What is Mutual Fund
Mutual Fund is a vehicle to pool money from investors for the purpose of investing in securities such as stocks, bonds, money market instruments, commodities and other assets in an attempt to produce capital gains and income for the fund's investors. Mutual Funds are operated by Professional fund managers, who manage the money for the benefit of their investors in return of a management fee. A Mutual Fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus. Mutual Fund is a suitable investment option for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.
Benefits of investing in Mutual Funds
- Professional management : Qualified professionals with the support of a research team that continuously analyses the performance and prospects of companies manage the money.
- Diversification : Diversification lowers the risk of loss by spreading the money across various industries and geographic regions. It is a rare occasion when all stocks decline at the same time and in the same proportion.
- More choice : Mutual Funds offer a variety of schemes that will suit the needs of an investor over a lifetime.
- Affordability : Mutual Funds offer investors an affordable way to diversify their investment portfolios.
- Tax benefits : Investments held by investors for a period of 12 months or more qualify for capital gains and will be taxed accordingly. These investments also get the benefit of indexation.
- Liquidity : In open-end funds, one can redeem all or part of his investment any time he wishes and receives the current value of the shares. Funds are more liquid than most investments in shares, deposits and bonds. Moreover, the process is standardised, making it quick and efficient so that one can get his cash in hand as soon as possible.
- Transparency : The performance of a Mutual Fund is reviewed by various publications and rating agencies, making it easy for investors to compare fund to another. A unit holder is provided with regular updates, for example daily NAVs, as well as information on the fund's holdings and the fund manager's strategy.
- Regulations : All Mutual Funds are required to register with SEBI (Securities Exchange Board of India). They are obliged to follow strict regulations designed to protect investors. All operations are also regularly monitored by the SEBI.
Learn more about Mutual Funds
How does a Mutual Fund Work
Different types of Mutual Fund
Open ended funds
- These are schemes that do not have a fixed maturity. The sale- purchase transaction is a continuous process here allowing investors entry and exit according to their suitability.
- Investors who wish to exit can offer their units to the Mutual Fund for redemption, generally called repurchase. Similarly the Mutual Fund can sell new units to investors interested in participating in the scheme, generally called sale.
- Every such transaction results in a change in the unit capital of the scheme. The unit capital increases when additional units are sold and decreases if existing units are repurchased.
Close ended funds
- These are schemes that have a fixed maturity. Liquidity in such schemes is available through listing in the stock market.
- Trades in the market entail change in the ownership of the units, but do not alter the scheme’s unit capital.
- Occasionally, closed-end schemes provide a re-purchase option to investors, either for a specified period or after a specified period, normally up to a total limit for all investors together, or a limit per investor. Such re-purchase would reduce the unit capital of the scheme
Equity schemes invest primarily in stocks. Depending on the scheme objective, investments could be in:
- Growth stocks where earnings growth is expected to be attractive.
- Momentum stocks that go up or down in line with market.
- Value stocks where the fund manager is of the view that current valuations in the market do not reflect intrinsic value
- Income stocks that earn high returns through dividends
The aim of Equity Funds is to provide capital appreciation over medium to long term.
Types of Equity Funds
- Large Cap Funds : Large cap funds invest a larger proportion of their corpus in companies with large market capitalization. They are safe, have predictable returns, easy to understand and less volatile to market swings compared to other diversified equity funds. These funds mirror the performance of the economy and are geared to handle market cycles better as they have the size and scale to weather the long down market cycle. However, when compared to mid and small cap stock, these investments lag in providing exceptional returns in a rising market situation.
- Large and Mid Cap Funds : These target large and mid-capitalization companies to invest their corpus. The ratio in which the investment is diversified becomes variable as investments made are unique for each fund. These funds are generally placed on a higher risk return trade off plane in comparison with a pure large cap fund, as its target market includes both large and mid-cap funds.
- Mid Cap and Small Cap Funds : These funds invest in a mix of midcap and small cap companies. The lack of any standardized definition or classification of small and medium sized company gives freedom to each Mutual Fund to draw their own definitions and classifications. The general thumb rule for small companies is to have a market capitalization of up to 500 crores. When market capitalization is over 500 crores but below 1000 crores, it is defined as a medium sized company. Due to their exposure in high beta stocks, they have a high risk return trade-off compared to a large cap fund. Investment in Mid-Cap Funds should have long term perspective.
