What happens with bond funds when interest rates are rising or falling in the finance market?
Generally Bond prices raises when interest rates fall and fall when interest rate rises. The degree of impact depends upon the tenure of the securities held in a portfolio. Market trend says that long term bonds are more sensitive to the fluctuation of interest rate than the short term bond funds. If interest rates rise, short term bond funds will get more benefit and if interest rates fall, the long-term bond funds will benefit more.
Which is considered as the most illiquid fund category among the GOLD, SHARES, BANK FIXED DEPOSITS and REAL ESTATE?
Real Estate sector is considered as the most illiquid fund among the above given category.
What would you suggest to an investor having a long term horizon with high risk appetite and looking for high growth?
The suitable suggestion is to invest in Equity fund because equity as an investment avenue has proved to give the best returns over a long-term horizon.
Where can we find the updates on the performance of the fund?
On a daily basis, the NAVs are uploaded on the AMFI website. Besides, anyone can visit the websites of mutual funds for relevant information.
Is a comparative study required before investing in mutual Fund?
Yes, a comparative study and thorough analysis across the market will help you decide and choose the right schemes for your hard earned money.
Can the NAV of a debt fund fall?
Debt fund invests in fixed income instruments like Commercial paper, Certificates of Deposit, Debentures and Bonds. The interest rate on these stays the same throughout their tenure but the market value keeps on changing, depending on how the interest rates in the economy move. A debt fund’s NAV is the market value of its portfolio holdings at a given point of time. As the interest rates change, so do the market value of fixed-income instruments and hence, the NAV of a debt fund may also fall.
Does higher returns means it is a better fund to keep on investing?
Higher returns indicates good fund but there must be some risks involved to achieve the good returns. While judging a scheme, a risk adjusted return is the best to measure. Statistical tools like Beta, Sharpe ratio, Alpha and Standard Deviation may be used to measure the risk and also refer to the ratings given by the reputed agencies.
Do Investors get regular updates about open ended funds?
Yes. NAV of open ended mutual funds are declared daily. Regular updates on the value of investments are available. The portfolio is also disclosed regularly with the fund manager’s investment strategy and outlook.