Investment in Mutual fund

Mutual Fund is an Investment Scheme in which money is pooled from different sources (Investors) and is used to buy Stocks, Bonds and other securities in the market.

If you want to invest in the stock market but do not want to be bothered with following the stock market regularly,you can opt for Mutual funds.Mutual fund is run by professionals and investors do not have to bother about the day to day functioning of the mutual fund.

Some of the terminologies related to Mutual Fund which you should be aware of are

NAV –(Net Asset Value) –In the context of Mutual funds, NAV is per share market value of the fund.

Units – You can think of it as the no. of shares of Mutual fund.

Entry and Exit Load –Entry and Exit Load refers to the a small fee which needs to be paid to the Mutual Fund Managing Firm while making a purchase (Entry) and selling (Exit) of Units. Now a days Entry and Exit Load is Nil for most of the Markets.

SIP -> SIP stands for systematic Investment purchase. In layman terms this means investing in a systematic way at regular intervals.In Mutual Fund SIP you instruct your Investment Advisor/Bank/Broker to invest a certain amount in Mutual Fund at regular intervals. This protects the investors from the ups and downs of the Mutual fund NAV.

Investment is mutual fund is calculated based on the NAV.So if  you are investing Rs.10000 in Mutual fund whose NAV is Rs. 50.You will be allotted 200 Units of the Mutual fund (Investment divided by NAV) considering all other charges as Nil.

How to make an investment in Mutual funds and track it.

You can make investment in Mutual Fund through a Investment Consultants or Broking Firms or Mutual fund houses directly.Now a days banks also provide the online facility to apply and track your investment in Mutual Fund.

In case you have made some investment in Mutual Fund offline,you can also choose to register for the online services later on and track your investment in mutual funds.Once you have registered for the online services, Fund houses also provide the facility to perform following transactions-

Purchase of new Units of same mutual Fund or any other mutual Fund by same Fund House.You can easily make investment in mutual fund with the click of a Button and these transactions are totally secure and transparent.

Redeem Your Units (Asking the Financial Firm to Return your money).Your money is usually directly credited to the bank account linked with you portfolio.


Mutual Fund Returns

Mutual Fund returns vary for all the Mutual fund schemes and also depend upon when and how much you invest in them.Just to get an idea you can refer to the tables below which shows some of the top performing Mutual funds over 1 Year and 3 Year period.

Top 5  Mutual Fund in India by Return% over last three year – As on April 2012

Mutual Fund Scheme Name Return  %  for Last 3 Years
Reliance Pharma Fund – Growth 42.45%
SBI Magnum Sector Funds Umbrella – Emerg Buss Fund – Growth 41.68%
ICICI Prudential FMCG – Growth 39.85%
ICICI Prudential Technology Fund – Growth 38.26%
UTI Transportation and Logistics Fund – Growth 37.91%

Top 5 Mutual Fund in India by Return% over last one year – As on April 2012

Mutual Fund Scheme Name Return % for Last 3 Years
Motilal Oswal MOSt Shares NASDAQ 100 ETF 35.11%
ICICI Prudential FMCG – Growth 33.95%
SBI Gold Exchange Traded Scheme 31.29%
UTI Gold Exchange Traded Fund 31.2%
Religare Gold Exchange Traded Fund 31.19%

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