multi-asset funds have to invest a minimum of 10% of the corpus each in three different asset classes.

Arbitrage Funds

Schemes of this category seek arbitrage opportunities in equity derivatives with more than 65% of the corpus.

Equity Savings Funds

This category allows a mixture of equity, debt, and arbitrage with a minimum of 65% in equity and its derivatives and 10% in debt instruments.

Asset allocation of balanced fund in India

Solution Oriented

This category of mutual funds seeks to fulfill a particular investment objective through the most beneficial strategy of investment. As per the norms of SEBI, there are two subcategories of solution-oriented schemes.

Retirement Funds

This category follows the most suitable investment strategy to assist the retirees financially. They have a lock-in period of 5 years or till the retirement age is reached by the investor; whichever is earlier.

Children’s Funds

These schemes seek to providing financial assistance in the future of children. They have a lock-in period of 5 years or till the child reaches the age of majority, whichever is earlier.

Commodity

The commodity fund is a category where the mutual funds investment is made in the commodities. The returns are generated based on the performance and condition of the particular commodity in which the corpus is invested. A commodity is a product or material which can be traded and exchanged with another product that is similar in nature. It can be gold, oil, tea, metals, minerals, etc. The price of many commodities can immensely affect the market conditions which is the reason why media primarily focuses on most of the commodity prices. Commodities are also a hedge against the inflation of an economy as the equity and commodity are traded inversely proportional to each other.

Gold Funds

Gold is the most popular commodity in the Indian mutual fund industry as a majority of investors prefers investing in gold compared to other offerings. Apart from the conservative and stable growth, gold has the upper hand against any other commodity for trading. Several prominent fund houses have come up with digital gold investment plans which are gaining huge popularity in the recent months.

What Are The Advantages of Mutual Funds Investments?

Let us examine the benefits
and features which are rewarded to the investors.

Better Returns

Investments in Mutual funds online provide an opportunity to gather maximum capital through variegated portfolio to the investors. Gains are the top priority for the selection of investment channel for a majority of investors. The returns of debt mf schemes are decent but are much better than that of the FDs and RDs. The equity returns are much higher than any other investment method. In the last ten years, on an average, equity schemes have provided 11-16% returns while debt schemes have generated 8-10% annualized returns. Mutual funds offer the best returns in longer tenures.

No Lock-in Period

Mutual funds have your back in times of emergency financial needs. Unlike most of the investment channels, they have no lock-in period. The investors can withdraw the redeemable units whenever they wish to, and no extra charges will be incurred if the exit load period is completed. ELSS and solution-oriented MF schemes are the only categories which have a lock-in period.

Professional Management

Mutual funds are managed by the professional fund managers who have expertise in the management of corpus. They are experienced in tracking the movements in the market and are aware of the right time to buy, sell, or accumulate the holdings. With high competition among the AMCs in the market, the fund managers compete against each other to win the trust of the investors and perform better than others. This competition directly benefits the investors who only need to invest, sit back, and relax while watching their money grow through a professionally handled portfolio.

Convenience

One of the significant advantages of the investments in mutual funds online is the availability of SIP as well as lumpsum mode of investment. It focus on delivering the most convenient services to the investors. The systematic investment allows the investor to create surplus wealth and fulfill their long-term financial goals without imparting financial burden which is not available in other options. The recurring bank deposit is not an option as it doesn’t provide enough returns to achieve many financial goals. The withdrawal option is also much comfortable and convenient than any other channel. Similar to SIP, the SWP option allows investors to withdraw a fixed amount.

Choices Available

A large variety of mutual fund is available which serves different goals and follows different strategies out of which the investors can choose the one which suit them the most. Conservative investors can select a less risky debt or hybrid scheme while aggressive investors can go for high return generating equity schemes. Mutual funds provide schemes for all kinds of investors in the most beneficial manner which is why it is considered the most comfortable method of investment.

Transparency

The investor is free to track the mutual funds investments at any time while they are growing or depreciating and take the required actions. They can trace the wealth gain on the invested amount anytime online as well as offline. Apart from that, all the mf companies are under the control of SEBI, which ensure the welfare and transparency of the corpus. The investors can forget about the worries and lead a comfortable lifestyle with the aid of mutual funds.

Financial Discipline

Apart from the benefits in the returns and affordability, mutual funds also embark financial discipline in the lives of investors. The regular investment through SIP for long-term maintains disciplined financial lifestyle while securing the future financially.

There are many more benefits of mutual funds investments which are easy to grab by anyone. Millions of successful investors have already adapted this lucrative platform and seized multiple benefits, and the numbers are increasing like a wildfire.

Mutual Funds: Objectives

Millions of investors have taken the advantage of investments in mutual funds online to fulfil multiple objectives.

