Why Choose Deep Knowledge & Investment (DKI)
You may invest in Mutual funds though a plethora of distributors and Financial Planners, but rare are the ones who advocate a product purely on its risk and returns potential.. Invariably distribution gets swayed by "extra" commissions and "extra incentive". However investing though Mutual Fund advisor like Deep Knowledge & Investment (DKI) is altogether different. Our primary focus remains the "investor" and investors financial goals and risk appetite. Prospective Investors contact us with a vague idea of investments. We start from scratch. After carefully assessing risk, we define financial goals of an individual/family. Then we structure investments to meet financial goals. We have several testimonials where investors started off by investing a few thousand every month and today have portfolios running in multiple of lacs.
As Mutual Fund advisor we have mastered wealth creation though systematic investment route. Besides professional and ethical advice, we provided investors with a unique login ID and password for online portfolio viewing to aid regular monitoring of portfolio. This feature comes free along with "ZERO" service charges. Our Relationship Managers (every client is assigned a specific RM) are just a phone call away.
We have recently started online buying and selling of mutual funds. This is done through NSE (National Stock exchange) India. After initial registration, everything shall be online and paperless. Besides, other features like online portfolio viewer and a RM stays. In nutshell we are a Mutual fund advisor that helps you invest in Mutual Funds online and offline. For more information, feel free to contact us.
WHAT IS MUTUAL FUND?
Mutual funds are very popular in the western world but in India lot of people wonder what is Mutual Fund ?? Are Mutual Funds sort of investments?? Are Mutual Funds risky??
Well let us answer the above questions in a simple way. When lot of investors pool money and invest in stocks, bond money market instruments and other types of securities, this is called Mutual Fund. A MF is always better than investing directly. This is a simple and easy answer to what is a mutual fund?
Following are the advantages of investing in Mutual Fund:
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Mutual Funds are highly regulated, SEBI (Securities and Exchange Board of India) lays down rules regulations, charges(expenses ratio), loads, etc. of Mutual Funds in India. The market regulator regularly monitors the AMC's(Funds and schemes as well). This is to ensure compliance and interest of retail investors.
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Mutual Funds operates with high degree of professionalism. A good Mutual Fund will ensure it has a well qualified research team that takes well informed and prompt decisions.
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Mutual Fund investor will have reduced risk in the portfolio. This is due to diversification as most Mutual Funds will invest in 30-200 securities. A good Mutual Fund will also increase and decrease the number of securities in the portfolio based on need and market conditions
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Mutual Funds are easier to buy and sell. An investors can choose an appropriate fund based on his need for capital appreciation, liquidity, financial objective and risk appetite. A well qualifies mutual fund distributor shall help you do that.
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To Know as to how to invest in Mutual funds and choose a best Mutual Fund. Just give us a call : Contact Us
TYPES OF MUTUAL FUNDS
There are various type of mutual funds, here we are classifying various types, according to maturity period and investment objective. To access your need for a certain type of mutual funds, it is advisable that you contact an expert mutual fund advisors.
Based on maturity period
An open-ended fund is a fund that is available for subscription and can be redeemed on a continuous basis. It is available for subscription throughout the year and investors can buy and sell units at prevailing NAV. These funds do not have a fixed maturity date. This is ideal for investors who want to maintain a liquid portfolio. Open Ended Funds are most popular in India.
A close-ended fund is a fund that has a defined maturity period, e.g. 3-6 years. These funds are open for subscription for a specified period at the time of initial launch. To provide liquidity these funds are listed on a recognized stock exchange. However, these funds are not very popular in India.
Interval funds combine the features of open-ended and close-ended funds. These funds may trade on stock exchanges and are open for sale or redemption at predetermined intervals on the prevailing NAV. These funds dont find favour among Indian investors.
Based on investment objectives
Equity/Growth funds invest a major part of its corpus in stocks and the investment objective of these funds is long-term capital growth. Equity funds invest minimum 65% of its corpus in equity and equity related securities. This is to provide Tax Free returns ( As per Indian Law Equity Investment or Equity Mutual Fund investments over 365 days are tax free). These funds may invest in a wide range of industries or focus on one or more industry sectors. These types of funds are most suitable for investors with a longer time horizon and higher risk appetite.
Debt/ Income funds generally invest in securities such as bonds, corporate debentures, government securities (gilts) and money market instruments. These funds invest minimum 65% of its corpus in fixed income securities. By investing in debt instruments, these funds provide low risk and stable income to investors with preservation of capital. These funds tend to be less volatile than equity funds and produce regular income. These funds are ideal for investors whose main objective is safety of capital with moderate growth. However the returns from these Funds as taxable.
Balanced funds invest in both equities and fixed income instruments in line with the pre-determined investment objective of the scheme. These funds provide both stability of returns and capital appreciation to investors. Balanced Funds are ideal for investors looking for a combination of income and moderate growth. They generally have an investment pattern of investing around 60% in Equity and 40% in Debt instruments. It is important to note that if a fund has less then 65% Equity then they do not qualify for tax free returns.
