- NRE Rupee Deposit
- NRE Recurring Deposit
- NRO Rupee Deposit
- NRO Recurring Deposit
- Foreign Currency Non Resident (FCNR) Deposit
- NRI Pro Foreign Currency Deposit
- NRI Pro Rupee Deposit
- Resident Foreign Currency Term Deposit
- Fixed Deposit Plus
Mutual Funds are professionally managed investment funds that pools money from various investors to invest in securities. These investors may be retail or institutional in nature. Mutual Funds Investments for NRIs helps in long term financial planning. There are a number of features and benefits for NRIs Mutual Funds. You can also enjoy diverse benefits at a low cost. For more details about Mutual Funds for NRIs please go through the list below.
As an investor, utilizing the various mutual funds types can become an asset. Before investing, it is advisable to know the different types of mutual funds. Basis the constitution of the fund, you can make your pick from the types of mutual funds. Mutual Fund allows an investor to build wealth by generating tax-efficient returns over different time periods.
The aim of Growth Funds is to result in the appreciation of money invested by an investor over medium to long- term periods. Such schemes normally invest a major part of fund portfolio in equities and hence have comparatively high risk. Investors may choose to invest in these funds via Growth or Dividend options. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.
The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes as they are not affected by fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds.
As the name suggests, balanced schemes try to strike a balance between risk and return. They do this by investing in both equities and debt. Therefore the risk is lower than equity or growth funds, but higher than debt or fixed-income funds and so are the returns.
These are funds that invest predominantly in stocks. As a result, they are usually considered high risk, high return funds. Equity Funds provide capital appreciation over long term. Based on the scheme objective, investments could be in growth stocks, where earnings growth is expected to be high, or value stocks, where the view of the fund manager is that current valuations in the markets do not reflect the intrinsic value. The popular funds in the category are defined below:
Midcap Funds invests in mid-sized companies that lie between large cap and small cap stocks and are more risky than large cap as investment options.
Small Cap Funds invest in stocks that lie at lower end of market capitalization. Small cap companies have smaller revenue and are usually in the early stage of development with significant growth potential. These funds have highest risk.
These funds invest in debt instruments like bonds, government securities, debentures etc. Debt funds are relatively safer and therefore the returns on them are modest when compared to equity funds. They seek to provide regular income and growth and are suitable for investors with a moderate risk appetite with a medium to long term investment horizon. However, they are highly vulnerable to the changes in interest rates. Debt funds are further classified on the basis of the maturity period of the underlying assets: long-term and short-term.
Some debt funds also invest in just a single type of debt instrument. Gilt funds which invest only in government securities are an example of such a fund. Gilt Funds invest in government securities of medium and long term maturities issued by central and state governments. These funds do not have the risk of default since the issuer of the instruments is the government.
There are Corporate Bond funds that invest predominantly in corporate bonds and debentures of varying maturities that offer relatively higher interest, and are exposed to higher volatility and credit risk.
Money Market Schemes or Liquid funds invest in short-term debt instruments issued by the government, corporates or banks namely CPs and CDs etc.
Hybrid Funds invest in both equities as well as debt instruments. For this reason, they are less risky than equity funds, but more than debt funds. Similarly, they are likely to give higher returns than debt funds, but lower than equity funds. The schemes under the hybrid category are:
Equity Linked Savings Scheme (ELSS) is an equity oriented Mutual Fund which helps investors address two critical aspects : tax saving and wealth creation. The lock-in period of 3 years provides the fund manager to take long term view in equities and generate optimal returns over long term.
Key benefits to an investor
^ Lock-in Period: PPF - 15 years (withdrawal allowed from 7th financial year onwards), Bank FD – 5 years, NSC – 5 years
Specialty funds invest primarily in a certain sector, industry, region, or security type. These investments do not offer the diversification that many other funds do. As a result, they are often seen as a riskier investment. The specialty fund is often used to describe a variety of funds, including sector funds, index funds and international funds.
Thematic funds invest in line with an investment theme. For example, an infrastructure thematic fund might invest in shares of companies that are into infrastructure construction, infrastructure toll-collection, cement, steel, telecom, power etc. The investment is thus more broad-based than a sector fund; but narrower than a diversified equity fund and still has the risk of concentration.