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Bursting top 5 mutual fund investing myths

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    From association with equities to a fascination with lower NAVs, there are a lot of myths and untruths that surround mutual funds. Here's looking at the top 5 and dealing them head on.

  • Grow My Money -

    Mutual funds myth 1: It's all about timing

    While there is no denying that market fluctuations do have an impact on the percentage of growth provided by the Mutual Funds, it is also pertinent to note that over an extended period of time these fluctuations get evened out. Thus anytime is a good time to start investing.

     

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    Mutual funds myth 2: Mutual funds are stock markets

    Typically people associate mutual funds with stock markets, especially because of equity funds. But, there are a lot more investment options as mutual funds invest in a variety of instruments like government treasury bonds and so on.

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    Mutual funds myth 3: Lower NAV is better

    It is more often assumed that a fund with lower NAV is a better prospect for growth, as one can buy more units at the same cost. But it is equally important to pay attention to other performance aspects like track record, fund management and volatility which determine the portfolio return.

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    Mutual funds myth 4: You need lump sum to invest

    While there are some Mutual funds that do allow you to invest a lump sum, it is always better and easier to invest through systematic investment plans (SIP), to make the most of market fluctuations. In fact, most funds today allow investments as low as Rs.1000, with no limits on the maximum amount.
     

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    Mutual funds myth 5: Mutual funds with higher NAV have peaked

    Another persistent myth is that funds with higher NAV have reached a peak and hence aren't good areas for investment. The reason why a fund has greater NAV could be multi-fold, based on the time and investment portfolio. It does not reflect upon the profitability that an investor can have from that fund.
     

     

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  • Indian Mutual Funds

    Indian Mutual Funds have currentlyinvested about 1.35 crore (13.5 million) SIP accounts through which investors regularly invest in Indian Mutual Fund schemes. (March 2017. Source: AMFI)

  • AAUM

    Average Assets Under Management (AAUM) of Indian Mutual Fund Industry for the month of March 2017 stood at ₹19.26 lakh crore. (Apr 2017. Source: AMFI)

  • Equity-oriented Schemes

    Equity-oriented schemes account for around 32.8% of the industry's assets. (March 2017. Source: AMFI) Equity-oriented schemes derive 85% of their assets from individual investors. (March 2017. Source: AMFI)

  • HNI Investors

    HNI investors account for 20.98% of investments for a period of 12-24 months. (Source: AMFI)

  • Benefit of Index Funds

    Index funds usually have much lower operating expenses over actively managed funds.

  • What is Net Assets?

    This figure represents the fund's total asset base, net of fees and expenses.