The Economic Times
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| 25 January, 2021, 01:00 PM IST | E-Paper

    Fund Basics

    Active investing is a hands-on approach whose goal is to beat the stock market index whereas passive investing is about researching, buying stocks to get a stock market index.

    The market watchdog- Securities and Exchange Board of India, brought in a slew of new rules and regulations to make mutual funds more transparent and investor-friendly.

    In eCAN, CAN is instantly generated, whereas in case of physical submission or FillEzz, it is generated after document submission. In the partially electronic CAN type, one can submit the information online, on the basis of which an eCAN is opened.

    The voting process for unitholders to decide the fate of the six debt schemes of Franklin Templeton Mutual Fund will begin on December 26 and end on December28th.

    How KYC process works in mutual fund investing

    For mutual fund investors, it is important to keep the information like address, mobile number and bank details in KYC records updated. To make changes, a KYC details change form needs to be submitted along with necessary documents.

    Long duration funds or long-term bond funds are debt funds that invest in long-term fixed income instruments. The investment mandate makes them suitable only for long-term investments.

    A mutual fund house offers two types of plans to the investors - Direct plan and regular plan. Here are five differences between the same.

    Dividend is nothing, but a part of the profits or money made by inventors. The mutual fund is simply distributing the profits among investors.

    Solution-oriented funds usually have a lock-in period of five years to encourage investors to remain invested for a longer duration as the investment horizon is long term.

    What are balanced mutual funds?

    Balanced funds are a new category of hybrid funds that came into existence after the recategorisation of mutual fund schemes by Sebi in 2017.

    ETFs or exchange traded funds are similar to index mutual funds. However, they trade just like stocks. An investor who buys an ETF doesn't have to pay an advisory/management fee to the fund manager.

    Most investors are not familiar with closed-ended schemes because they mostly deal with open-ended schemes that are always open for purchase and sale of units.

    Pharma funds are in focus. Ever since the news of pharma funds offering stupendous returns in the last one year started making waves, investors are extremely curious to know about these schemes.

    Alpha is an estimated value of a stock's expected excess return. Simply put, alpha is the difference between the investment return and the benchmark return (eg. NSE Nifty) or what the scheme generates over and above the returns of its benchmark index.

    What are money market funds?

    Money market mutual funds, as the name suggests, invest mostly in money market instruments. As per Sebi norms, these schemes must invest in money market instruments with maturity of up to one year.

    When we talk about mutual funds, we normally talk about open-ended funds or schemes. An open-ended scheme is available to buy and sell all the time. You can buy and sell the units of the scheme based on its NAV.​

    A Fund of Funds or FoF invests in mutual fund schemes. A regular mutual fund scheme or fund collects money from investors and invest the money in stocks or debt based on its mandate.

    Index funds, as the name suggests, invest in an index. They invest in stocks that constitute the index in the same proportion. The whole idea is to mimic the index. Why?

    A mutual fund scheme must invest at least 65% of its corpus in Indian stocks (or equity and equity-related investments) to be treated as an equity mutual fund for the purpose of taxation.

    What are balanced funds?

    Before the Sebi categorisation and rationalisation of mutual fund schemes in October 2017, most investors and advisors used to refer to equity-oriented hybrid schemes as balanced schemes.

    The Economic Times