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Tag: Mutual Fund

The benefits of investing in short-term debt funds
Investors are always looking for profitable investment opportunities that can help them grow their wealth without a lot of risk. One type of investment that has the potential to offer high returns with minimal risk is a short-term debt fund.

Short-term debt funds are a type of mutual fund that invests in debt instruments with maturities of up to three years. The portfolio of a short-term debt fund typically consists of government securities, corporate bonds, commercial papers, treasury bills, etc. From new investors to experienced ones, this investment strategy is highly preferred. On that note, here are four crucial benefits that explain how short-term debt funds are beneficial to investors.
1. Offer safe and stable returns
Investing in short-term debt funds can be an effective way to achieve safe and stable returns with minimal risk. These funds typically invest in bonds and other debt instruments with shorter to medium-term maturities, which protects them against interest rate fluctuations. As such, they are relatively well suited for managing the risks associated with changing rates, making them an attractive option for investors seeking a stable investment. Additionally, these funds let your investment grow significantly through dividend payments.
1. Help achieve short-term goals faster
With an investment horizon of up to one to three years, these funds provide significant short-term benefits by giving you access to multiple assets and offering high liquidity. For example, short-term debt fund investments can be useful for paying insurance premiums or funding a family vacation. In addition, they are ideal for investors who prefer the predictability of fixed-income investments over more volatile investments like stocks.
1. Diversify your investment portfolio
For investors concerned about volatility in the equity markets, short-term debt funds can be a helpful way to mitigate risk. These funds diversify your portfolio in the debt asset class and help hedge the risk of equity investments in your portfolio. Since diversification is the soul of investing, most financial experts recommend going for short-term debt funds with high-quality securities in its portfolio.
1. Provide regular dividends
Most short-term debt funds offer regular dividends based on the performance of the underlying investment portfolio. Whether paid monthly, quarterly, or semi-annually, these dividends can help to generate additional income and provide financial protection for unexpected expenses. Moreover, you have full control over how you use your dividend payments – you can either save or reinvest them to buy more units and maximise your earnings potential

Closing thoughts

Short-duration debt funds are ideal for investors with a short investment horizon of one to three years, who are looking for stable income but have a moderate appetite for risk. Debt funds provide a wealth of benefits to investors and have the potential to generate better returns than traditional investment instruments. Since these funds offer a high degree of liquidity, and come with no exit load, first-time investors in the debt fund market can also consider this investment.

However, it is important to choose the right debt mutual fund that matches your risk appetite and investment horizon by conducting thorough research, evaluation, and analysis based on historical fund performance.
February 26, 2023
How to maximise your wealth by investing in mutual funds?
Most successful mutual fund investments come with a solid goal and a game plan to achieve it. Some investors may try to appreciate their investment with little risk, while others try to maximise their growth regardless of the risk. The goal here usually depends on your risk tolerance.

There are plenty of ways to stay conservative here. For instance, you could look for mutual funds online that primarily invest in debt. But how do you invest when you want to maximise your capital appreciation through mutual fund investments?

Read on to explore some methods you can use to try and achieve maximum returns.

Equities versus debt

Before exploring ways to maximise mutual fund returns, it is important to understand the characteristics of two of the most common securities that mutual fund portfolios contain – equities and debt.

Equities are shares of companies. Investing in equities is known to have a higher potential for growth. At the same time, they come with a higher risk as well.

On the other hand, debt investments are considered safer comparatively. But their growth potential tends to be lesser.

An important thing to understand here is that different equity and debt instruments have varying risk and return potential levels.

Things to consider to maximise wealth creation

Now that you understand the varying characteristics of equities and debt, take a look at three methods you can use to try and maximise your capital appreciation.
1. Choose a high-risk option
As discussed above, high-risk options are known to have higher return potential as well. To make use of this, you may dedicate more space to securities like equities in your portfolio. This can ensure that you have the highest chance of growth.At the same time, remember that diversification is also important, and don’t invest in one security alone. Rather, try and make up to 65% to 70% of the investments in the portfolio in high-risk options if your risk tolerance allows.

2. Target a sector that shows potential
One way to ensure that your equity portfolio choices have the best chance of growth is by targeting a sector that is expected to perform well. Not all sectors perform similarly at all times. Different sectors will have different time periods where they tend to outperform other sectors.

For instance, the hotel and tourism sectors showed bullish signs once COVID-19 restrictions were lifted worldwide. You could do your research to find out similar opportunities and invest in companies in the sector that shows the most potential.
1. Try investing in the index
  If historical data is to be believed, index funds have always outperformed short-term fluctuations in the long term. The growth of Sensex and Nifty are examples of this. Both indices have grown more than 70% in the last five years as of November 2022. If you are an investor who is looking for not-so-aggressive options like the two above, you may try to invest in indices to try and maximise your chances for growth.
You can invest in them through index mutual funds. They are mutual funds that track an index as is.