- Multi Cap Funds : Portfolio of multi cap funds comprises large cap, mid cap and small cap stock. These diversified Mutual Funds are thus in a position to invest in all stocks across market capitalization. This makes multi cap funds less risky when compared with pure mid cap or small cap funds and therefore are looked upon with favour by investors who are not looking for very aggressive investment options.
- Sectorial Funds : As the name suggests sectorial funds invest in a specific sector or industry viz. energy or utilities. These funds are diverse and variable with respect to market capitalization, investment objectives (i.e growth and/ or income) and class of securities within any portfolio. These funds cannot be singularly categorized like a large or mid cap fund and are deemed considerably risky as their entire execution depends on the performance of the only sector in which they have been invested. Lack of diversity to fall back on makes this plan suitable for aggressive investors only.
- Thematic Funds : A thematic fund is one where the fund’s objective is to deliver optimal returns by investing in stocks which qualify to belong within the particular theme that is considered. For example, themes may range from Multi-Sector, International/ Multi Economy, Commodity, particular style of investing etc. Theme based funds are often mistaken to be sector funds. Yet unlike a sector fund, theme funds have a broader spectrum to operate in. Thematic funds are also dependent on the performance of a particular set of sectors all belonging to the same nature. Thus lacking the diversity and support of a broader market, they are volatile and prone to risk. This sort of investment is preferred by seasoned investors who are well aware of the market trends and are adept in making speculations.
- Index Funds : Index funds are designed to match the performance of a market index which it tracks (e.g. BSE, NSE). It is generally done by maintaining an investment portfolio that replicates the composition of the chosen index. Thus the stocks and their weightage in the portfolio would be same as that of the chosen market index. This replicating style of investment is called passive investing. Characteristics of an index Mutual Fund are broad market exposure, low operating expense and a low portfolio turnover. It would be erroneous to assume that the performance of index funds match the performance of the actual index. There may be two factors responsible for this. A) The management fees charged becomes a liability on the returns. B) Weightage given by the funds for particular securities may not be exact with the weightage of the securities in the actual index. The marginal difference that exists is termed as tracking error.
- Equity-linked savings scheme (ELSS) : ELSS is open-ended, diversified equity scheme. They offer tax benefits up to Rs.150000 under Section 80C of Income Tax Act 1961. There is 3 years lock-in period.
Risk of investing in Equity Mutual Funds
- Market Risk : At times the prices of all the securities in a particular market rise or fall due to broad outside influences affecting stock prices. This change in price is due to "market risk".
- Investment Risks : NAV of Sectorial schemes are linked to the equity performance of such companies and may be more volatile than a more diversified portfolio of equities.
- Liquidity Risk : Thinly traded securities carry the risk of not being easily saleable at or near their real values.
- Changes in the Government Policy : Policy changes, especially in regard to the tax benefits may impact the business prospects of the companies leading to an impact on the investments made by the fund.
Income or Debt Funds generally invest in fixed income securities (debt securities) such as bonds, corporate debentures and Government securities. True to their name Income Funds aim to provide a steady flow of income to the investors, making them ideal for capital stability. Risks are typically lower in debt fund compare to equity funds and capital appreciation is also of limited nature in the former.
Types of Debt Funds
- Liquid Funds/ Money Market Funds : Liquid fund is a type of debt fund whose primary area of investment is in money market instruments viz. certificate of deposits, treasury bills, commercial papers and term deposits. It is easier for a fund manager to meet the redemption demand of his investors due to the lower maturity period of these underlying assets (with the period of investment being even as short as 24 hours). Liquid fund option thus provides a golden opportunity for corporates and individuals to lodge their surplus cash for very short periods. An additional advantage is that returns on these funds oscillate less in comparison to other funds.
