FAQ

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Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. Each scheme of a mutual fund can have different character
and objectives. Mutual funds issue units to the investors, which represent an
equitable right in the assets of the mutual fund.

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Open ended funds can issue and redeem units any time during the life of the scheme
while close ended funds can not issue new units except in case of bonus or rights
issue. Hence, unit capital of open ended funds can fluctuate on daily basis while that
is not the case for close ended schemes. Other way of explaining the difference is
that new investors can join the scheme by directly applying to the mutual fund at
applicable net asset value related prices in case of open ended schemes while that is
not the case in case of close ended schemes. New investors can buy the units from
secondary market only.


 

 



 
  

In case of mutual funds, the investments of different investors are pooled to form a
common investible corpus and gain/loss to all investors during a given period are
same for all investors while in case of portfolio management scheme, the
investments of a particular investor remains identifiable to him. Here the gain or loss
of all the investors will be different from each other.

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Net asset value on a particular date reflects the realisable value that the investor will
get for each unit that he his holding if the scheme is liquidated on that date. It is
calculated by deducting all liabilities (except unit capital) of the fund from the
realisable value of all assets and dividing by number of units outstanding.



  
 
 
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Yes, there are a number of mutual fund schemes which give you fixed monthly
income. Further, you can also get monthly income by making a single investment in
an open ended scheme and redeeming fix value of units at regular intervals.

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Dividend income from mutual fund units will be exempt from income tax with effect
from July 1, 1999. Further, investors can get rebate from tax under section 88 of
Income Tax Act, 1961 by investing in Equity Linked Saving Schemes of mutual
funds. Further benefits are also available under section 54EA and 54EB with regard
to relief from long term capital gains tax in certain specified schemes.

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The above statement is partially true. 10% tax on dividend paid is not applicable for
funds which have invested more than 50% in equity for next three years. Hence, if
you have invested in an equity scheme, you will not loose out for the time being.
However, in case of debt funds, your statement is true.

 
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No stock market related investments can be termed safe with certainty as they are
inherently risky. However, different funds have different risk profile which is stated
in its objective. Funds which categorize themselves as low risk, invest generally in
debt which is less risky than equity. Anyway, as mutual funds have access to
services of expert fund managers, they are always safer than direct investment in the
stock markets.




    
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You have to define your individual requirements and then simply go to )  

*  + icon on the home page of this web site. You can select your defined
parameters and get a list of schemes which would fit the needs.



  
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Mutual funds are meant only for a small investor like you. The prime reason is that
successful investments in stock markets require careful analysis of scrips which is
not possible for a small investor. Mutual funds are usually fully equipped to carry out
thorough analysis and can provide superior returns.
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