What are Mutual Funds? Types of Mutual Funds, Schemes and Benefits - PowerPoint PPT Presentation

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What are Mutual Funds? Types of Mutual Funds, Schemes and Benefits

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As mutual funds differ in types, it gets quite challenging for investors to pick the right type of investment funds and kick start their investment careers. Here, we'll talk about mutual funds, the types, benefits of investing in MF, total schemes, and etc. But before we get started, let's have a quick look at the meaning of mutual funds investment. – PowerPoint PPT presentation

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Title: What are Mutual Funds? Types of Mutual Funds, Schemes and Benefits


1
What are Mutual Funds? Types of Mutual Funds,
Schemes and Benefits Gill Broking
2
  • The latest Mutual fund investment scheme in India
    is developing at a really fast rate. In February
    2019, this sector recorded a total amount of up
    to 23.16 trillion in AAUM (Average Assets Under
    Management). In 2009, AAUM showed approximately 5
    trillion. The figures clearly suggest how this
    industry has increased by 4 times within 10
    years. Currently, India has over 2,500 mutual
    fund schemes and 44 AMFI.
  • As mutual funds differ in types, it gets quite
    challenging for investors to pick the right type
    of investment funds and kick start their
    investment careers. In this PPT, we'll talk about
    mutual funds, the types, benefits of investing in
    MF, total schemes, and etc. But before we get
    started, let's have a quick look at the meaning
    of mutual funds investment.

3
What are Mutual Funds?
  • A mutual fund is one of the famous investment
    instruments that collect money from novices and
    professional investors. The money is collected in
    different asset classes namely equity shares,
    debt, gold, foreign securities, and the list goes
    on. Mutual Funds are regulated and managed by
    SEBI and the Association of Mutual Funds in
    India. They are safe, transparent, reliable, and
    flexible forms of investment. But, the question
    is why people love to invest in mutual funds?
  • It is no longer an era when people would invest
    in traditional investment instruments. Whether it
    is a beginner or professional investor, mutual
    funds seem the most reliable and secure option
    for investment. Furthermore, these funds come in
    a wide range of schemes and types. You can build
    your investment portfolio for just 500/-

4
  • Depending on the investment plan you choose,
    mutual funds allow investors to build their
    investment portfolio for Rs 500 and get started
    with the investment procedure. Another major
    advantage of mutual funds is that it is handled
    by professional fund managers, who possess years
    of experience in managing financial profiles of
    the investors. No matter which mutual fund
    investment scheme you opt for, you can rest
    assured that your money is safe with financial
    experts. Lets learn about the types of mutual
    funds in India.

5
Types of Mutual Funds
  • Basically, there are three types of mutual funds
    categories in India debt funds, equity funds,
    and hybrid funds. Depending on your risk
    appetite, investment goals, and overall
    investment profile you can pick any of the
    below-listed mutual funds.

6
1) Equity Funds
  • One of the most common types of equity funds, in
    which more than 65 of the investments are used
    for equity instruments, are known as equity
    funds. In the simplest terms, equity funds are
    long-term investment plans where investors put
    their money in reputable companies. The growth of
    the companies decides the rate of returns for
    investors. Equity funds are the most reliable
    option for investors who are ready to bear
    significant risk in order to obtain fruitful
    results.
  • As equity funds depend on the stock and economy,
    they come with a high risk. That's the reason why
    they are only preferred by professional
    investors. According to SEBI and AMFI, there are
    a total of 11 types of equity funds out on the
    market. However, the most common type of equity
    fund is ELSS (Equity Linked Savings Scheme). It
    is specially developed for investors who are on
    the lookout for a tax-saving investment funds
    option.

7
  • The investments in ELSS can save you up to 1.5
    lakh on tax. However, there is a specific lock-in
    period (usually, 3 years) in the tax-saving
    investment funds. It is important to note that
    equity funds come with a lock-in period. You
    might need to invest funds for as long as 5 years
    if you want to receive the maximum perks. This is
    because the growth of the companies takes years.
    If you want your money to grow rapidly, then
    equity funds are the best pick!

