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Mutual Funds

Mutual Funds
Mutual Funds Cycle

What is equity Mutual fund?


It is the pool of money collected from various investors to invest in stock market with the help of fund manager, who is experienced and his recommendation is based on research.

Salient features of equity as an asset class

  • Equity as an asset class has generated consistent returns in excess of 22% over period of past 15 years.
  • The growth of equity as an asset class is higher as compared to other assets, because the corporate growth in developing economy is much higher as compared to developed country.
  • Stock market provides opportunity to invest in equities of corporate having growth story and also experiencing growth.
  • As compared to other asset class equity is cyclical in nature, thereby it requires the investor to stay invested for longer tenure.
  • We think that India will continue to be on growth path & corporate growth will remain in double digit at least for next decades.

We recommend investor for “Systematic Investment Plan” to maximize the returns on their investments. Why “Systematic Investment Plan”?

  • It is a tool that allows you to invest in mutual funds through small periodic investments
  • It induces the habit of compulsory saving and we recommend investing on incremental basis.
  • It can be done daily, weekly, monthly & Yearly basis and it helps in reducing the risk of market timing.

SIP

Do’s

  • Invest regularly preferably on monthly basis.
  • Invest the amount on regular interval, which ensures higher saving & gradual exposure to stock market.
  • Since exit is equally important as entry, on achieving benchmark return, one should take an exit from the portfolio.
  • Invest into different themes based upon market condition if market is low; invest more in blue-chip base MF, when the market just picks up invest in midcap MF.

Don’t

  • Do not check the portfolio returns on regular basis as fall in market instigate fear and hasty decisions results in unwarranted losses


“Warren Buffet philosophy” Be fearful when others are greedy and greedy when other is fearful. Never be driven by market sentiments remain invested till you get complete cycle to be over & One reached to the desired expected returns (obviously it should be based on past track record)

We recommend fixed and incremental SIP over lump sum investment as it neutralize the fluctuation of the market.
There are themes of Mutual funds .The portfolio of the fund is built on the basis of these themes .The decision to invest in any of these themes depends purely on investor risk profile and market conditions.
Some of the popular fund themes.

Large Cap

Theme: such MF invest in large cap & blue chip stocks, which over period of time balance the market fluctuation. Thereby provide decent returns in long run. It generally run in tandem with sensex.
Investment in stock : State Bank of India, Reliance Industries Ltd, Infosys, Hero Motor corp etc

Dynamic Fund

Theme : such MF generally churn the portfolio very often, they believe on warren buffet philosophy that ‘ Sell when everyone buys & Buy when everyone sell”.
Investment in stocks : Generally value buying large cap & mid cap stocks

Discovery Fund

Theme : Invest in emerging businesses / the companies which is undervalued and market has not recognized the same.
As when market recognize its true value, the stock multiply

Midcap Fund

Theme : Most stocks held in a mid-cap fund are firms with established businesses that are still considered developing companies. These funds tend to offer more growth than large-cap stocks and less volatility than the small-cap segment.

Dividend Yield

Theme: Such MF invest into stocks which has regular dividend payment track record and distribution of good dividend yield by the companies

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