A Guide to Mutual Funds in India

Mutual funds in India offer a wide range of investment options for investors.

You can choose from various types of mutual funds, including equity, debt, and hybrid funds.

Equity funds invest in stocks, providing potential for long-term growth, as seen in the case of the SBI Magnum Equity Fund, which has a 10-year return of 12.45%.

Debt funds, on the other hand, invest in fixed income securities, offering relatively stable returns with lower risk.

Hybrid funds combine the benefits of both equity and debt funds, providing a balanced investment portfolio.

The minimum investment required to invest in a mutual fund in India is Rs. 500, as per the SEBI guidelines.

Investing in Mutual Funds is a great way to grow your wealth over time. You can transact in mutual fund schemes for more than 30+ Asset Management Companies empaneled with HDFC Bank.

To make investing easier, you can track your Mutual Fund holdings and transactions directly through NetBanking, making it convenient to manage your investments.

The top performing mutual funds in India have impressive 5-year returns, ranging from 18.91% to 29.57% per annum. For example, the ELSS scheme with an expense ratio of 0.5% has a 5-year return of 29.08% per annum.

Investing in mutual funds is a great way to grow your wealth over time. With over 30+ Asset Management Companies empaneled with HDFC Bank, you have a wide range of options to choose from.

You can easily invest in mutual fund schemes directly through HDFC Bank's NetBanking, making it convenient to track your holdings and transactions.

To get started, you can use the HDFC Bank's InvestNow platform, which offers expert recommendations based on your financial goals and risk appetite. There are no registration charges for InvestNow, and the onboarding process is smooth and hassle-free.

To invest in mutual funds, you can log in to your HDFC Bank NetBanking account, go to the Mutual Fund tab, and click on the InvestNow banner. You can also check your PAN status on the CAMS website.

Once you have logged in, you can add a nominee for your investment by clicking on your profile and going to the Add Nominee option.

You can also use the HDFC Bank's Mutual Fund Screener tool to find the right mutual fund scheme for your investment goals.

Growth funds are a great option for those seeking substantial returns, particularly for long-term investors.

They primarily invest in stocks of companies with high growth potential, which can lead to significant capital appreciation over time.

If you're willing to hold onto your investment for the long haul, growth funds can be a smart choice.

Their focus on capital appreciation can result in substantial returns, making them suitable for investors with a high-risk tolerance.

However, it's essential to remember that growth funds typically come with higher risks, so it's crucial to assess your personal risk tolerance before investing.

Liquid Assets are a great way to diversify your investment portfolio. They provide a safe haven for your money, allowing you to access it quickly when needed.

Liquid Funds are a type of Mutual Fund that prioritises liquidity and safety, investing in short-term debt instruments. This makes them ideal for investors seeking quick access to funds with minimal risk.

You can expect to get your money back within a short period, usually up to a year or less. This is because Liquid Funds invest in debt instruments with short maturity periods.

Investing in Liquid Funds can be a good option for emergency funds or for parking your money temporarily. They offer a low-risk way to earn some returns on your money.

Liquid Funds are not meant to be a long-term investment solution, but rather a way to keep your money liquid and easily accessible.

Commissions play a significant role in investing in mutual funds.

HDFC Bank, being an AMFI Registered Mutual Funds Distributor, earns commissions from various fund-houses.

The SEBI circular, SEBI/IMD/CIR No. 4/168230/09, outlines the comparative commission earned by HDFC Bank from different fund-houses.

HDFC Bank earns a commission from each fund-house, and the amount varies between them.

The commission earned by HDFC Bank from various fund-houses is comparative, as per the SEBI circular.

Mutual Funds are categorized by structure, influencing how investors buy and sell units. These structures include open-ended, closed-ended and interval funds.

Investors can choose from various types of Mutual Funds, each with its unique investment approach. Equity Funds invest in shares of companies, targeting well-established, large companies or smaller, high-growth businesses.

Debt Funds, on the other hand, invest in bonds, providing a steady income through categories like Government Bond Funds and Corporate Bond Funds.

Equity funds are a great way to get exposure to the stock market. They can provide the potential of high returns over the long-term, making them ideal for young, aggressive investors.

Equity funds invest in shares of companies, targeting well-established, large companies or smaller, high-growth businesses. This diversification can help spread risk and increase potential returns.

There are different types of equity funds, including large-cap and small-cap funds. Large-cap funds focus on well-established companies, while small-cap funds target smaller businesses with high growth potential.

Here's a brief overview of some equity fund characteristics:

Hybrid funds are a great option for those who want a balanced investment portfolio. They blend both stocks and bonds, aiming for growth and stability in a single package. This mix of assets can help reduce risk and increase potential returns.

Index funds are a great option for those who want to invest in the overall market or specific segments without the hassle of stock selection.

They replicate a market index's performance, providing low-cost exposure to the overall market or specific segments.

One of the benefits of index funds is that they offer exposure to equity markets, allowing you to diversify your portfolio.

Index funds also have no hassle of stock selection as they replicate the Index, taking the guesswork out of investing.

