mutual funds provide an efficient medium to investors to practice asset allocation without having to worry about rebalancing the portfolio
Mutual fund investors have to learn to live with short term dips in schemes‘ performance and changes in ownership. Such changes should not deter focus on fundamental aspects of procedure of investment management.
Sector funds are meant for investors willing to take high risk to earn high returns
International funds may look great from the diversification point of view, risks such as currency risks, portfolio concentration risks and operational risks.
Multicap funds are market capitalization agnostic and invest across the breadth of the equity market.
Closed ended funds come with drawbacks such as lack of track record, no liquidity and absence of asset rebalancing.
Balanced funds invest around 70% of the money in equities and rest in bonds. This may not the in line with 50:50 exposure to bonds and shares the investor desires.
Thematic funds came with additional level of risk though they are seen as a high returns opportunity. One should take exposure if and only if he can time his investments.
Life goals do change at various stages of life. These should be treated as triggers to revisit your financial plan and change your SIP
Long term investments means the gains are long term in nature and do not attract tax. This means you not only save on taxes but also get to ride short term volatility in the equity markets.
Sometimes it is the wrong expectation or the wrong time frame that acts against the possibility of making money. Investors also err when they take trading as investment.
Balanced funds offer exposure to both debt and equities. While equities offer to beat inflation, debt offer much needed stability to the portfolio
Direct plans offer lower expense ratio. In the long term, the lower expense ratio should translate into larger saving pool for investors in direct plans as compared to those in regular plans.
Investors should check the dividend yield and should not get carried away by the rate of dividend announced on the face value of the units. Also one should assess if the dividends are sustainable.
Arbitrage funds offer you payoffs akin to a debt fund with a better tax treatment. Also you are not exposed to risk of investing in shares.
While some investors allow the SIP to continue, some prefer to stop their SIP. And investors confident about their investment go ahead and buy more in lump sum. Which of these is the best strategy?
Compared to the old scheme of three colours system, five levels of risks help mutual funds better represent the risk associated with mutual fund schemes
Equity mutual funds let accumulate retirement funds at a double digit rate of returns through systematic investment plan. Debt funds can be used to protect the kitty once investor reaches age of retirement.
A dip in mutual fund returns need not necessarily happen due to failure of the fund manager and investors need not take any decision in a haste.
Instead of taking excessive charge of your fund portfolio, it makes sense to let the fund manager look after your investments.
Small and Mid cap funds come with high volatility. Allocate a small portion of your portfolio to these schemes if they have been long term consistent performers
If you have more than 10 years on hand, consider using SIP in aggressive equity funds. Otherwise stick to debt oriented funds and balanced funds.
While selling equity mutual funds help you take money home, holding on to equity mutual funds for long term may make you wealthy.
Rollovers are not sale for the purpose of tax, says CBDT circular. This has eliminated confusion and allowed investors to extend their investments up to 36 months.
Financial Advisor Forum travels across the country with leading financial advisors and talk to them about the key issues, the challenges and the way ahead for the mutual fund industry in India.