- Ultra Short Term Funds : Ultra short-term funds target liquid fixed income instruments that have short term maturities. Though it helps investors avert interest rate risks, they offer better returns than most money market instruments. Though liquid and ultra-short-term funds resemble each other on many grounds, yet the points that differentiate the two are listed below. Note: Comparison between Liquid Fund and Ultra Short Term Fund
- Floating Rate Funds : Floating rate funds are those that invest in bonds and debt instruments. The coupons of these debt instruments fluctuate according to the underlying levels of interest rates. This is in contrast to fixed rate coupons. Floating rate funds have several advantages. The primary advantage is that its degree of sensitivity is lower compared to funds or instruments that have a fixed coupon rate. Investors are attracted to floating rate funds when there is an upward trend in interest rates. This is because there will be a consequent/relative upward impact upon the levels of interest or coupon payments. Floating rates on the other hand, appeal less to investors when the interest rates are on the decline
- Short Term & Medium Term Income Funds : These funds have an average maturity period (of up to 3 years), nestled between the short liquid and ultra-short-term funds and the long pure income funds. They perform best when short term interests are high, turning potentially beneficial when interest rates go down as the market becomes more liquid. Such funds are popular amongst the more conservative investors who do not desire to take aggressive risk and generally operate within a 9 to 12 month window.
- Income funds : These funds investing in government bonds, corporate bonds and other money market instruments (generally with a maturity of more than 3 years) are volatile in nature. They tend to fluctuate with the changing interest rates and are thus preferred by only those who have a long term investment plan in mind and are prone to taking risks in their investment schemes. The crucial matter is the timing of entry and exit from these funds. The ripest moment to invest is when the interest rates have reached the pinnacle on the bell curve and is just about set to decline.
- Gilt Funds : Gilt fund is one of the investors’ safest bet as the investment is made in Government securities of medium and long term maturities that are issued by State and the Central Government. Naturally, with the Government being the issuer of the instruments the funds are totally free from the risk of default. These funds come with a high degree of interest rate risk which is directly proportional to their maturity profile value. Net Asset Values (NAVs) of the schemes change in accordance with the change in interest rates and other economic factors.
- Dynamic Bond Funds : The debt securities that these funds invest in have varying maturity profiles. The interest rate varies individually for these funds and hence each portfolio needs to be actively managed by fund managers. The scope of investment for these funds has a broad spectrum ranging through all classes of debt and money market instruments with no cap or floor on maturity , duration or instrument type concentration.
- Corporate Bond Funds : Corporate bonds and debentures, which offer higher interest, are the main areas of investment for these funds. Higher interest rates however amounts to greater volatility and credit risk. Investors looking to earn a regular income through medium and/ or long term investment opportunities based on moderate risk oriented schemes prefer these funds.
- Fixed Maturity Plans (FMPs) : FMPs are actually Debt Mutual Funds that are close ended and invest in debt instruments. They have a specified maturity date that is less than or is coinciding with the maturity date of the scheme itself. Securities are redeemed on or before expiration of the policy and the proceeds are credited with the respective investors. These plans resemble the passive debt funds where portfolio managers need to buy and hold the debt securities throughout the tenure of the product. FMPs are free from interest rate risks when the investor does not have any desire to withdraw the funds prematurely. For the conservative investor these are tax efficient investment opportunities.
|Liquid Funds||Ultra short Term Funds|
|Maturity Period||Invest in security with residual maturity up to 91 days.||Can invest in security with a maturity period higher than 91 days.|
|Risk Factor||Less risky as compared to Ultra ST Fund due to lower maturity period||Protests against interest rate risk but it is not immune to market fluctuations|
Risk of investing in Debt Mutual Funds
- Interest Rate Risk : The price of a bond and the prevailing interest rates are closely related. Interest Rate Risk is the probability of change in the bond price due to any fluctuation in the interest rate. The change is generally inverse i.e when interest rates go up; most bond prices go down and vice versa. Interest rate is also dependent on the duration of a bond. Duration is the reactivity of a bond’s price to the interest rate movement, and is dependent on the remaining maturity time of the bond, commonly expressed in terms of years. The thumb rule is that the duration will be higher when the bond’s remaining maturity is longer. Moreover the price also tends to fluctuate as the rate of interest changes. E.g., a bond with 20 years left to maturity will have a higher duration than an otherwise equivalent bond with 10 years left to maturity. In similar lines, there is a large drop in price for a bond with a high duration when it is affected by a rise in interest rate.
- Credit Risk : Credit Risk is the creditworthiness of the issuer of a bond coupled with its ability of not only making interest payments on time but also of making proper credit of proceeds (face value) at the maturation . A bond is said to be a defaulted one if the issuer fails to repay either the interest or the principal on time. Under such circumstances, when the credit rating or the issuer’s creditworthiness is under scrutiny, the price of its bonds tends to decline. The ripple effect of this causes the further decline of the share price of the funds that hold the issuer’s bonds. Credit rating agencies evaluate the creditworthiness of an issuer and express it in terms of bond credit ratings.