Conclusion

The above methods could help you gain maximum returns from mutual fund investments. But at the same time, it is important to ensure that you are not blindly following returns alone. Instead, the best approach is to figure out your risk tolerance and apply these above methods if your risk appetite allows for the same.
December 23, 2022
What are mutual funds, and how to invest in them?
There are numerous ways of investing one’s capital, but none as famous as mutual fund investments in India. A mutual fund is a pooled investment instrument that collects money from various investors and invests it in securities such as equities, bonds, money market instruments, etc.

Every person who invests in a mutual fund owns units of the fund. A mutual fund’s NAV (Net Asset Value) is the fund’s per-share market value. The NAV is the price at which a mutual fund’s shares are bought and sold. The NAV of a fund is derived by dividing the market value of securities of a scheme by the total number of units of the scheme on any particular dateIt is declared at the end of every trading day after the closure of markets.

Types of mutual funds in India

Mutual fund companies divide mutual funds based on structure and asset class. Here are the various kinds of mutual funds based on their structure.
- Open-ended mutual funds: Open-ended mutual funds have no limits onwhenan investor can invest in the fund.
- Close-ended mutual funds: Close-ended mutual funds allow investors to purchase units only during the New FundOffer (NFO) period. These units can be redeemed at a fixed date of maturity.
- Interval funds: Interval funds get opened for the purchase/redemptionofunits at different intervals during the fund’s tenure. Hence, they have the features of both open-ended and close-ended funds.
Based on their asset class, mutual funds can be divided into four types.
- Equity funds: Equity mutual funds invest in stocks. These funds are risky but can provide high returns.
- Debt funds: Debt mutual funds invest in debentures, fixed income assets, and government bonds. They are low-risk investments that may provide better returns than a savings account or fixed deposit.
- Hybrid funds: Hybrid mutual funds invest in a mix of asset classes. Hybrid funds balance risk and returns by maintaining a proportion of equity and debt investments.
How to invest in mutual funds?

Follow these steps to invest in a mutual fund scheme:
- Risk profiling: Assess your risk-taking ability. This involves identifying the kind of investment vehicle you wish to invest in, including its risks.
- Asset allocation: As the next step, you must look to divide your capital into various asset classes. Asset allocation must be a mix of equity and debt instruments to balance the risks.
- Identification of funds: After dividing your capital into assets, you must identify the funds belonging to each asset class in which you wish to invest your capital.
- Consider a mutual fund SIPcalculator: A mutual fund SIP(Systematic Investment Plan) calculator can help you estimate the size of the corpus that you can have via regular mutual fund investments.
- Invest online or offline: Once you have gone through these steps, you can invest in the mutual fund scheme of your choice, either online or offline.
To sum up

A mutual fund scheme is a pooled investment strategy that helps you invest in various assets, including equity, debt, or a combination of both. The price of a unit of a mutual fund scheme, called its NAV, is decided at the end of a trading day. Before investing in a mutual fund scheme, you must assess your overall risk-taking ability, identify the fund you wish to invest in, and consult a mutual fund SIP calculator.
September 24, 2022
The Essential Things You Need to Know About Mutual fund investment
There are more than 12,000 financial investment funds currently. Among them are the Mutual fund investments, which belong to the category of Undertakings for Collective Investment in Transferable Securities (UCITS).

When you want to invest, there is, on the one hand, the bank investment which gives a rather low return, but without risk and on the other hand, more risky financial investments with a good return. How does a MFI work? What is the taxation on the performance of a MFI? Here is a full article on mutual funds.

What is an MFI?

In order to grasp the subject of MFIs as a whole, it is important to come back to the definition of these and their functioning.

Mutual funds (MFI): definition

MFI: pooling of capital

The mutual fund consists of a pooling of capital invested by holders of financial securities (investors). A security holder is a person who has invested in one or more MFIs and who, in return, holds a share (pro rata of the securities). Security holders are co-owners of the fund.

There are several classes:

Monetary: the risk is minimal

Shareholder: for a Mutual fund investment of this class, 60% in action and 40% free. The risks are significant, but the return is high.

Bond: few risks with a so-called modest but more regular performance.

Alternative management: the risks are high.

With formula: there are the guarantee funds (without risk of loss), the funds known as protected with a limited risk and the funds with promises (amount indicated in advance).

Streamlined: these are mainly life insurance contracts that have linearity in their management and in their performance.

How an MFI works

It is a company that manages the fund. Each holder of securities invested and it is the company which will decide where to place this money according to the objectives of the fund. An MFI does not have a legal personality; each co-owner engages his responsibility up to his invested capital, neither more nor less.

There are different types of MFI:

Company MFI (MFIE):these funds are intended for employees who wish to invest in their business. It is an employee participation in the results of the company.

