In this article, we debunk 5 popular myths regarding mutual funds. Read on...
The mutual fund industry added Rs 2.2 lakh crore to its asset base in 2022, driven by consistent monthly increase in SIP (Systematic Investment Plan) flows. The Assets Under Management (AUM) of the mutual fund industry rose by 5.7 per cent or Rs 2.2 lakh crore to a total Rs 39.88 lakh crore in 2022, data from the Association of Mutual Fund Industry (Amfi) showed on Tuesday. This was way lower than a surge of nearly 22 per cent or an increase of close to Rs 7 lakh crore in the asset base to Rs 37.72 lakh crore in 2021.
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Before you invest in a mutual fund, here are some important things you need to understand.
Industry body Amfi to hold meeting to decide on road map.
The Nifty's stunning 200-point jump in the final minute of trading wasn't a glitch. It marked India's shift to a new, globally accepted system of end-of-day price discovery.
The share of non-resident Indians (NRIs) and overseas investors in Indian mutual funds has been declining over time, despite adding half-a-trillion rupees to holdings over the last five years. Mutual fund holdings for the segment went up from Rs 0.95 trillion as of December 2018 to Rs 1.54 trillion as of December 2022, shows Business Standard analysis of data from the industry body Association of Mutual Funds in India (Amfi). Their share in overall mutual fund assets has fallen from 4.2 per cent to 3.9 per cent during the same period.
Investors with a 6 to 12 month horizon may consider them. They should align their holding period with the fund's maturity profile and prefer schemes with a lower expense ratio.
10% TDS only on dividend paid by mutual funds, not on redemption of units: Tax dept
'Periods of heightened volatility, driven by global events such as tariffs and geopolitical tensions over the past year-and-a-half, can make some investors pause or discontinue their investments.'
Despite strong AUM growth, MFs lag behind other popular investment avenues. MFs received only 6 per cent of total household savings in 2021-2022.
Existing mutual fund investors have time till March 31 to nominate a beneficiary or opt out of it by submitting a declaration form, failing which their folios will be frozen, and they will not be able to redeem investment. The Securities and Exchange Board of India (Sebi), in its circular on June 15, 2022, made it mandatory for mutual fund subscribers to submit the nomination details or declaration to opt out of the nomination on or after August 1, 2022. Later, the deadline was extended to October 1, 2022.
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To become a sponsor-free AMC, a MF must have positive liquid net worth and net profit of at least Rs 10 crore in all of the preceding five years.
Drone technology company ideaForge Technology has successfully raised Rs 500 crore through a Qualified Institutional Placement (QIP). The funding, which saw strong interest from domestic and international institutional investors, will be used to accelerate innovation, expand its product portfolio into combat drones and autonomous systems, and strengthen its working capital to meet growing demand in defence, homeland security, and civil sectors.
Drone technology company ideaForge Technology has successfully raised Rs 500 crore through a Qualified Institutional Placement (QIP). The funding, which saw strong interest from domestic and international institutional investors, will be used to accelerate innovation, expand its product portfolio into combat drones and autonomous systems, and strengthen its working capital to meet growing demand in defence, homeland security, and civil sectors.
'Investors shouldn't let fear dictate their decisions. The most important step is simply to begin investing.'
Here's how you can plan your returns better by investing in mutual funds and the best mutual funds to invest in.
Remember two things: dividend is your own money back to you and it may not be tax-free, and never choose the dividend reinvestment option.
Which are the best mutual funds to buy now? What should be your strategy now while buying mutual funds? Should you buy open-ended or close-ended funds?
Asset management companies launched 239 new fund offerings (NFOs) mobilising Rs 1.18 lakh crore in 2024, with sectoral or thematic equity funds emerging as the top choice of investors, according to a report by Germinate Investor Services Research. This was higher than 212 NFOs collecting Rs 63,854 crore in 2023 and 228 NFOs garnering Rs 62,187 crore in 2022.
Even as net flows into smallcap funds in March turned negative, for the first time in 30 months, they remained a big draw for new investors. The smallcap fund category saw a net of 360,000 investment accounts, or folios, getting added last month, the second-most among all active equity categories. Smallcap funds' continued traction could be driven by their strong performance across timeframes, say experts.
During these two decades, the total assets managed by the industry has grown from two per cent to eight per cent of the gross domestic product (GDP).
Net investments into equity mutual fund schemes in India remained elevated at approximately 38,440 crore in April, despite a slight dip from March's high and a 3% month-on-month decline in Systematic Investment Plan (SIP) inflows.
State-run UTI Mutual fund has toppled private sector ICICI Prudential to be the country's second biggest fund house, while Anil Ambani Group's Reliance MF has retained its top position.
The National Stock Exchange (NSE) is set to launch India's largest initial public offering (IPO), estimated at Rs 30,000 crore. This mega public issue will surpass previous records held by Hyundai Motor India and Life Insurance Corporation of India (LIC), marking a significant event in the Indian stock market. The move comes as India's primary market shows signs of recovery after a period of slowdown.
'I don't see fear becoming a dominant factor for retail investors.'
Following the money and freezing anything unaccounted is the only way to set an example for others, suggests Debashis Basu.
It is easy to get lost in the huge world of mutual funds. Mutual funds expert T Srikanth Bhagavat tells you how to cut through the maze.
Mutual funds have launched a clutch of new fund offers in the silver ETF (exchange traded fund) category this year and collected Rs 1,400 crore in assets after the introduction of the newly-created investment asset class by market regulator Sebi in 2021. Further, fund houses including Kotak Asset Management Company have filed draft documents with the markets regulator to float silver ETF as well as silver ETF fund of funds for investors, information with the Securities and Exchange Board of India (Sebi) showed. These NFOs (new fund offers) are providing an opportunity to the investors to digitally invest and own silver which is easily tradable during market hours.
The improvement in the performance of actively managed mutual fund (MF) schemes is acting as a key tailwind for the nearly Rs 50 trillion industry, Kotak Institutional Equities (KIE) said in a report. The report adds that the two largest listed asset management companies (AMCs) - HDFC and Nippon India - are likely to be the biggest beneficiaries. "The industry has a solid track record of delivering alpha on 10-year returns (70-80 per cent of assets under management (AUM) beat the benchmark), with shorter duration performance also on an upswing.
Investors can begin investing in mutual funds with as little as Rs 100.
Anil Rego of Right Horizons answers questions sent in by GA readers.
Sebi has objected to the practice adopted by MFs to term their new offering as 'IPOs'.