Tax Planning Benefits Retirement Planning Benefits Child Future Planning Benefits Wealth Creation Benefits
ELSS mutual funds allow tax-saving Retirement mutual fund also allow tax-saving Financial assistance for chid’s future Most convenient method
Tax benefits of up to Rs 50,000 Tax benefits of up to Rs 50,000 Unique strategies are available Different schemes for varied risk-appetites
Least lock-in of 3 years Least lock-in of  5  years Education and other requirements can be secured Enormous wealth can be created in long term
Most profitable tool under section 80C Strategically planned mutual funds Multiple options available
Multiple options available
Specific schemes for post retirement era
Best financial assistance for retires

Apart from all the goals mentioned above, there are multiple objectives which can be achieved with the help of MF. It is the best savings channel which can decorate the monthly income by adding handful returns. Efficient savings can be done for marriage, education, buying assets and properties, traveling and many more reasons.

Direct Vs Regular Funds

Mutual funds are considered as in two different plans, namely direct plans and regular plans. Direct are the ones which are chosen by the investor personally while regular are the ones suggested by the experts. If we get sick, we can either consult a doctor who can prescribe suitable medicines, or take medication on our own. When it comes to building a house, we can either design our house on our own, or take the assistance of a professional architecture that can look out for the things that we might need.
Similarly, a financial expert can give better suggestions for the mutual funds investments which are in line with the requirements and desires of the investor. Due to the availability of a large number of options, it can be perplexing to decide the best mf scheme for oneself. A wrong selection might be harmful to the financial welfare of the investor. Hence, the regular MF plans can prove out to be much beneficial than the direct plans.

Particulars Direct Plan Regular Plan
Assistance / Recommendations No At every point you are assisted by our highly trained wealth coaches
NAV comparison (in general) Higher Lower
Market analysis Required Yes No
Reports & tax calculations Self & time consuming Accuracy with our wealth coaches & with our software system
Research on Funds Required

(Presently above 9000 schemes available in India)

 Deep analysis required as you may miss Buy & Sell Opportunity or end up selecting wrong fund. Not required, as our wealth coaches will assist you & will work with you to reach your financial goals.
Convenience Less More
Time Consumption More Less
Service related issue Self management One Point – with our wealth coaches
Methods of Mutual Funds Investments

Investments in mf can be made through two different modes:

1. Systematic Investment Plan (SIP)

In a systematic investment plan, which is also known as SIP in mf, a small amount is invested in the selected mutual fund periodically for the selected tenure. The periodicity of the investment in MF can be monthly, quarterly, half-yearly, or yearly. The amount so invested allots specific units to the investor’s portfolio according to the NAV of the fund at the time of each investment. SIP mode of investment in mutual funds allows the investors to reduce the risk factor as the total amount invested is added to different prices and the average of all the price is taken out which is generally positive in the longer tenure. This phenomenon is called as rupee cost averaging. The investment through SIP is continuously compounded after every investment which increases the value of the invested amount through the power of compounding.

2. Lump sum Investment

It is a one-time investment in mutual funds in which the units are allotted to the investors depending on the NAV of the fund at the time of entire investment. Lump sum speculation incurs the market risk and is generally avoided in high-risk funds. The features like rupee cost averaging, and power of compounding are not available in this mode, but it can reward with greater returns if the investment is made at the right time in the particular MF.

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with your SIP

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How to Select Mutual Funds

An investor can choose a better mutual fund scheme for oneself if he/she can read various parameters of the schemes. New investors should always take the assistance of the experts until they get familiar with these features and aspects. There are various other criteria to choose the mutual fund scheme, including:

  • Returns:The parameter which is mostly focused by the laymen investor is the returns in the past which admittedly is one of the most important factors but analyzing the performance of trailing and rolling returns under the different market conditions can provide a better idea of the prospect.
  • Fund Management:It is very essential to have an idea of the skill-set of management staff before placing a bet on the mutual fund as the experience and strategies followed by the manager can immensely affect the outcomes.
  • Risk/Reward Ratio:The risk suitability is one of the most critical factors to be checked before choosing the right mutual fund. The standard deviation represents volatility of the scheme directly while the beta can give the ratio of risk taken by the fund to that of the benchmark. The returns generated by the mf schemes at the cost of risk influenced can be considered through parameters like Sharpe and Treynor ratios.
  • Investment Strategy:The investor should consider the suitability of the investment strategy followed by the fund according to his/her comfort. The portfolio which is generally chosen by the mutual fund can be analysed for better investment experience.

Many other parameters are required to be considered before mutual fund investments and achieving the financial goal with prosperity. To invest without a setting, a specific goal is not recommended in MF. Those investors who don’t have the time or skills to read about the online mutual funds investments should take the assistance of the experts rather than choosing a random scheme and creating financial hardship.

Why you Need Mutual Funds?