- Prepayment Risk : Prepayment Risk arises out of the possibility that a bond owner will be credited with his/her principal investment amount prior to the maturity of the bond. This situation is triggered in a market where the interest rates are falling, leading to a consequent yield that exceeds the current market rates urging borrowers to issue bonds and procure loans at the new interest rate. The borrowers then use the proceeds to prepay existing loans and other debts which have higher interest rate. When such loans are prepaid, the bondholder is barred from enjoying the above market interest payments from the investment any further and is forced to reinvest in a market where the prevailing interest rates are inferior to the original rates paid by the prepaid bonds. Prepayment risk is most prevalent in bond Mutual Funds that invest in mortgage-backed debt securities.
- Inflation Risk : Inflation risk is the fact that the purchasing capacity of a bond's fixed interest payment is weakened by increase in price levels. As the characteristic of bond Mutual Funds is that they offer regular pay-outs from interest earnings, investors are naturally attracted to such Mutual Funds. Inflation risk however, can affect these types of pay outs. As inflation mitigates the purchasing power of investments, it is particularly a matter of concern for those types of investments that promise a fixed pay out of interest over a span of time, as in cases of bonds or certificates of deposits. The bottomline is, as inflation increases prices of goods and services in general, investors find that there has been a drop in their earnings.
Portfolios of Hybrid Fund are an amalgamation of equity stocks and bonds which can vary proportionally. It has qualities of both equity and debt schemes and appeals to investors who are willing to go for debt plus returns with higher levels of risk than fixed income schemes. The debt investments ensure a basic interest income, which the fund manager hopes to top up with capital gains on the equity portfolio.
Types of Hybrid Funds
- Balance Funds : Balance funds in India tend to have 65% in equity keeping in mind existing tax laws. The rest is invested in debt. This type of fund is geared toward investors who are looking for a mixture of safety, income and modest capital appreciation. The debt investments ensure a basic interest income, which the fund manager hopes to top up with capital gains on the equity portfolio. However, losses can eat into the basic interest income and capital. The greatest benefit of a balanced fund is that it makes risk more palatable. An allocation to bonds moderates the short-term volatility of stocks, giving the risk adverse long term investor the courage and confidence to sustain a heavy allocation to equities. From taxation point of view it is treated similar to equity funds.
- Monthly Income Plans : MIPs are low risk, income generating options that are enhanced by a small equity component averting any major addition to the risk factor of any portfolio. Investors willing to earn the short term debt market return prefer this. MIPs tend to have 70% to 95% in debt instruments and 5% to 30% in equity instruments. Though these funds have a nomenclature of Monthly Income Plan but monthly income is not assured and is subject to availability of distributable surplus. From taxation point of view it is treated similar to debt funds.
- Capital Protection Oriented Funds : Capital Protection Oriented Funds are closed- ended hybrid funds that invests 75-80% of its corpus in fixed income securities maturing in line with the tenure of the scheme with an objective to seek capital protection. The balance is invested in equity and equity related securities seeking capital appreciation. Over the term of the plan, the debt portion grows to the principal amount, thus ensuring that the capital is 'protected'. Meanwhile, the portion invested in stocks helps boost returns. From taxation point of view it is treated similar to debt funds.
- Arbitrage Funds : An arbitrage fund tries to take advantage of the price differential (of the same asset) between two or more markets or market segments. Having the option of substantial investment of the portfolio in debt markets, these funds turn hybrid in nature. Volatility of the assets has a direct influence on the returns of Arbitrage funds. When the market is persistently volatile these funds capitalize on the market inefficiencies and rake in sizeable profit for the investors. Hence, these funds are safe bets for low risk profile investors. Moreover, since these funds primarily invest in equities, their tax treatment is in the level of equity funds.
Various options or plans in Mutual Funds
- Growth Option : In this plan the investor realizes only the capital appreciation on the investment (by an increase in NAV).
- Dividend Payout Option : In this plan dividends are paid-out to investors. However, the NAV of the scheme falls to the extent of dividend payout. This plan provides a regular income to the investor.
- Dividend Re-investment Plan : In this plan dividends are declared but re-invested in the same scheme by purchasing additional units.
