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Over the years, mutual funds have emerged as a dependable and popular way to enhance one's financial situation. It acts as a substitute for more traditional investment options, including real estate, gold holdings, overnight funds, term deposits, and so forth.
With Kotak Mahindra Bank, you can avail the opportunity to grow your wealth through mutual fund investments. And enjoy various services the bank provides like portfolio management, pension fund management and many others.
A mutual fund is a collection of funds that are professionally managed by a fund manager, who allocates the funds among stocks, bonds, money market instruments, and/or other securities based on the fund's investment goal.
Why are debt hybrid mutual funds a great investment?
Why are debt hybrid mutual funds a great investment?
Here’s how you can invest in companies like Starbucks, Airbnb and Google
Market Perspective
In India, mutual funds are categorised according to the asset classes in which they make investments. Here are a few common categories:
Please follow the following steps while investing in Kotak.
Before investing, ensure you have completed your KFC to make the process smoother and hassle-free.
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Mutual fund (MF) is a mechanism for pooling money by issuing units to the investors and investing funds in securities in accordance with objectives disclosed in the offer document.
Purchase - Login to your Net banking account, select the investment tab and proceed with the purchase option. Select category of scheme eg. Equity or Debt.
For mobile banking investors, you need to login to your mobile banking app, select investment option and then purchase the mutual fund.You can also visit the nearest branch if you need assistance in investing in Mutual funds.
Redeem - Login to your Net banking account, select investment tab, and proceed with the redemption option for the required fund transaction.
For mobile banking investors, you need to login to your mobile banking app, select investment option, then select redemption option.
You can also visit the nearest branch if you need assistance to redeem your funds.
An SIP allows an investor to invest regularly. One puts in a small amount every month that is invested in a mutual fund. An SIP allows one to take part in the stock market without trying to second-guess its movements
An Investment Horizon refers to the length of time that an investor is willing to hold the portfolio for. Investment horizon can be classified as following
Know Your Client (KYC) registration is mandatory for all investor as per SEBI guidelines. KYC is being centralized through KYC Registration Agencies (KRAs) registered with SEBI. With this, each investor has to undergo the KYC process only once in the securities market and the details would be shared with other intermediaries by the KRAs.
NAV is the market value per-unit of all the securities held by the fund. NAV determines performance of a particular scheme of a mutual fund. Mutual funds invest the money collected from investors in securities markets. In simple words, NAV is the market value of the securities held by the scheme.
Since the market value of securities changes every day, the NAV of a scheme also varies on a day-to-day basis. It is mandatory for mutual funds to disclose the NAV on a regular basis. The NAV per unit is the total market value of securities of a scheme minus any liabilities (or expenses), this is then divided by the total number of units of the scheme on any particular date.
For example, if the total market value of securities of a mutual fund scheme is ₹210 lakh and liabilities of ₹10 lakh and the mutual fund has issued 10 lakh units to the investors, then the NAV per unit of the fund is ₹20 (i.e.210 lakh – 10 lakh /10 lakh units).
If you choose the Growth plan of a mutual fund, the fund will compulsorily reinvest any gains earned in the fund. It does not offer any pay-out. Profits made on the portfolio are necessarily ploughed back into the scheme. These growth plans are continuous compounders of your wealth.
If you choose the dividend payout plan of a mutual fund, a portion of the return/fund is paid out periodically to the investor. The NAV of a dividend fund faces a drop in value to the extent of dividend paid out.
In a dividend reinvestment plan, the mutual fund buys units to the extent of the dividend declared by the fund at the post-dividend NAV and credits units to the account. This results in an increase in the number of units.
The purchase price / Purchase NAV is the price at which Investor buys the unit of a scheme. Units are allotted to customer on basis of amount invested divided by NAV as on Investment date.
Repurchase or redemption NAV is the price at which Investor sells the unit (Minus any load if applicable) Exit load is chargeable as a percentage of NAV if investment is redeemed before the Exit load time
A Load Fund is one that charges a percentage of NAV for entry or exit into the fund. The load structure of a scheme has to be disclosed in its offer documents. In accordance with the SEBI circular no. SEBI/IMD/CIR No.4/168230/09 dated 30 June 2009, there is no entry load for any/all mutual fund schemes.
Exit load is generally charged if the exit is made before a specified time. For example in most equity funds, the exit load is 1% if the exit is before 1 year. Assuming you bought the fund at a NAV of INR 10, after 6 months the NAV is ₹ 11 and you wish to exit from the fund, you will be charged 1% of 11 = 0.11 and your redemption proceeds would be ₹10.89 (₹11-₹0.11)
Currently, in India, the exit load charged is credited to the scheme. The investors should consider the loads while making investment as these affect their returns. However, the investors should also consider the performance track-record of accomplishment and service standards of the mutual fund which are more important. A no-load fund is one that does not charge for entry or exit load. It means the investors can enter the fund/scheme at NAV and no additional charges are payable on purchase or sale of units.
These schemes provide tax benefit of up to Rs. 1.5 lakhs under Sec 80C of the Income Tax Act, 1961. They are pure equity funds, however they come with a lock-in period of 3 years. Such funds not only help the investor save tax but also participate in equity markets.
Expense ratio is the cost of running and managing a mutual fund, which is charged to the scheme. Expense ratio represents the annual fund operating expenses of a scheme and other charges, expressed as a percentage of the fund’s average daily net assets. Operating expenses of a scheme are administration, management, advertising related expenses, etc.
Schemes according to Maturity Period - A mutual fund scheme can be classified into an open-ended scheme or a close-ended scheme depending on its maturity period.
These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents, e.g., Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, Information Technology (IT), Banks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared with diversified funds since they focus on specific sectors.
