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How to use
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Invest in a diversified, professionally managed basket of
securities at a relatively low cost
Specialised investment activity carried out by professionals
For smooth and efficient processing of personal investment requirements
Diversification of investment across asset classes,sectors and market cap reduces risk
Open-ended schemes with on-going sale and repurchase facility offer high liquidity
Features and Benefits
Types of Mutual Funds
Eligibility and Documentation
Open Ended – These are schemes that do not have a fixed maturity. The Mutual Fund ensures liquidity by announcing sale and repurchase price for the unit of an open-ended fund.
Closed Ended – These are schemes that have a fixed maturity. The money of the investor is locked in for the period. Occasionally, closed-end schemes provide a re-purchase option to the investors, either for a specified period or after a specified period. Liquidity in these schemes is provided through listing in a stock market.
Equity Schemes – These primarily invest in shares. Based on the 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 various kinds of equity schemes are:
All non-theme and non-sector funds can be classified as equity diversified funds.
These funds invest in companies from different sectors. However they put a restriction in terms of the market capitalisation of a company, i.e., they invest largely in BSE Mid Cap Stocks.
ELSS is an open-ended equity growth scheme that is offered by Mutual Funds in line with existing ELSS guidelines. The investments under this type of scheme are subject to a lock-in period of 3 years and, as per the Finance Act 2005, are allowed the benefit of income deduction upto Rs 1,50,000 under section 80(C).
Rajiv Gandhi Equity Savings Scheme is a tax advantage savings scheme for first time retail investors in securities market. It gives tax benefit who invest upto Rs. 50,000 & whose annual income is below Rs. 12 Lakhs. Tax benefit is upto 50% deduction on investment amount under section 80 CCG of income tax act.
These schemes invest in various sectors but restrict themselves to a particular theme eg, services, exports, consumerism etc.
These are schemes that invest in a particular sector for example IT. They have a high degree of risk associated with them as if that particular sectors does not perform then their returns will suffer.
These kinds of schemes invest across market caps.
There are also schemes to meet financial objective like retirement & child plan.
Debt or Income Schemes – Such a fund invests in interest bearing securities, mainly government securities and corporate bonds. This fund earns returns for its investors from interest income on its investments and profits on trading securities. In terms of risk, this type of fund is the least risky.
Money Market Schemes – These schemes invest in short-term debt instruments issued by the government, corporates or banks. These are typically investments in short term papers like the CPs and CDs etc.
Hybrid Schemes – The types of hybrid schemes are:
Balanced schemes invest in a mix of equity and debt. The debt investments ensure a basic interest income, which the fund manager hopes to top with a capital gain from the investment in equities. However loses can eat into basic interest income and capital.
Monthly Income Plans:
MIPs are suitable for conservative investors who along with an exposure to debt do not mind a small exposure to equities. These funds aim to provide consistency in returns by investing a major part of their portfolio in debt market instruments with a small exposure to equities. Thus an MIP would be suitable for conservative investors who along with protection of capital seek some capital appreciation as MIPs have an exposure to equities. However the monthly income is not assured.
Hybrid Asset Allocation Funds:
These schemes invest in a mix of Equity, Arbitrage and Debt.
Asset Allocation Funds:
These schemes invest in a mix of Equity, Debt & Commodity.
An Equity Linked Saving Scheme is an open-ended equity growth scheme that is offered by Mutual Funds in line with existing ELSS guidelines. The investments under this type of scheme are subject to a lock-in period of 3 years and, as per the Finance Act 2005, and are allowed the benefit of income deduction upto Rs. 1,50,000. ELSS offers the benefits of tax saving and capital gains. Instead of spreading your investments across different instruments such as PPF, ELSS, NSC and infrastructure bonds, you can now invest the entire limit of Rs. 1,50,000 available under Sec 80(C) in ELSS.
Advantages of ELSS
A Systematic Investment Plan (SIP) is a convenient way to accumulate wealth in a disciplined manner over a long-term period. It helps you to invest regularly in small instalments and thereby build wealth over a period of time.
SIP is a method of investing in a mutual funds scheme. These schemes are offered by the Asset Management Companies (AMCs) to customers through a distributor. The Bank acts as a distributor of Mutual Fund products for the AMC to the customers. A customer wanting to invest in such a scheme can avail of the Systematic Investment Plan option through Axis Bank.
Advantages of SIP
Power of Compounding:
SIP helps you to start investing at an early age to meet the greater expenses of your life. Saving a small sum of money regularly makes money work with greater power of compounding with significant impact on wealth accumulation.
Rupee Cost Averaging:
SIP minimises the effects of investing in volatile markets. It helps you average out your cost by generating superior returns in the long run. It reduces the risk associated with lump sum investments. Since you get more units when the NAV drops and fewer when it rises, the cost averages out over time, so that the average cost of your investment is often reduced.
Convenience and Regularity:
SIP gives you the convenience to pay through Axis Bank Electronic clearance service (ECS) or Auto Debit. You can decide the amount and the mutual fund scheme. A fixed amount will automatically get debited from your account on a date specified by you.
Disciplined approach towards investment:
Since you invest regularly, it makes you disciplined in your savings, which leads to wealth accumulation. Disciplined investing is vital to earning good returns over a longer time frame.
Select a mutual fund scheme of your choice with the payment option as SIP.
Decide the investment periodicity (frequency of making payments). You can choose to make your investment on a monthly or quarterly basis.
Select the minimum investment amount. For instance, you can choose to invest Rs 60,000 every year with a monthly SIP option. This means you would be investing Rs 5,000 every month in your fund. By the end of a year, you would have invested Rs 60,000 in your fund.
The amount gets converted into units, depending on the Net Asset Value (NAV). NAV is the market value per unit of a fund. If the NAV in the first month is Rs 20, you will get 250 units. Similarly in the next month if the NAV is Rs 25, you will get 200 units. The following month if the NAV is Rs 18, then you will get 277.77 units. So, after three months, you would have 727.77 units. On an average, you would have paid around Rs 20.6 per unit.
The units get accumulated over a period of time. You can stay invested till the time you wish and redeem your units when you wish to exit from the scheme. The units are redeemed at the market value (NAV) and you get back your money with returns.
For investing in SIP, all you need to do is visit your nearest Axis Bank branch and just fill up a simple application form. You can also fill in your personal details on the "Apply Now" link on our website and our relationship manager will get in touch with you shortly.
Mutual Fund investments are subject to market risk. Please read the offer document carefully before investing.
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