A Short And Easy Guide To Mutual Funds
This article discusses mutual funds and types of mutual funds with particular reference to HDFC Mutual Fund. The article includes details on how to invest in mutual funds, the benefits of investing in mutual funds, and a profile of HDFC Mutual Fund.
- Mutual Funds are professionally managed investment companies that collect money from various investors and invest the same on behalf of them in equity shares, bonds, fixed-income funds, real estate funds, and many other funds.
- The income/profits generated from these investments are distributed among investors in proportion to their holding after deducting expenses incurred by calculating the scheme’s Net Asset Value (NAV).
- Mutual funds offer small investors the opportunity to invest and benefit from growth in equity markets at a low cost as mutual funds are managed by professionally qualified and skilled managers.
How to Invest in Mutual Funds
- Investing in mutual funds has become straightforward. One can simply complete the KNC (know your client) verification online or through the help of a mutual fund distributor or a financial advisor. KNC is a one-time registration process and does not have to be repeated every time one makes a mutual fund investment.
- Investment in mutual funds can be made by a mutual fund distributor, registered investment advisor, a stock exchange broker, a bank, or a non-banking financial institution.
- Mutual Funds investment can be made for as low as Rs 500 per month through systematic investment plans (SIP).
Investment in Mutual Funds can be made in the following ways:
- Offline investment with the fund house
- Offline investment through a broker
- Online on the official website of the fund house
- Through an investment app
Benefits of investing in Mutual Funds
There are several benefits of investing in mutual funds
- Mutual Funds have professional management
Mutual Funds are managed by skilled, professional managers who have ample experience. Fund Managers deeply study the performance of companies before they invest in them.
- Higher returns
Mutual Funds offer higher returns compared to fixed deposits. Investment in equity funds has the potential to generate higher returns but also has higher risk. Even debt funds outperform fixed deposits with higher returns to the same amount of risk. The returns are higher due to tax benefits.
- Offer diversification of risk
Mutual Funds offer investment in various assets like stocks, debt funds, and real estate. Thus, the risk is diversified across various classes of assets.
- Convenient and low cost
Investing in Mutual Funds has become very simple, trouble-free, and quick. The Know your client (KYC) process has become effortless and investments can be KYC verified online till a limit of Rs 50,000. Moreover, amounts as low as Rs 500 per month or Rs 5000 per year can be invested in mutual funds. It is advantageous for small investors who do not have to accumulate large sums of money before investing.
HDFC Mutual Fund
- HDFC Mutual Fund is among India’s leading mutual fund managers, with over 4.4 lakh crore(4.4 trillion) rupees in assets under management.
- The company became a publicly listed company in August 2018.
- The company has a network of 227 branches and 1207 employees.
- The company is owned by HDFC Ltd, one of the leading housing finance companies. Investment in HDFC Mutual Fund can be considered for the following reasons:
- The company believes that it allows investors to invest profitably in the market without worrying about trends.
- The company has set up the infrastructure for fundamental research and further makes deep analyses.
- The company avoids the latest trends and fads with its strong emphasis on managing portfolio risk.
- The company offers savings and investment products that provide wealth and income-creation opportunities to its customer base of 96 crore accounts.
- The company has a track record of over 26 years, including investing in multiple market cycles and delivering excellent returns.
Some products of the company:
HDFC Balanced Advantage Fund
HDFC Arbitrage Fund
HDFC Asset Allocator Fund of Funds
HDFC Banking & Financial Services Fund
HDFC Banking and PSU Debt Fund
HDFC Children’s Gift Fund
HDFC Corporate Bond Fund
Mutual funds should be a preferred investment vehicle for young middle-class investors, as falling interest rates have made interest on fixed deposits unattractive and unable to combat inflation. Mutual fund managers, with their skills, can produce returns beating inflation by investing in equity funds, as small investors neither have the expertise nor the time to invest directly in equity markets. HDFC Mutual fund is one of the best brands in the mutual fund industry with a proven track record, and investors can consider investing in it.