8
2) Debt Funds
  • Another famous type of Mutual fund is debt funds,
    where a major portion of the money is invested in
    money market securities and debt. Any mutual fund
    where less than 65 of the total money is
    invested in the equity market is debt fund. Debt
    Funds is a reliable and secure form of investment
    option for investors with low-risk appetite. If
    you are not willing to take higher risks, then
    debt funds should be your number 1 priority.
  • Now that these funds are associated with lower
    risk, they offer a comparatively lower rate of
    returns than equity funds. However, they are far
    better than fixed deposits and other traditional
    investment instruments. Debt funds offer higher
    ROI than fixed investment funds, but their
    results are not as fruitful as equity funds. SEBI
    has introduced 16 types of debt funds.

9
  • One of the most popular debt fund investment
    options is liquid funds. Not only are they less
    risky, but debt funds offer a maximum rate of
    returns to the investors. In liquid funds, the
    money is invested in the money market securities
    that come with a maturity period of 91 days. As
    they have a shorter maturity period, they carry
    the least amount of risk.

10
3) Hybrid Funds
  • As the name implies, hybrid funds are the special
    mutual fund's type where the money is invested in
    either two or more than 2 securities. For
    example, investors can opt for hybrid funds where
    they can invest in both equity and debt funds.
  • Hybrid funds are often considered balanced funds
    since they lower the risk of your investment
    while increasing the chance of high returns. As
    you invest in equity funds, you get a higher ROI.
    On the contrary, your risk is lowered as the
    portion of your money is also invested in debt
    funds. There are 7 types of hybrid mutual funds
    available on the market.
  • The most popular type of hybrid funds is Dynamic
    Asset Allocation Funds. The best part about this
    mutual fund investment scheme is the investors
    get an opportunity of investing their money i.e.
    anywhere between 0 to 100 percent in equity and
    debt. There is no fixed ratio that you are
    obligated to follow.

11
Benefits of Mutual Funds Investments
  • From the above examples and schemes, we assume
    that the meaning and purpose of mutual funds are
    already clear to you. On that note, lets move to
    the other section of the post which is benefits
    of investing in mutual funds.

12
Professional Funds Management
  • When you invest in mutual funds, you allow an
    expert financial manager to track, monitor, and
    look after all your investments. You dont have
    to manage your investments. In fact, all your
    investments are managed by professionals who
    possess years of experience in dealing with
    investment instruments. Every investor is liable
    to pay a certain percentage of fees on their
    returns. This fee is known as expense ratio and
    is paid for the administration and management
    works.
  • The expense ratio can vary from 0.5 to 1.5.
    But, it must not go beyond 2.5. Mutual fund
    houses reveal the rate of returns in each mutual
    fund scheme after deducting the expense ratio.

13
High returns
  • The reason why a majority of investors interest
    is shifting towards mutual funds investment is
    the high rate of returns. Gone are the days when
    traditional investment methods such as Gold,
    commodities, FDs, and precious metals were
    popular. Today, mutual funds are considered the
    most reliable and flexible investment solution
    for investors across India.
  • You can expect up to 7 of ROI in investments.
    The rate of returns can go up to 15 if you
    invest in equity funds for over 5 years. The high
    rate of returns is the main reason why most of
    the investors prefer mutual funds instead of
    relying on the traditional form of investments.

14
Flexible Investment
  • You don't have to invest all your savings in one
    go if you choose mutual funds investment. Mutual
    funds come with two types of investment plans
    i.e. lump-sum payment and SIP. If you choose the
    latter, you get a chance of starting your
    investment with as slow as Rs 500/- in your
    investment account. Yes, you read it right! The
    minimum amount you need to get started with the
    mutual fund's investment is Rs 500 whereas the
    maximum limit is not available.
  • If you opt for SIP investment plan, a set amount
    of money automatically deducts from your bank
    account every month and transfers to the mutual
    fund's account. For example, if you select a
    500/- per month investment, this amount will be
    debited from your bank every month automatically.
    The small investments generate high returns at
    the time of maturity.