Different methods of investment in Mutual Funds
- Lump sum Investment : In case of lump sum investing, the investor has money in hand which can be invested entirely at one go.
- Systematic Investment Plan (SIP) : SIP is a disciplined way of investing where investors invest a fixed amount of money on regular intervals. The frequency of investment is usually weekly, monthly or quarterly. SIP provides an investor the benefits of Rupee Cost Averaging as he gets more units when the price is low and fewer units when the price is high. As a result, in the long run the average cost per unit is supposed to be lower. SIPs are the best form of controlled investment. They provide option to the investor to increase or decrease the invested amount or even to quit the plan as per their convenience. This is a common choice for retail investors who have a resource constraint to pursue active investment.
- Systematic Transfer Plan (STP) :
A systematic transfer plan is a disciplined way of shifting part of investors' current investments into other schemes, thus providing diversification. STP is one of the best risk mitigation strategies of the market. Systematic Transfer Plan is of two types:
- Fixed STP : A fixed STP is where investors take out a fixed sum from one investment to another.
- Capital appreciation STP : A capital appreciation STP is where investors take the profit part out of one investment and invest in the other.
- Systematic Withdrawal Plan (SWP) :
In a Systematic Withdrawal Plan (SWP) the investor has the freedom to withdraw money at predetermined intervals from his/ her existing Mutual Fund. The funds thus withdrawn may be opted for reinvestment in other funds, or may be used as per the investor’s convenience. Systematic withdrawal plans are used by investors to create a regular flow of income from their investments. SWP is available in two options:
- Fixed Withdrawal : Where you specify amounts you wish to withdraw from your investment on a monthly/quarterly basis.
- Appreciation Withdrawal : Where you can withdraw your appreciated amount on a monthly/quarterly basis.
Investor categories eligible to invest in Mutual Funds
- Resident Individuals
- Indian Companies
- Indian trusts and charitable institutions
- Non-banking Financial Companies (NBFC)
- Insurance companies
- Provident funds
- Non-resident Indians (NRI)
- Overseas Corporate Bodies (OCB)
- SEBI registered FII’s
Different risk and return measures that are used to evaluate Mutual Fund schemes
- Standard Deviation: Standard deviation is a statistical measure that is used to quantify the amount of variation or dispersion of a set of data from its mean. When SD is close to 0, it means that the data points are close to the mean, whereas when points are dispersed over a large range of value it indicates a high SD. Standard deviation is calculated as the square root of variance and is also known as historical volatility. Investors generally use the Standard Deviation method to meter the expected volatility of the market. For example, a volatile stock will have a high standard deviation while the deviation of a stable blue chip stock will be lower.
- Sharpe Ratio: It is used to measure the risk-adjusted performance of a portfolio. The Sharpe ratio is calculated by subtracting the risk-free rate from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns. Sharpe ratio is used to gauge the influencing factors of a portfolio’s return i.e whether the returns were specifically a result of smart investment decisions or excess risk. A good risk adjusted performance is visible through a greater Sharpe ratio in a portfolio, whereas a negative Sharpe Ratio suggests that a risk-less asset would be better suited than the security being analysed.
- Alpha Alpha is a performance evaluator on the basis of risk adjustment by taking a Mutual Fund’s fluctuation and comparing its risk adjusted performance to a benchmark index. The Alpha is the excess return that the fund has, in relation to the return of the benchmark index. When the fund’s performance surpasses its benchmark index by 1%, it indicates a positive alpha. On the other hand a negative alpha is when the figure remains below the 1% mark.
- Beta It checks the degree of volatility or systematic risk of a given portfolio on the canvas of the market as a whole. When the security price moves with the market the beta remains at a neutral 1. Scoring below 1 means that security price oscillates less than the market, and beta over 1 means that the security's price will be more volatile than the market.
Costs involved in Mutual Fund investing
- Total Expense Ratio (TER):
Investors, in order to get professional assistance on certain areas of fund management seek the service of Asset Management Companies (AMCs). In lieu of their services, the AMCs charge the investors for not only professional fund management, but also some regular operational cost viz. advisory fees and fees for investment management, sales/ agent commissions and ongoing service fees, legal and audit fees, registrar and transfer fees, fund administration expenses and marketing and selling expenses. The entire gamut of these fees borne by the investor comes under the heading of “Total Expense Ratio” (TER) which is actually an annual charge on AUM expressed in percentage. As per SEBI’s guidelines, TER and AUM share a inversely proportional relation, i.e TER needs to be lower as AUM increases. The net of all liabilities, inclusive of TER comes under the corpus of the NAV of a Mutual Fund scheme. As per a recent circular by SEBI, service tax, which as earlier paid by AMCs now comes under the purview of “cost to investors”.
