Mutual fund is a financial instrument which pools the money of different people and invests them in different financial securities like stocks, bonds etc. Each investor in a mutual fund owns units of the fund, which represents a portion of the holdings of the mutual fund. Let us understand with the help of an example. Suppose you invest Rs 10,000 in a mutual fund. If the price of a unit of the fund is Rs 10, then the mutual fund house will allot you 1,000 units. Let us assume the total money invested in the fund by all the investors is Rs 10 crores. The mutual fund invests the money to buy stocks. Then each unit will represent 0.000001% of all the stocks the mutual fund has in its holdings. If you have 1,000 units, then your portion of the mutual fund stock holdings will be 0.01%. As the value of securities held by the mutual increases or decreases, so will the price of the units.
What are Mutual Funds?
Advantages Of Mutual Fund
Risk Diversification
Mutual funds help investors diversify their risks by investing in a fair portfolio of stocks across different sectors. A diversified portfolio reduces risks associated with individual stocks or specific sectors. If an equity investor were to create a well-diversified portfolio by directly investing in stocks it would require a large capital outlay. On the other hand, mutual fund investors can buy units of a diversified equity fund with an investment as low as र 5,000/- only (even lower for ELSS funds). Further mutual funds are managed by professional fund managers who are experts in picking the right stocks to get the best risk-adjusted returns. Retail investors often lack this expertise.
Economies Of Scale In Transaction Costs
Since mutual funds buy and sell securities in large volumes transaction costs on a per unit basis is much lower than buying or selling stocks directly.
Tax Efficiency
Mutual funds are more tax efficient than most other investment products. Long term capital gains (holding period of more than 1 year) for equity mutual funds are tax exempt. Further dividends of equity funds are also tax free. For debt funds long term capital gain (holding period of more than 3 years) is taxed at 20% with indexation. Once indexation (due to inflation) is factored in the long term capital gains tax is reduced considerably, especially for investors in the higher tax bracket.
High Liquidity
Open ended mutual funds are more liquid than many other investment products like shares, debentures and variety of deposit products (excluding bank fixed deposits). Investors can redeem their units fully or partially at any time in open ended funds. Moreover, the procedure of redemption is standardized across all mutual funds.
Variety Of Products And Modes Of Investment
Mutual funds offer investors a variety of products to suit their risk profiles and investment objectives. Apart from equity funds, there are also income funds, balanced funds, monthly income plans and liquid funds to suit different investment requirements. Mutual funds also offer investors flexibility in terms of modes of investment and withdrawal. Investors can opt for different investment modes like lump sum (or one time), systematic investment plans, systematic transfer plans (from other mutual fund schemes) or switching from one scheme to another.
Our Offerings
E-Wealth Account
As a client of our E-Wealth A/c service, you can enjoy some big, tangible benefits. You can do hassle, worry, and error-free transactions in a very easy, time, and cost-effective manner – any time, anywhere.
We offer an easy transaction facility and a few very unique services for mutual fund transactions in our NJ E-Wealth A/c service, as given below.
- Fresh Purchase /Additional Purchase /Redemptions /Switch Transactions
- SIP and STP registration
- NFO – Purchase, Switch and SIP Registration
- Equity Stock SIP registration
- Equity IPOs and Debt IPOs Application
- Comprehensive reports
What’s more, we offer multiple modes of doing transactions as listed below…
- Mobile: Transact through application on your mobile
- Online Desk: Transact through online Trading Account Desk
- Phone: Call and transact through your phone
- Offline: Transact through physical instructions
Client Desk
The Client Desk is a premium offering for our clients which consolidates entire wealth/portfolio information, covering every major financial /non-financial product, for an entire family or an organization. Access to the Client Desk is given through a highly secured, unique login-id and password to every client.
The information inside the desk is updated on a daily basis and all transactions done through us are automatically updated so that clients need not make any entries. The Client Desk empowers you by keeping you updated & informed, anytime any where – throgh online access or through a mobile application.
MARS
One of the key challenges of managing a portfolio is to regularly monitor and adjust the portfolio on an ongoing basis as per your risk profile and in line with market movements. However, most advisors fail to do so as it involves making multiple transactions frequently in a time-bound manner. We have a unique offering for our NJ E-Wealth A/c Clients called ‘MARS’ that very effectively gives the answer to this problem.
MARS is a technology-powered tool that helps in managing asset allocation through periodic rebalancing of portfolio which involves a research & logic-driven scheme selection process. With two broad asset allocation offerings – Dynamic & Fixed, MARS is the answer to client worries on portfolio management.