A Mutual Fund is an efficiently managed pool of funds invested by various investors for the purpose of investing in securities like bonds, commodities, stocks, and short-term market instruments.
Mutual Funds can also be termed as the financial intermediaries that collect funds in the form of investments from the investors and invest it on their behalf. It is relatively a secure investment that will let the investors enjoy attractive & beneficial gains.
Mutual Funds can be classified into three wide categories:
- Performance Ranking
- Total Expense Ratio
- Investment Objective
- Risk Profile
- Services and Transparency
- The tax implications
Many people think that investing in Mutual Funds is a risky affair because the value of the money investments could fluctuate with time. The risk is spread among a large pool of investors. For this reason, you are individually on low-risk through diversification.
Mutual Funds do not provide any guaranteed return. However, the regulations of SEBI enable Mutual Funds to deliver guaranteed returns in accordance with the fund meeting conditions. The AMC, in case of a return scheme, ensures a minimum level of return. The guarantor’s name and the process in which the guarantee shall be met should be disclosed in the document by Mutual Funds. Any government body does not guarantee investments in Mutual Funds.
Mutual Funds are superior to other investment avenues due to the following advantages:
Portfolio Diversification: A broad basket of securities is available for the small investors. They can share the benefits of the efficiently managed portfolio by experts. This portfolio diversification deducts your risk of loss by investing your money in various geographic regions. It prevents an investor from the cliché“Put all your eggs in one basket”. We will spread your fund across various reputed industries.
Tax Benefits: Investors can enjoy income tax benefits in Mutual Funds. One can get more advantages as compared to the other investment avenues.
Professional Management: Qualified professionals are responsible for managing Mutual Funds, and they have experience in analyzing the performance of companies. The continuous process of selecting suitable investment takes time and needs expertise that will add value to your investment. Fund managers can manage your investments in a better way.
Transparency: Regular updates of prices are available for open-ended Mutual Funds. Investors can compare funds with others because the overall performance of the Mutual Fund is reviewed by rating agencies and various publications.
Limited Risk: Investment in Mutual Funds is less risky due to portfolio diversification, professional management, and economies of scale in transaction cost.
Mutual Funds can provide the advantages of professional management and diversification. But investments in a Mutual Fund involves risk. It involves the market risk. Most of the funds will experience a downturn when the market is in doldrums. A professional fund management organization can eliminate the company specific risks easily.
Securities Exchange Board of India (SEBI) is the regulatory body for all types of Mutual Funds. All the funds must be registered with it. UTI is the only exception; this corporation was formed under the separate act of Parliament.
AMC is the abbreviation for Asset Management Company. It is a highly regulated organization that pools money from many individuals into a portfolio structure with the stated investment goals for a fee.
AMC manages the Mutual Funds as an investment manager and, for this reason, charges a fee on an annual basis for portfolio management.
Systematic Investment Plan or SIP is a method through which an investor contributes a fixed amount in Mutual Funds (monthly or quarterly as per convenience). Through SIP, one can get more or fewer units of a fund over a period.
It minimizes the total cost of acquisition by a method of rupee cost averaging. An investor can get more unit at a lower price for the same investment.
An investor can avoid lump sum investment at a single point in time.
Cognus Capital Invest offers you a facility of participating in the Systematic Investment Plan (SIP) every month or quarterly by providing post-dated cheques. We would deposit the cheques at the dates mentioned. We will provide you a statement of account for every transaction.
NAV or Net Asset Value is the price of one unit of a fund. It represents the market value of all assets per unit after deducting liabilities. Calculate NAV using formula:
(Market value of fund’s investment + Other Assets + Receivables + Accrued Income – Accrued Expenses – Other Liabilities – Payables)/The number of units outstanding
The applicable NAV is the Net Asset Value per Unit at the end of the working day for the purpose of purchase, switches and redemption
NAV is declared on all business days on or before 9 P.M, depending on the type of scheme. It is announced on a weekly basis in case of close-ended funds.
A load is the fee collected by a Mutual Fund company at the time of entering or exiting the scheme. It is commonly termed as “Entry Load” or “Exit Load”.
Some funds did not charge any fees and referred as “No Load Schemes”.
Our website provides a detailed analysis of the forthcoming plans for the guidance of the investors. You can visit our website regularly to get latest updates on various schemes.
A custodian is a specialized financial firm that holds customer’s securities and other assets in physical or electronic form. The firm is responsible for handling, possession, and safekeeping all the securities purchased by the Mutual Funds.
The primary responsibilities of the custodian are:
- To maintain all the securities systematically
- To check that the purchases and sales must be carried out properly
- To collect dividends, interest and redemption on the due date
- To ensure that the broker will clear all the bad deliveries
You can select the right fund on the basis of following characteristics:
- Risk Profile
- Asset Allocation
- Track Record of the scheme
- Background of the fund provider company
The funds that don’t have a fixed period of maturity are known as open-ended funds. You have the liberty to buy or sell these funds anytime.
The funds whose maturity period lies between 2-15 years are referred as closed-ended funds. You can buy or sell these funds only when they are listed on the stock exchange.
You have to decide on the basis of your investment objective that depends only on your age, financial responsibilities, tax status, income, and risk taking capability.
All financial assets including the Mutual Funds unit are exempt totally from the wealth tax. (Under the Wealth Tax Act)
Cognus Capital Invest
Cognus Capital Invest is a leading financial firm in the investment world. We provide capital administration and wealth management services. Our varied family of investors provide optimum investment solutions at low costs.
Our firm was established in 2014 to cater the long-term investment needs of investors.
All the data of our investors is backed up daily to provide security and also to ensure that all your transactions always take place in a secure manner.
An investor can make various investments from varieties of products like Mutual Fund, bonds, FDs, etc., in order to achieve financial goals. Along with this, an investor can take advantages of our value-added services like ready to go portfolios, smart investment solutions, financial advisory services, flexible, systematic investment plans, and other beneficial investment services.
NRIs can invest in all the Mutual Funds with the help of AMCs.
Setting up an account is FREE. You just need to enter your personal information. When the registration is completed, you will be able to access your account.
Yes, you can open more than one account according to your wish.
To speak to our experts, you can give us a call on 09982795333. You can also write to us at firstname.lastname@example.org, and we will get back to you shortly.