By investing in index funds, you can expect returns similar to the Index returns, making them a low-risk option.

Here are some key features of index funds:

Fixed Maturity funds are a great option for those seeking fixed returns and minimal interest rate risk. They have a predetermined maturity date, providing a clear investment horizon.

Investors can rely on Fixed Maturity funds to provide a stable return, as they are less susceptible to interest rate fluctuations. This makes them a suitable choice for those who want to avoid market volatility.

Their fixed returns are typically attractive to investors who need predictable income, such as retirees or those with a conservative investment strategy.

Investing in mutual funds can be a great way to balance risk and reward, but it's essential to understand the different types of funds available. Medium Risk Funds, like balanced funds, offer a balance between risk and reward by combining equity and debt investments.

These funds suit investors seeking moderate growth with a manageable level of risk. They can provide a steady return with some potential for growth, but it's not as high as higher-risk funds.

Income investments are a great way to generate regular returns, particularly for those seeking a steady income stream. Income Funds, for instance, focus on bonds, fixed-income securities, or dividend-yielding stocks to provide a consistent income.

Investors looking for predictable returns might find Income Funds appealing, especially if they need regular income to support living expenses.

Mutual Funds offer a range of options for investors with different risk profiles.

Very low Risk Funds are ideal for conservative investors seeking capital preservation and minimal fluctuations in the investment's value. They primarily invest in low-risk securities.

Low Risk Funds, such as Government Bond Funds, aim for income generation with a slightly higher risk than very low risk options. They suit investors with a slightly higher risk tolerance.

Capital Protection Funds focus on safeguarding the principal amount while generating modest returns. They are ideal for risk-averse investors looking to protect their investments.

Medium Risk Funds offer a balance between risk and reward by combining equity and debt investments. These suit investors seeking moderate growth with a manageable level of risk.

High Risk Funds, such as sector-specific Equity Funds, focus on capital appreciation with increased risk. They are for investors willing to accept higher volatility in pursuit of potentially higher returns.

Investing in mutual funds can be a smart way to grow your money over time, with the potential for long-term growth and regular income through dividends.

You can choose from a variety of mutual fund types, including equity funds, debt funds, and hybrid funds, each with its own set of characteristics and benefits.

Equity funds, for instance, invest in stocks and have the potential for higher returns, but also come with higher risks.

Debt funds, on the other hand, invest in low-risk debt securities and offer regular income through interest payments.

Hybrid funds, as the name suggests, combine elements of both equity and debt funds to provide a balanced approach to investing.

Investing in stocks can be a daunting task, but understanding the different market capitalization strategies can help you make informed decisions.

Large Cap investors focus on the top 100 stocks in the market, which are typically well-established and stable companies.

If you're looking for a mix of stability and potential for growth, Large Cap might be the way to go.

Mid Cap investors, on the other hand, invest in the next 150 stocks, which can offer a balance between growth and stability.

Small Cap investors, however, take a riskier approach by investing outside the top 250 stocks, which can be more volatile but also potentially more rewarding.

Here's a quick rundown of the different market capitalization strategies:

Ultimately, the choice of market capitalization strategy depends on your risk tolerance and investment goals.

Asset Allocation is a crucial aspect of investment strategies that allows you to manage risk and optimize returns. By automatically adjusting the portfolio's allocation, Asset Allocation Funds can help you maintain a specific risk-return profile.

In the long term, Asset Allocation Funds can be particularly effective, with some strategies allowing for up to 75% investment in stocks. Aggressive Hybrid Funds, for example, can max out at 75% in stocks, while Balanced Hybrid Funds can only go up to 50%.

Dynamic Asset Allocation Funds are another option, adjusting the allocation in various asset classes based on market conditions to provide superior returns. This can be a great choice for investors looking to ride out market fluctuations.

Here are some common Asset Allocation strategies:

By understanding these different Asset Allocation strategies, you can make informed decisions and create a portfolio that meets your unique needs and goals.

If you're looking for a reliable investment option, consider mutual funds. They offer a range of benefits, including diversification and professional management.

One of the top-performing mutual funds is the one with an expense ratio of 0.62% and a 5-year return of 29.57% p.a. This is significantly higher than the average return.

Another option is the ELSS (Equity Linked Savings Scheme) with an expense ratio of 0.5% and a 5-year return of 29.08% p.a. This is a great choice for those looking for long-term growth.

For a more conservative approach, consider the Aggressive Hybrid fund with an expense ratio of 0.71% and a 3-year return of 20.46% p.a. This fund is designed for those who want to balance risk and return.

If you're unsure which fund to choose, don't worry! Our in-house Research Desk has hand-picked a selection of recommended mutual funds that are sure to meet your needs.

Here are some key characteristics of our recommended mutual funds:

Tax Saving is a smart way to invest in your future. You can get a dual benefit of wealth creation and tax saving by investing in Tax Saving Funds.

These funds offer a potential of wealth creation, which is a great incentive to start investing. With a 3-year lock-in period, you can start building your wealth without worrying about immediate access to your money.