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Money Market/ Liquid Funds
Money market/ Liquid funds invest in safer short-term instruments such as Treasury Bills, Certificates of Deposit and Commercial Paper for a period of less than 91 days. The aim of Money Market /Liquid Funds is to provide easy liquidity, preservation of capital and moderate income. These funds are ideal for corporate and individual investors looking for moderate returns on their surplus funds for a short period of time.
Gilt funds invest exclusively in government securities. Although these funds carry no credit risk, they are associated with interest rate risk. These funds are safer as they invest in government securities.
Some of the common types of mutual funds and what they typically invest in:
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Type of Fund |
Typical Investment |
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Equity or Growth Fund |
Equities like stocks |
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Fixed Income Fund |
Fixed income securities like government and corporate bonds |
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Money Market Fund |
Short-term fixed income securities like treasury bills |
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Balanced Fund |
A mix of equities and fixed income securities |
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Sector- specific Fund |
Sectors like IT, Pharma, Auto etc. |
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Index Fund |
Equities or Fixed income securities chosen to replicate a specific Index for example S&P CNX Nifty |
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Fund of funds |
Other mutual funds |
Other Schemes
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Tax-Saving (Equity linked Savings Schemes) Funds
Tax-saving schemes offer tax rebates to investors under specific provisions of the Income Tax Act, 1961. These are growth-oriented schemes and invest primarily in equities. Like an equity scheme, they largely suit investors having a higher risk appetite, want to save tax under Sec 80 CC and aim to generate capital appreciation overlong term. They come under EEE (Exempt, Exempt, Exempt ) category. The investments under these schemes qualify for tax exemption under section 80CC of the Income Tax act, besides all gains are also tax free at the time of redemption, that is after a minimum period of 3 years.
Index schemes replicate the performance of a particular index such as the BSE Sensex or the S&P CNX Nifty. The portfolio of these schemes consist of only those stocks that represent the index and the weightage assigned to each stock is aligned to the stock's weightage in the index. Hence, the returns from these funds are more or less similar to those generated by the Index.
Sector-specific funds invest in the securities of only those sectors or industries as specified in the Scheme Information Document. The returns in these funds are dependent on the performance of the respective sector/industries for example FMCG, Pharma, IT, etc. The funds enable investors to diversify holdings among many companies within an industry. Sector funds are riskier as their performance is dependent on particular sectors although this also results in higher returns generated by these funds.
COMPARISON BETWEEN SIP, PF AND NSC
Retail investors are often confused between various names and various financial products. NSC, PF, PPF, FD etc all seem similar to them. Here we explain basic features of four financial products. Names may be familiar, the basic features may not be.
National Savings Certificates(NSC) is a Govt. of India Bond, it is basically used for small saving and income tax saving investments in India. NSC is a part of the postal savings system of Indian Posts. This can be purchased from any Post office in India. These are issued for five and ten year maturity and can be pledged to banks as collateral for availing loans. The holder gets the tax benefit under Section 80C of Income Tax Act, 1961. Current rate of return is 8.5%. Trusts and HUF cannot invest in NSC. There is no upper limit for investments. Returns of NSC are taxable. However, no Tax is deducted at source.
Systematic Investment Plan (SIP) is process of investing a fixed sum, regularly, in a mutual fund scheme. It allows you to buy units each month on a particular date, so you can implement a savings plan. The main advantage of SIP is rupee cost averaging. Unlike PF and NSC, SIP is not a product. SIP is just a mode of investment in a mutual fund. Essentially regular investment in a mutual fund is a SIP. An investor can invest in open ended Equity Fund or an ELSS (EQUITY LINKED SAVINGS SCHEME or TAX SAVING) fund. SIP has a history of mitigating risk and offering high double digit returns. An investor can start a SIP in an ELSS fund to save tax and earn higher returns. Anymore information on this can be sought from the best mutual fund distributor, Deep Knowledge & Investment (DKI).
Provident Fund (PF). All of us have heard of PPF (Public Provident Fund) and EPF (Employee provident Fund). There is essentially no difference between the two. Both are part of retirement planning. EPF is When an employee gets a part of his salary deducted with an equal contribution from his employer. Normally 12% of basic salary automatically goes into PF account. And employer has to contribute 12% too. However, an employee can contribute higher than 12% but the employer contributing over 12% is his choice. Maturity amount of EPF is paid either at retirement or resignation. Current rate of interest in EPF is 8.5%.
PPF is a voluntary provident fund scheme started by Govt of india. Any individual can open a PPF account and start investing. Anyone (including HUF) can open a PPF account (normally in nationalized banks or certain branches of Post offices). Maturity of PPF can be redeemed after 15 years from the date of opening of the account. Minimum contribution is Rs.500 every year. Current rate of interest in PPF is 8%. Returns are tax free
Fixed deposit (FD) is essentially and Bank Deposit which offers higher rate of interest than regular savings account. If the suplus money in bank savings account has no utility for a certain minimum period of time then it can be invested in a fixed deposit. It enables the depositor to earn higher interest on their surplus fund. There are certain disadvantages of FD. Firstly, the real returns (post tax) are lower than the inflation. Tax is deducted at source. Secondly, FD rate differs from bank to bank and is also different for different time periods. Higher the period, higher the FD rate. Lastly, an early redemption (then the period initially decided) in penalised and depositor gets a lower rate.