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| 1. What are the advantages of investing in Mutual Funds ? |
- Professional Management
- Diversification
- Convenient Administration
- Return Potential
- Low Costs
- Liquidity.
- Transparency
- Flexibility
- Choice of Schemes
- Well Regulated
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| 2. What are the different forms of Mutual Funds? |
On the basis of Objective
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On the basis of Flexibility
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On the basis of geographic location
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Equity Funds/ Growth Funds |
Open-ended Funds |
Domestic funds |
Diversified funds |
Close-ended Funds |
Offshore Funds |
Sector funds |
Open-ended Funds |
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Index funds |
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Tax Saving Funds |
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Debt / Income Funds |
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Liquid Funds / Money Market Fund |
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Gilt Funds |
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| 3. How to invest in Mutual Funds? |
- Identify your investment needs
- Choose the right Mutual Fund
- Select the ideal mix of Schemes
- Invest regularly
- Keep your taxes in mind
- Start early
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| 4. What is an Asset Management Company? |
An Asset Management Company (AMC) is a highly regulated organisation that pools money from investors and invests the same in a portfolio. They charge a small management fee, which is normally 1.5 per cent of the total funds managed. |
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| 5. What is NAV? |
NAV or Net Asset Value of the fund is the cumulative market value of the assets of the fund net of its liabilities. NAV per unit is simply the net value of assets divided by the number of units outstanding. Buying and selling into funds is done on the basis of NAV-related prices. NAV is calculated as follows:
NAV = (Market Value of the Fund’s investments + Receivables + Accrued Income) – (Liabilities - Accrued Expenses) / Number of Outstanding units. |
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| 6. How Often in NAV Declared ? |
The NAV of a scheme has to be declared at least once a week. However many Mutual Fund declare NAV for their schemes on a daily basis. As per SEBI Regulations, the NAV of a scheme shall be calculated and published at least in two daily newspapers at intervals not exceeding one week. However, NAV of a close-ended scheme targeted to a specific segment or any monthly income scheme (which is not mandatory required to be listed on a stock exchange) may be published at monthly or quarterly intervals. |
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| 7. What is Entry / Exit Load? |
A Load is a charge, which the AMC may collect on entry and/or exit from a fund. A load is levied to cover the up-front cost incurred by the AMC for selling the fund. It also covers one time processing costs. Some funds do not charge any entry or exit load. These funds are referred to as ‘No Load Fund’. Funds usually charge an entry load ranging between 1.00% and 2.00%. Exit loads vary between 0.25% and 2.00%. |
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| 8. What is Sales / Purchase Price? |
Sales/Purchase price is the price paid to purchase a unit of the fund. If the fund has no entry load, then the sales price is the same as the NAV. If the fund levies an entry load, then the sales price would be higher than the NAV to the extent of the entry load levied. |
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9. What is redemption Price? |
Redemption price is the price received on selling units of open-ended scheme. If the fund does not levy an exit load, the redemption price will be same as the NAV. The redemption price will be lower than the NAV in case the fund levies an exit load. |
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| 10. What is repurchase price? |
Repurchase price is the price at which a close-ended scheme repurchases its units. Repurchase can either be at NAV or can have an exit load. |
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| 11. What is a Switch? |
Some Mutual Funds provide the investor with an option to shift his investment from one scheme to another within that fund. For this option the fund may levy a switching fee. Switching allows the Investor to alter the allocation of their investment among the schemes in order to meet their changed investment needs, risk profiles or changing circumstances during their lifetime. |
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| 12. Is there any minimum lock in periods? |
There is no lock-in period in the case of open-ended funds. However in the case of tax saving funds a minimum lock-in period is applicable. The lock-in period for different tax saving schemes are as follows:
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U/s 88 |
3 yrs. |
U/s 54EA |
3 yrs. |
U/s 54EB |
7 yrs. |
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| 13. Can I modify / cancel my transactions? |
Yes, while placing any mutual fund order, modify or cancel option would be available to you till the final confirmation of the order is placed by you. Once you click on Final Confirmation you cannot modify or cancel the order placed by you. You can only modify / cancel any Systematic Investment Plan (SIP) / Systematic Withdrawal Plan (SWP) order placed by you. |
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| 14. Can I transact anytime during the day? |
Yes, you can transact at any time of the day. However, in order to get the NAV of the current day you would have to transact before the cut-off time of the scheme. If you place any order after the said cut-off time, you would be eligible for NAV of the next day. |
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| 15. Can I Purchase after the time which is displayed besides the scheme? |
In order to get the NAV of the same day, you can purchase up to the cut-off time of the scheme, after which you will get the next day's NAV. (If the next day is a holiday, then the NAV of the next working day). |
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| 16. Is there a minimum transaction amount for the fund? |
As decided by the fund, there is a minimum transaction amount indicated against each scheme. You will get to see the minimum transaction amount in the Place Order screen. |
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| 17. After my first purchase can I immediately enter another transaction? |
After your first purchase you will not be permitted to transact for a period of 4 to 7 days depending on the processing time of the Mutual Funds' Registrar. After you place an investment order in any Mutual Fund for the first time a Folio Number is generated for that particular fund. Until the Folio number is generated you will not be allowed to place any further orders for that particular Mutual Fund. After the Folio Number is generated you can place any number of orders in any schemes of the Mutual Fund. |
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