Tax Saving Funds invest primarily in equities, which can provide exposure to the equity market. This means you can potentially earn higher returns on your investment.

Here are the key benefits of Tax Saving Funds:

Aggressive Strategies are designed for investors who are willing to take on higher market risks in pursuit of substantial capital appreciation. This approach is typically suitable for those with a long-term horizon and a risk-taking mindset.

Aggressive Growth Funds, for example, are a type of investment vehicle that targets substantial capital appreciation and is willing to accept higher market risks. They're perfect for investors who can stomach the ups and downs of the market.

Investors who opt for Aggressive Strategies should be prepared to ride out market fluctuations and not expect consistent returns. This requires a high degree of financial discipline and a clear understanding of their risk tolerance.

Investors with a long-term horizon, such as those saving for retirement, may find Aggressive Strategies appealing due to their potential for substantial capital appreciation.

Interval funds offer a unique investment strategy that combines the benefits of open and closed-ended funds. They allow investors to make periodic redemption requests, typically at predetermined intervals.

One of the key features of interval funds is their ability to balance liquidity and long-term investments. This makes them a good fit for investors who want to maintain some level of liquidity while still investing for the long term.

Interval funds typically allow periodic redemption requests, which can provide investors with a sense of control and flexibility.

Mutual Fund Structure plays a significant role in determining how investors interact with these funds. There are three main structures: open-ended, closed-ended, and interval funds.

Open-ended mutual funds allow investors to buy and sell units at any time, giving them flexibility and liquidity. This is unlike other investment options that may have restrictions on buying and selling.

Closed-ended mutual funds, on the other hand, have a fixed number of units and trade on a stock exchange, making it easier for investors to buy and sell.

A Complete KYC is a must for mutual fund investors.

The process involves verifying the investor's identity and address, which can be done through various documents such as passport, driving license, or utility bills.

This step is crucial to prevent money laundering and ensure that investments are made by genuine individuals.

In India, the Know Your Customer (KYC) process is mandated by the Securities and Exchange Board of India (SEBI) for all mutual fund investors.

SEBI has made it mandatory for mutual funds to obtain a KYC certificate before allowing an investor to invest in their schemes.

A KYC certificate is valid for a period of 5 years from the date of issuance and needs to be renewed thereafter.

The KYC process also requires investors to provide their PAN (Permanent Account Number) details, which is a unique 10-digit number assigned to taxpayers by the Income Tax Department.

Open-ended funds are perfect for investors seeking flexibility in terms of entry and exit points. They allow you to buy and sell units continuously, providing liquidity.

One of the key benefits of open-ended funds is that they're suitable for long-term wealth creation. This is because they offer the flexibility to invest and withdraw funds as needed.

Investors can buy and sell units at any time, making it easy to adjust your investment portfolio. This is particularly useful for those who need to access their funds quickly.

Open-ended funds are commonly used for long-term investments, allowing you to grow your wealth over time. They're also a great option for those who want to take advantage of market fluctuations.

Investing in mutual funds can be a complex process, but having the right tools at your disposal can make a big difference. You can use a Returns Calculator to estimate the returns on your investment, giving you a better idea of what to expect.

A Risk Analyzer is also a valuable tool, allowing you to assess the level of risk associated with a particular fund. This can help you make more informed decisions about your investments.

You can also use a SIP Calculator to determine how much you need to invest each month to reach your financial goals. And if you're looking for a more personalized approach, an Asset Allocator can help you create a diversified portfolio.

Here are some of the key investment tools and resources available:

When investing in mutual funds, having the right tools can make all the difference. Mutual fund investors can use a Returns Calculator to estimate their returns based on their investment amount and tenure.

For those looking to start investing, the SIP Calculator can help determine the amount needed to invest each month to achieve their financial goals. A SIP Planner can also be used to plan and track their investments.

Investors can use the Asset Allocator to determine the right asset allocation for their portfolio based on their risk tolerance and investment goals. The Mutual Fund Screener can be used to filter mutual funds based on various parameters such as risk level, investment objective, and expense ratio.

Here are some of the key tools available to mutual fund investors:

Important updates are being made to certain Mutual Fund schemes across the board.

As of February 2, 2022, lumpsum subscription, switch-ins, and fresh registration of SIP/STP or such other special product under certain schemes have been temporarily suspended.

This suspension is a result of a communication from AMFI dated January 30, 2022, and is aimed at avoiding a breach of industry-wide overseas limits as allowed by RBI.

Lump sum subscription or switch-in applications received after the cut-off timing of February 1, 2022 will not be accepted and processed.

However, intra-scheme switches between Plan(s) and Option(s) in the same scheme and existing registered SIP/STP or such other special product transactions are exempt from this suspension.

The suspension is temporary and will continue until further enhancement of the limit by regulators.

In HDFC Bank Mutual Fund systems, updates are done based on communication from respective AMCs, which may result in rejected and refunded investments during the intimation and updation stages.