15
Portfolio Diversification
  • Mutual funds are known for three main fund
    categories that are mentioned above. You can
    always balance your risk by investing in
    different funds and diversify your investment
    portfolio. For example, if you choose a hybrid
    funds investment option, you can minimize the
    risk while increasing the chances of higher
    returns.

16
A Systematic Investment Plan (SIP)
  • As discussed above, the systematic investment
    plan (SIP) is the best mutual fund investment
    scheme for investors who do not want to risk all
    their savings by paying the entire amount in one
    go. SIP allows investors to choose the interval
    period as well as the amount they want to get
    deducted at each interval. For example, you can
    fix monthly, quarterly, or weekly mutual funds
    investment option where a specific amount set by
    you will be deducted from your bank account
    automatically.
  • Furthermore, this plan allows you to modify the
    monthly payment amount according to your
    financial condition.

17
Tax Benefit
  • A lot of investors consider the ELSS (Equity
    Liked Saving Scheme) investment plan to avail of
    tax benefits. Under section 80c of the Income Tax
    Act, the investors who put their money in ELSS
    can save up to 1.5 lakh on tax. However, ELSS
    comes with a lock-in period that is up to 3
    years. You won't be able to redeem money before
    the ELSS reaches its maturity period.
  • The best part is even if you choose the other
    types of investment options (which don't
    specifically focus on tax saving benefit) you
    won't be charged tax for amount up to 1 lakh. 
    You are only liable to pay tax on the earnings
    that exceed 1 lakh.

18
The Working of Mutual Funds
  • Everyone knows how important mutual funds are and
    how can they grow your money rapidly. But the
    question is how exactly the mutual funds work?
    Before you invest in mutual funds, it is
    important to learn the working of this investment
    product right from the launch of MF to its
    maturity period.
  • 1) The mutual fund investment process starts when
    AMC discovers the right money-making opportunity
    that is subject to certain risks in the market.
  • 2) The fund house or AMC compares the latest
    investment opportunities with the ones already
    existing. They also take into consideration the
    pros, risks, and drawbacks of the new investment
    products and analyze if the same can outperform
    the existing investment plans.

19
  • 3) The AMC selects a financial investment manager
    who's responsible for creating a portfolio of
    multiple asset classes. The fund manager then
    chooses the right mutual fund category for the
    new investment product.
  • 4) As soon as the fund house gets SEBIs approval
    for the launch of the new mutual fund investment
    product, they introduce it in the market. Also
    known as New Fund Offer, the NFO stays on the
    market for a week or 10 days.
  • Open your free trading account

20
Some of the most common mutual fund's investment
houses in our country are as follows
  • 1) ICICI Prudential Mutual Fund 
  • 2) Reliance Mutual Fund
  • 3) Franklin Templeton Mutual Fund
  • 4) Aditya Birla Sun Life Mutual Fund
  • 5) HDFC Mutual Fund
  • 6) SBI Mutual Fund
  • 7) Axis Mutual Fund
  • 8) Kotak Mahindra Mutual Fund
  • According to the subscription period, one can
    categorize the funds as close-ended and
    open-ended mutual funds investment plans. The
    latter allows people to enter and leave the
    funds investment whenever they want. However,
    the close-ended investment plan restricts the
    exit of investors until the maturity period of
    the scheme (which is usually 3 to 4 years).

21
  • Contact Us
  • For complete information about mutual funds, get
    in touch with trading experts specialized to
    offer investing in mutual funds.
  • Gill Broking
  • Phone No 011-40345555, 8750000121
  • Address B-98-99, Third Floor, Lajpat Nagar-1,
    New Delhi, India 110024
  • Email ID mf_at_gillbroking.com
  • Website - https//mf.gillbroking.com
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