Note: Recently SEBI has allowed AMCs to charge an additional 30bps in TER on the condition that the new inflows from beyond top 15 cities are at least 30% of gross new inflows in the schemes or 15% of the schemes AUM (year-to-date), whichever is higher. In other words, TER may go up to 2.8% instead of 2.5% for equity schemes. However, the additional TER will be clawed back if inflows beyond top 15 cities are redeemed within a period of 1 year from the date of investment.
- Exit Load: Mutual Funds allow an investor to redeem/ sell his units prior to the maturity of the scheme. However, this can be done only when a charge is paid for the same. This charge or Exit Load is leveed basically to discourage the investor from leaving the scheme before a substantially long time period. Exit loads are charged by various categories based on predefined holding period cut offs. If the holding period is already short, as in case of liquid funds, exit load is not charged from investors. However, for most other categories, the exit load varies from 1%-3% as per the exit time frame specified for the funds.
- Transaction Charges: As per SEBI guidelines w.e.f August 2011 AMCs have been authorized to collect a nominal one-time amount as transaction fee. For a first time investor, the fee is INR 150 for an investment amount exceeding INR 10000. For SIPs where the total fund value involved is greater than INR 10000 the transaction charge is INR 100 to be paid in four equal instalments spanning the time from the second to the fifth instalment.
Do all Mutual Funds have the same structure for expense ratio
Expense ratios differ from one fund to the other. Actively managed funds have a higher expense ratio when compared to passively managed funds like index funds or ETFs. SEBI recently petitioned that Mutual Funds could launch schemes under a single plan to facilitate new investors to be subject to a single expense structure. SEBI also requested that MFs should provide a separate plan option for direct investment (i.e investments will not be routed through any distributor) in all of their schemes- existing, as well as new. These separate plans will have an USP of a lower expense ratio eliminating the distribution expenses. Moreover, these plans shall be free from payment of commissions.
Tax Reckoner for financial year 2015-16
|Individual / HUF||Domestic Company||NRI|
|Capital Gain Taxation|
|Equity Schemes (Listed)||Nil||Nil||Nil|
|Equity Schemes (unlisted, exit by way of redemption of units)||Nil||Nil||Nil|
|Debt Scheme(Listed)||20% with indexation + 12% surcharge** + 3% cess = 23.0720%||20% with indexation + 12% surcharge** + 3% cess = 23.0720%||20% with indexation + 12% surcharge** + 3% cess = 23.0720%|
|Debt Scheme(Unlisted)||20% with indexation + 12% surcharge** + 3% cess = 23.0720%||20% with indexation + 12% surcharge** + 3% cess = 23.0720%||10% without indexation + 12% surcharge*8 + 3% cess = 11.5360%|
|Equity schemes(if equity schemes are unlisted, exit is by way of redemption of units)||15% + 12% surcharge** + 3% cess = 17.3040%||15% + 12% surcharge* + 3% cess = 17.3040%||15% + 12% surcharge** + 3% cess = 17.3040%|
|Debt Schemes||As per slab rates + 12% surcharge** + 3% cess||30% +12% surcharge* + 3% cess||As per slab rates + 12% surcharge** + 3% cess|
|DIVIDENT DISTRIBUTION TAX****|
|Debt Scheme||25% + 12% surcharge+ 3% cess||25% + 12% surcharge+ 3% cess||25% + 12% surcharge+ 3% cess|
Tax Deduction at Source (Applicable to NRI Investors)
|Short Term Capital Gain||Long Term Capital Gain|
|Equity Oriented Schemes(Listed)||15% + 12% surcharge** + 3% cess = 17.3040%||Nil|
|Equity oriented Schemes(unlisted, exit by way of redemption of units)||15% + 12% surcharge** + 3% cess = 17.3040%||Nil|
|Other than equity oriented Schemes (Listed)||30% + 12% surcharge** + 3% cess = 34.6080%||20% with indexation + 12% surcharge** + 3% cess = 23.0720%|
|Other than equity oriented schemes (Unlisted)||30% + 12% surcharge** + 3% cess = 34.6080%||10% without indexation + 12% surcharge** + 3% cess = 11.5360%|
* Surcharge at the rate of 12% is applicable on domestic companies where the income exceeds INR 10 crores and where income exceeds 1 crore but is less than 10 crores surcharge of 7% is applicable.