The awareness campaign which is getting popularized in the recent months by the name ‘Mutual Fund Sahi Hai’ by Association of Mutual Funds of India (AMFI) has successfully created awareness of the most beneficial investment medium due to which the number of investors has dramatically increased in India. Mutual Funds own a total corpus of more than Rs 23,30,000 crore under management, and the figure is snowballing along with its popularity. MF is not only a platform to invest in a most convenient manner but also an opportunity to grab the most beneficial returns by laymen. It allows an investor to take advantage of the professionally managed investments without the fundamental knowledge or financial background. It can secure your financial future in a disciplined manner without incurring financial imbalances. It is an advanced strategy which has revolutionized the savings and investment strategy which in turn is assisting the economic growth of the country.

Mutual Fund: How does it Works?

Each mutual funds investment allots specific units to the investor, which represents holdings in a particular fund. The price of the unit depends upon the ‘Net Asset Value’ or NAV. The profits generated through investments are dispersed proportionally to every unit of the mutual fund. The gain or loss of the investment in mutual funds depends entirely on the rise and fall of the NAV. Let’s take an example of a mutual fund, say X fund whose NAV is Rs 10. An investor buys 100 units of that fund which will cost him Rs 1000. Now, if the NAV of X fund becomes 12 after a year, his investment will be worth of Rs 1200 with a gain of 20%. After knowing the working procedure of the mutual funds investments, you might be wondering how the NAV grows? The answer is simple to understand. The corpus of mutual funds is invested in multiple securities, and the average of fluctuations in all the investments is taken out. If the average is positive, then the NAV will grow, and if the average is negative, it will fall, and the fund will provide loss.

Who Can Invest in MF?

Online Mutual funds investment in India provides an opportunity to every resident and non-resident Indian to invest. Though there are some restrictions on investing for the NRIs belonging to the USA and Canada by some of the asset management companies, for the residents, the only things required for investment are PAN card and a linked AADHAR card of an adult.

The minor cannot invest on their own, but on their behalf, an adult guardian can use the details of the minor to invest.

Why Is Mutual Funds Better than Other Investment Methods?

Investment is one of the most crucial aspects for any individual in order to avoid the money to lose its buying power in the future. Various channels of investment like bank FDs and RDs, PPF, Corporate Bonds, etc. are available which are compared in the table below.

It can be inferred from the above-comparison that investments in mutual funds provide better returns at the expense of moderate risk and have several other advantages, which are the reasons why it is one of the most appreciated and beneficial investment methods out of all the available options in India.

How to Invest in MF In India?

The investments can be made offline as well as online.

Offline Process

Step 1: KYC Form

KYC form needs to submit along with a valid proof of ID & Address to the distributor, MF branches, Authorised banks, or dealer’s office which can also provide the KYC form to be filled by the investor.

Step 2: Fund Selection

Based on the goals, needs, tenure, risk, and investment horizon the investor needs to select the best performing mutual fund scheme for investment.

Step 3: MF Application & SIP Mandate

If the KYC form is approved, which generally takes 5-7 working days, the investor has to fill the application of the AMC along with a cheque of the amount that needs to be invested. In the case of SIP, the SIP mandate form also needs to be filled and attached for effortless investment directly from the concerned bank account in the future.

Contact our wealth coaches for inquiry

Online Process

Step 1: Personal Details

The investor needs to complete his/her profile by providing required personal details on the website of the provider.

Step 2: KYC Verification

KYC form along with valid ID & address proofs need to be sent physically to the address of Saffllya or to our registered wealth coaches.

Step 3: Start Investing

Our wealth coaches will guide to select the plan, amount, and other details as per your needs and risk appetite. Start investing right away after depositing the amount online portal, mobile app or through OTBM (One Time Bank Mandate).

Contact our wealth coaches for Open a account

As we can infer from these steps, the online procedure is much more comfortable and burden free. The investment can be made within a few clicks & with association of our wealth coaches.

Why Choose SAFFOLLYA ADVISORY for Mutual Fund Investment

At SAFFOLLYA .. Investors are always considered as the top priority. Every need and desire of the individual investors are considered beforehand to suggest the optimum scheme. To allow the investors experience swift investment process, we provide multiple features which have satisfied more than 2,000 investors.

Dedicated Wealth Coaches

We believe that no computer can understand your financial needs as good as a our dedicated Wealth Coaches.

 
Face to Face Relationship

We don’t hide behind call centers. You can expect on-demand meetings and calls from our Wealth Coaches

 
Online Investment Platform

You get an access to online Mutual Fund platform that allows you to buy, sell, additional purchase, switch etc.

 
Zero Fees

Our advisory service is completely FREE even though you take services from our Wealth Coaches.

 
Transparency

While SEBI regulates us so that the investors are protected in every possible way, we also make sure that our relationships go beyond what we are regulated to do.

 
Intelligent Investing

We help you select a few funds according to your risk appetite in different asset classes out of over 9000 funds from Indian Mutual Fund universe is a difficult task.

 

Our well trained Wealth Coaches, several other features of our website and app have successfully fulfilled the goals and desires of the thousands of investors. Thus making Saffollya one of the fastest growing organization mutual funds advisory In India.