What is known as actively managed fund and who should opt it?

Actively managed funds are those type of funds in which the fund manager avail the flexibility to choose the investment portfolio. In such funds, fund manager invests in better performing sectors to get the best returns as compared to the benchmark index. However, this strategy could also give lower or negative returns in case fund manager prediction not works in line or goes wrong.

What is Liquid Fund?

Liquid Fund is basically a kind of debt fund carries a low degree of risk and invested in short term market instruments like treasury bills, government securities and other instruments specified by regulatory authorities. Investment made in liquid funds can be taken out with a very short notice period.

What is Money Market Fund?

Money market fund is a type of mutual fund investment that invests only in money markets such as commercial papers, commercial bills, treasury bills, certificate of deposit and other instruments specified by regulatory authorities. The minimum lock-in period of these funds are 15 days. Earlier it was regulated by RBI but now come under the regulatory preview of SEBI.

What refers to LIQUIDITY in Mutual funds?

Liquidity refers to an important attribute of a scheme which offers facility to the investor to convert their unit holding in cash in a simple and hazel free manner when ever required. By using the liquidity facility an investor can transfer the dividend payment or appreciation or dividend re-investment to the target scheme also.

What refers to Growth plan option in Mutual funds?

Growth option is an optional facility where the scheme does not pay any dividend to the investor. Any gains made in the fund holdings are invested back into the scheme so that wealth rises over time but the number of units with the investor remains the same.

What refers to dividend payout option in Mutual funds?

Dividend payout option in Mutual funds refers to the proportionate distribution of profits made by the scheme among the unit holders at dividend declaration. As a matter of fact every investor should know that fund is not bound to pay out a dividend.

What refers to dividend re-investment option in Mutual funds?

The dividend re-investment option in Mutual funds refers to reinvestment of dividends in the fund scheme itself by buying more units on behalf of investor.

What are Equity Funds?

Equity Funds can be defined as the funds which are principally invested in stock/Equities. It comes in different flavors to meet the requirement of different categories of investors. Equity funds can be classified on different parameters such as –

Market Capitalization Basis – Large cap Funds / Mid cap Funds / Small cap Funds

Investment Strategy Basis – Arbitrage Fund/ Index Fund/ Sector fund / Quant Fund etc.

What is Arbitrage Fund?

It is a fund that invests simultaneously in cash and  derivatives market and enjoy the advantage of the price differential of a stock and derivatives by taking  opposite positions in the two markets.

What is Multicap Fund?

Multicap Funds can be defined as the funds that have a small cap portfolio at present and a large cap portfolio tomorrow. The fund manager has absolute liberty to invest in stocks belonging to any sector

What is Quant Fund?

Quant Funds can be defined as the fund with typical type of scheme where the system itself works as the fund manager.  Predefined conditions based upon rigorous back testing are entered into the system and as and when the system throws ‘buy’ and ‘sell’ calls, the scheme enters, and/ or exits those stocks.

What is Open Ended Fund/ Scheme in mutual Funds?

Open Ended Fund/ Scheme in mutual Funds can be defined as an ongoing scheme which is continuously available for subscription and repurchase without having a fixed maturity period. Liquidity is the main feature of Open ended scheme.

What is close ended fund/Scheme in mutual funds?

This type of fund /scheme refers to fixed maturity period scheme where investment can be made at the time of new offer only and there after investor can buy or sell the units through stock exchange. Some schemes offer periodic repurchase facility also.

What is Gilt Fund?

Gilt funds are invested in government securities which carries a feature of fluctuation due to change in interest rates. 

What is Index Fund?

Index Fund refers to the scheme invested in the securities in the same weightage comprising to a particular index such as BSE (SENSEX), NSE (NIFTY) etc.

What is Capital protection – oriented fund?

It is a type of close ended scheme that invests significantly in fixed income securities and a small part of its corpus in equities.

What refers to direct plan in mutual fund?

Direct plan in mutual fund refers to the investment made directly through AMC without involving any intermediary/distributor. Investors need to follow the process explained by AMC at their website. No commission is paid in this plan therefore investor can get better returns as compared to regular plan.

What is Equity-Linked Savings Schemes (ELSS)?

This Mutual Fund Scheme is principally invested   is in equity and the dividends in this scheme are tax-free.

What is Mutual Fund Utility (MFU) Transaction?

Mutual Fund Utility (MFU) is an Unique browser based “Shared Services” initiative under the aegis of Association of Mutual Funds in India (AMFI), which acts as a “Transaction Aggregation Portal” which facilitates  the Mutual Fund customers by provides access  with connectivity to Registrars and Transfer Agents (RTA), Banks, Asset Management Companies (AMC), Payment Gateways (PG) and KYC Registration Agencies (KRAs) and enables online transaction submission convenience in multiple schemes across Mutual Funds through a single form/payment. It provides a CAN (Common Account Number) registration to the investors.

What is Growth option in mutual funds?

Growth option in a mutual fund scheme refers to the capital appreciation of the investment.  Suppose you invested Rs 1 lac in Equity fund and chosen growth option. If the scheme delivers a return of 13% after 1 year, your money will grown by Rs. 13,000. Assuming that he had invested at a NAV of Rs. 100, then after 1 year the NAV would have grown to Rs 113.  If remains invested this money to grow for longer period it may create a healthy wealth.