** Surcharge at the rate of 12% is applicable on individuals/HUF having total income exceeding INR 1 Crore
*** In order to qualify for long term capital asset, the units of Mutual Funds (other than units of an equity oriented fund) should be held for a period of more than 36 months. In the case of equity oriented funds, units would qualify for long term assets if held for more than 12 months.
****For the purpose of determining the dividend distribution tax payable, the amount of distributed income shall be increased to such amount as would after the reduction of dividend distribution tax on such increased amount at the specified tax rates be equal to the amount of income distributed by the Mutual Fund & rebate of up to INR 2000, available for resident individuals whose total income does not exceed INR 500000
Our Recommended Schemes
|Fund Name||Fund Type||Risk Grade||Returns (%)|
|1 Year||3 Year||5 Year||7 Year||10 Year||Since Launch|
|Franklin India Income Opportunities Fund||Debt: Short Term||Medium Risk||8.27||8.76||9.23||9.39||NA||9.13|
|DHFL Pramerica Credit Opportunities Fund||Debt: Short Term||Low Risk||6.94||9.31||NA||NA||NA||9.69|
|Franklin India Short Term Income Fund||Debt: Short Term||Low Risk||8.27||8.65||9.25||9.36||9.19||8.36|
|Franklin India Low Duration Fund||Debt: Short Term||Low Risk||8.07||9.25||9.46||9.64||NA||9.43|
|DHFL Pramerica Short Maturity Fund||Debt: Short Term||Low Risk||6.44||8.34||8.68||8.94||8.76||7.92|
|Franklin India Ultra Short Bond Fund - Super Institutional Plan||Debt: Ultra Short Term||Low Risk||8.11||9.20||9.52||9.61||8.91||8.91|
|L&T Floating Rate Fund||Debt: Ultra Short Term||Low Risk||7.34||8.33||8.47||8.89||7.85||7.77|
|Indiabulls Ultra Short Term Fund||Debt: Ultra Short Term||Low Risk||6.85||8.16||8.52||NA||NA||8.79|
|Invesco India Growth fund||Equity: Large Cap||High Risk||38.02||14.75||19.08||14.21||9.51||12.21|
|Mirae Asset India Opportunities Fund||Equity: Large Cap||High Risk||36.86||16.30||20.84||16.85||NA||17.62|
|Aditya Birla Sun Life Top 100 Fund||Equity: Large Cap||High Risk||29.58||11.94||17.62||14.56||9.93||15.69|
|ICICI Pru Focused Bluechip Equity Fund||Equity: Large Cap||High Risk||31.35||12.85||16.95||14.07||NA||15.78|
|Aditya Birla Sun Life Pure Value Fund||Equity: Mid Cap||High Risk||54.84||22.46||30.40||22.51||NA||21.95|
|Canara Robeco Emerging Equities Fund||Equity: Mid Cap||High Risk||47.48||21.03||28.85||23.24||14.88||19.57|
|L&T Infrastructure Fund||Equity: Multi Cap||High Risk||58.51||24.44||23.91||14.73||3.95||6.78|
|SBI Pharma Fund||Equity: Multi Cap||High Risk||-0.05||3.67||17.03||16.70||13.64||16.62|
|Sundaram Rural India Fund||Equity: Multi Cap||High Risk||36.02||21.17||20.85||16.85||8.61||13.79|
|Franklin India Smaller Companies Fund||Equity: Small Cap||High Risk||41.45||20.37||29.94||23.89||14.97||16.62|
|L&T Emerging Businesses Fund||Equity: Small Cap||High Risk||63.95||28.33||NA||NA||NA||34.60|
|DHFL Pramerica Arbitrage Fund||Hybrid: Arbitrage||Low Risk||6.00||6.57||NA||NA||NA||6.81|
|Indiabulls Arbitrage Fund||Hybrid: Arbitrage||Low Risk||5.92||6.91||NA||NA||NA||7.01|