Invest in Mutual Funds

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Mutual Funds

Invest in Mutual Funds with us and supercharge your investments with just a few clicks. Offering a perfect blend of liquidity, flexibility and capital appreciation, Mutual Funds can set you up for long-term success while minimising risk through professional asset management. With our easy investment process, investing in Mutual Funds online has never been easier. We bring investing to your fingertips through our safe and secure net banking portal and Axis Mobile app - Open, ensuring a quick, convenient and effortless investing experience in Mutual Funds.

What are Mutual Funds?

Mutual Funds are investment vehicles that pool money from multiple investors to invest in a broad range of assets, such as stocks, bonds, debt and other securities.

Mutual funds are managed by experienced professionals, i.e., fund managers, who make investments to achieve specific investment objectives (such as income generation, liquidity or capital appreciation). This ensures informed investing and proper diversification.

You can buy Mutual Funds online from various available categories that align with their financial goals, risk tolerance levels and investment horizons.

Advantages of Mutual Funds?

  • Diversified portfolio

    Mutual Funds’ investments spread risks across different securities and asset classes. This reduces the risk exposure from single investments and stabilises market returns through balanced asset management and allocation.

  • Variety

    Mutual funds offer a plethora of options, such as equity funds, debt funds and hybrid funds, to choose from based on your financial goals, investment horizon and risk tolerance.

  • Flexibility

    With features like systematic investing (SIP), switching of funds, dividend reinvestment and easy withdrawal, Mutual Funds enable you to adjust, reallocate and rebalance your investments to meet evolving financial needs.

  • Economies of scale

    The collective investment approach of Mutual Funds facilitates bulk investments. This minimises associated costs and maximises market returns through economies of scale.

  • Liquidity

    Providing easy access to funds, Mutual Funds allow you to swiftly convert your investment funds into cash, ensuring financial safety and stability in emergencies.

  • Lighter on wallet

    With low minimum investment requirements, starting from just ₹100, Mutual Funds make quality investments accessible to all, irrespective of their financial capacity or status.

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Types of Mutual Funds

Equity funds

Equity funds

Equity funds invest primarily in company stocks and carry high risk-high returns potential. While the returns on such investment funds are based on company-specific and market performance, they offer a potential for high returns over the long-term. This makes them suitable for individuals prioritising capital appreciation.

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Debt funds

Debt funds

Debt funds invest in fixed-income securities, including debentures, bonds and commercial papers. These funds are considered suitable for conservative investors seeking steady income.

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Hybrid funds

Hybrid funds

As the name suggests, hybrid funds invest in a diversified portfolio of equity and debt instruments. Such funds are ideal for moderate-risk investors demanding balanced returns with reduced volatility.

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Index funds

Index funds

Index funds track a particular index, such as NIFTY or SENSEX, and mirror its performance. Following a passive investment approach, these funds are ideal for novice, long-term or risk-averse investors looking for stable returns combined with diversification and consistent performance.

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Why should you invest in Mutual Funds?

  • Diversification

    Through diversification, Mutual Funds reduce dependence on a single stock or sector and protect your investments from market ups and downs.

  • Convenience

    Mutual Fund investment plans feature a simple, paperless investment process and provide a single window for diversified investments. Such beneficial facilities save you time and effort, ensuring a seamless and convenient investing experience.

  • Affordability

    Mutual Funds make investing affordable and accessible with low minimums (as low as ₹500) and no hidden charges.

  • Professional management

    Mutual Funds are expertly managed by seasoned fund managers possessing years of experience in the field. This highlights that Mutual Fund investment decisions are guided by a deep understanding of market dynamics, keeping your funds safe from unnecessary risks.

  • Compounded growth

    Reinvested market returns in lump sum investments and continuous contributions in SIPs create a snowball effect. This fuels wealth creation and significantly amplifies the impact of your principal investments.

Ways to invest in Mutual Funds?

