Enter PAN to check KYC status
TYPES OF MUTUAL FUNDS
Mutual funds may be broadly classified into the below categories:
EQUITY FUNDS
Equity mutual funds invest predominantly in equities and equity-related securities. These funds provide an excellent alternative to investing in stocks directly. Since equities tend to perform well over the long term, such funds equip investors with wealth creation potential. These may be the best mutual fund category for long-term, high risk investors.
DEBT FUNDS
Debt funds invest predominantly in fixed income securities. Such funds tend to generate returns for investors primarily through the accrual of interest income. Some of the funds may also generate better returns through appreciation in mutual fund portfolio valuation due to favorable changes in interest rates and improvements in credit quality.
HYBRID FUNDS
Many mutual fund companies may also offer solution-oriented schemes catering to specific financial goals, such as children's education, retirement planning, etc. Such schemes have a lock-in period of 5 years or the child's age or retirement age, as per the scheme objective. As such, the investors benefit from implied resistance to liquidating their investments sooner.
EQUITY FUNDS
Equity mutual funds invest predominantly in equities and equity-related securities. These funds provide an excellent alternative to investing in stocks directly. Since equities tend to perform well over the long term, such funds equip investors with wealth creation potential. These may be the best mutual fund category for long-term, high risk investors.
DEBT FUNDS
Debt funds invest predominantly in fixed income securities. Such funds tend to generate returns for investors primarily through the accrual of interest income. Some of the funds may also generate better returns through appreciation in mutual fund portfolio valuation due to favorable changes in interest rates and improvements in credit quality.
HYBRID FUNDS
Many mutual fund companies may also offer solution-oriented schemes catering to specific financial goals, such as children's education, retirement planning, etc. Such schemes have a lock-in period of 5 years or the child's age or retirement age, as per the scheme objective. As such, the investors benefit from implied resistance to liquidating their investments sooner.
MUTUAL FUND INVESTMENT PLANS
DIRECT VS REGULAR PLAN:
If you invest in the mutual fund directly from the fund house’s website/app, without the intervention/advisory of a distributor, it is termed as a direct plan.
If you’ve invested in the mutual fund through a registered distributor, you opt for a regular plan.
Some of the major differences between these direct & regular mutual fund plans include:
| DIRECT PLAN | REGULAR PLAN |
|---|---|
| No intermediary involved | Bought through a mutual fund distributor |
| Total expense ratio is lower than regular plan; hence Net Asset Value (NAV) & returns are higher in comparison | Total expense ratio is higher due to distribution commission; hence NAV & returns are lower in comparison |
| DIY (do-it-yourself) investment | Your financial advisor may guide with mutual fund plans, assist with transactions, monitor the portfolio, etc. |
GROWTH VS IDCW PLAN
If you opt for the growth option while investing in a mutual fund, your earned profits will be reinvested in the scheme.
If you opt for the Income Distribution cum Capital Withdrawal (IDCW) plan, your profits (dividends) will be paid out to you at predefined intervals.
Some of the major differences between growth and IDCW plans include:
| GROWTH PLAN | IDCW PLAN |
|---|---|
| Reinvested profits increase the mutual fund NAV over time | Dividends are paid out to investors, hence NAV is lower than the growth plan |
| Short or long term gains will be applied at redemption | Dividend income will be taxable as per the investor’s tax slab |
| Ideal for those focussed on long term wealth creation | Ideal for those who want periodic payouts |
HOW DO YOU DETERMINE
WHICH MUTUAL FUND IS BEST?
With different types of mutual funds in India offering various benefits & carrying different investment risks, it may be tough to identify the best mutual fund to invest in. Doing thorough research on the schemes you wish to invest in, checking the 1, 3, 5 year returns, and understanding the scheme objective and underlying securities may help you make an informed decision.
To find the top performing mutual funds in India, investors need to look at a variety of factors, including:
Historical
ReturnsInvestment
StrategyFund Manager Profile
And Track RecordComparison With Other
Mutual Funds
MUTUAL FUND COMPANIES
Saving money via gold, real estate and bank fixed deposits has always been popular in India. However in recent times, mutual funds are gradually gaining popularity due to their potential of generating higher returns when compared to some traditional investment avenues.
Today, there are several asset management companies offering a wide range of mutual funds. According to the Securities and Exchange Board of India, there are 40+ registered mutual fund companies in India as on 13 Jul, 2023. These companies offer a variety of mutual fund schemes across equity, debt, commodities, ETFs and FoFs.
INVESTING IN MUTUAL FUNDS ONLINE
With the rising popularity of digital across different fields & industries, mutual funds aren't far behind. People can invest in mutual funds online with minimal effort, from the comfort of their own home, on their computer or mobile device.
The basic pre-requisite for investing in online mutual funds is KYC. Investors can complete their e-KYC with soft copies of their ID proofs, signature image, photo/live video, and verification through OTP. KYC compliant investors can invest in a scheme of their choice, from any mutual fund house as per their convenience.
The steps to invest in a mutual fund online are listed below:
Visit your chosen mutual fund website
Login/sign up and enter PAN for KYC validation
Choose the portfolio and scheme
Select the relevant options (regular or direct mutual fund investment, growth or dividend payout, etc.) and fill your details
Proceed to the payment gateway and make payment
If you opted for SIP, you have to login to your bank's website and add the Unique Registration Number under the Add Biller/Payee option to facilitate auto-debit of SIP installments.
SIP CALCULATOR -
MUTUAL FUND RETURNS CALCULATOR FOR SIP MODE
If you're wondering how to estimate your mutual fund investment returns & corpus growth, it is pretty straightforward. You can use our Systematic Investment Plan (SIP) Calculator to figure out how small periodic investments help you create wealth in the long them.
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