Systematic Investment Plans (SIPs)

A Systematic Investment Plan is a popular way to invest in Mutual Funds. You can make regular investments into a particular Mutual Fund scheme at specified intervals, for example- weekly, quarterly or monthly.

Following a disciplined investment approach, this investment method cultivates a habit of regular savings and investing, resulting in substantial wealth growth over time.

Lump sum investments

Lump sum investments in Mutual Funds involve investing a corpus of funds in a Mutual Fund scheme at one time. This investment approach provides an opportunity to capitalise on potential higher market returns.

How do Mutual Funds work?

The Mutual Funds investment process comprises the following five main steps:

  • Pooling of funds: Funds collected from multiple investors are pooled together to create a large portfolio. Investors put money into a Mutual Fund scheme either through a lump sum or SIP.
  • Investment: The pooled funds are then strategically invested in stocks, fixed income securities, money market instruments, commodities like gold etc depending on the scheme’s objective.
  • Fund Management: Professional fund managers manage the investment portfolio based on their research and analysis, and monitoring market trends.
  • Net Asset Value (NAV): You receive for your investments in a mutual fund. The price of a unit is known as the NAV, which is calculated as the total asset minus the total liabilities, divided by the total number of units outstanding. The NAV is calculated daily and fluctuates based on the performance of underlying assets.
  • Return on investment: You earn returns from mutual fund investments either through capital gains due to appreciation in NAV over time or through dividends (in case if you have chosen Dividend plan).

Mutual Funds fees and charges

While Mutual Funds offer diverse investment opportunities, they also come with certain charges that you must understand before investing. These fees and charges include:

  • Expense ratio: This ratio reflects the fund’s operating expenses, expressed as a percentage of its total assets and covers the following:
    • Management fees, such as fund manager’s remuneration.
    • Operational costs related to auditing or regulatory compliance.
    • Administrative charges for record-keeping and customer service.
  • Exit load: This is a fee charged when you withdraw or redeem your Mutual Fund investment within a specified period.

Note: Mutual Funds fees and charges vary significantly across different schemes, fund houses and investment types. Consult official documents, such as Scheme Information Document (SID) or Statement of Additional Information (SAI) or seek guidance to understand the associated charges in detail.

Frequently Asked Questions

To choose a suitable Mutual Fund, it is crucial that you define your financial goals, assess your risk profile and consider Mutual Fund investment tenure. Furthermore, you should research the fund-related details, including its type, objective, past performance, portfolio composition, and associated fees.

Yes, Mutual Funds are taxable and the tax implications depend on the fund types, type of capital gain (such as long-term capital gain or short-term capital gain) and holding period.

For example- For equity funds, short-term capital gains within 12 months are taxed at 20%. On the other hand, long-term capital gains above ₹1,25,000 (in a year) are taxed at 12.5%. Debt funds are taxed at applicable slab rates irrespective of the holding period.

Mutual Funds allocate investments across various assets, which earn returns in the form of dividends and capital gains.

These returns are then distributed in two ways including:

  • Income Distribution cum Capital Withdrawal (IDCW): In this option you receive payouts at regular intervals.
  • Growth option: This reinvests the entire earnings in the scheme to benefit from compounding over time.

When making Mutual Fund withdrawals, investors may have to pay exit load. It is a fee charged for redeeming units before a specified period. It is charged to discourage redeeming units too early.

To redeem Mutual Fund units, you need to inform your fund house, or you can make a redemption request online by selling your Mutual Fund units at the prevailing NAV (Net Asset Value).

Once your redemption request is approved, the sum realised from the sale of these units will be credited to your registered bank account.

Standard risks associated with Mutual Funds investment include:

  • Market risk: Risk of loss or decline in investments due to due to market fluctuation.
  • Interest rate risk: Debt funds are negatively impacted when interest rate rises as the value of bonds and interest rate inversely related.
  • Liquidity risk: Some securities may not be easily sold during market downtrend thereby resulting in high impact cost.

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