Risk MFI (MFIR):as its name suggests, it is for so-called “risk” products with a minimum mandatory investment of 50% in European stocks not listed on the stock exchange. In return for the risks incurred, there is a tax advantage on these shares if they are kept for at least 5 years. Advantage which consists of a tax exemption (social security contributions remain compulsory). This type of MFI is now called FPCI (Professional Capital Investment Fund).

MFI in innovation (MFII): the fund must be invested at least 60% in companies not listed on the stock exchange, in an innovation sector (high-tech sector) with high capital gains. This is for example the case of the Internet, telecommunications or even electronics. It is also a risk fund which gives the right to a tax reduction of 28% of the amount of capital invested with a ceiling (€ 3,000 for a single person, € 6,000 for a couple). It will, of course, be necessary to keep this investment for at least 5 years.

Real Estate Investment Funds: in shares only. They can be managed by distributors, custodians or management companies.

Futures market mutual fund (FCIMT): it is the same principle as a MFI to which two additional constraints are added. 50% must be held in cash and be a formula fund with the amount of the fund determined in advance.

Taxation and MFI calculation

For the accounting of a MFI, it is necessary to differentiate income from capital gains. In fact, to be able to file your income tax return, you will not put these two things in the same box.

Since January 1, 2018, the taxation of financial investments has changed. The 2018 Finance Law introduced the single flat-rate levy (PFU) which brings a levy up to 30% including 12.8% tax and 17.2% social security levy. This fixed deduction is calculated on the capital gains recorded on the sale of capital shares. It is also calculated when you are going to declare your income from securities and movable capital.

Did you know?
- You can choose the PFU or the progressive tax scale for your income tax return. It must be requested before the end of the year preceding the declaration. This choice is correlated with your income. There are tax details for each type of mutual fund.
- To calculate and know the performance of your capital, simply subtract the assets from the liabilities.
- The liabilities are equivalent to the number of shares of security holders and the assets are all that relates to financial instruments, the market, etc. To make the calculation, the assets are frozen through the MFI’s portfolio. This gives the value of the asset. By dividing the value of the assets by the number of shares of security holders, you will have the net asset value of the fund.
MFI or Investment Company with variable capital (SICAV)?

It is important to differentiate between a SICAV and a MFI thanks to their definition:

SICAV: SociétéAnonyme (SA), a legal person managed by shareholders with a board of directors. Each shareholder has the right to vote. For a SICAV to be created, a minimum capital of 7.5 million euros is required.

MFI: it is a little on the same principle as an SARL since each holder of securities is entitled to a number of shares proportional to its investment capital. To create a fund, the entry ticket amounts to € 400,000.

When we already look at these two definitions, we can see that the legal status is not the same. Then there is a difference in the risks taken and the nature of the investors. For a MFI, you have a more lucrative return with greater risks than for a SICAV. Only the capital is limited.

What should be remembered is that these are collective investment undertakings for transferable securities (UCITS) which operate almost similarly with differences in status. To make your choice, you can refer to the document that was sent to you during your investment search: the Key Investor Information Document (KIID). It is this document which will detail all the data concerning the fund in question: performance, strategy, risks, costs, etc.

Good to know: SICAVs are often more suitable for so-called experienced investors because they are decision-makers, which is not the case for a MFI. Find out more.

Frequently Asked Questions

How to translate MFI in English?

We could translate this by mutual funds. It is the same translation for a SICAV or a UCITS. Indeed, our French acronyms do not exist as is in English. It will therefore be necessary to explain in more detail what an MFI is to make the difference with the others.

How to subscribe to a MFI?

To subscribe, simply go to an online banking establishment, with a broker or an insurer to make your request. In exchange you will receive the KIID which will give you an idea of the risks and costs incurred. Then it only remains to choose.
December 13, 2021
What are the best mutual funds

For the smart options for mutual fund investment now the steps are essential. You need to be specific on this part. For that you need the best deal.

The ranking with the best funds you find on other sites is a misleading exercise because it doesn’t help you understand how to invest your money but it is a pure vanity metric that often hides many problems. If you are looking for a ranking because you are an advanced investor and you feel you do not need advice, you will hardly find it here.

Is it worthwhile or not relying on this strategy to invest your money?

If, on the other hand, you are interested in understanding if it is worthwhile to invest in funds, keep reading because there is so much information useful for you.

Investing in funds often is not worthwhile

The mutual fund investment are most of the times a bloodbath to the detriment of the customer organized by the bank and management company, with the aim of putting your hands in your pockets even when the instrument does not makes them incapacitated.

It will seem a harsh opinion, which among other things contrasts with what your financial promoter will have told you, very interested; thanks to the generous commissions he will put in his pocket, to direct you towards this peculiar investment tool.

Unlisted actively managed funds : they are the worst because they are not traded on the stock exchange (consequently, they are less liquid for you) and have higher commissions without offering better returns than the market;

Actively managed listed funds: more transparent and liquid than the former, they often have entry and exit costs and management costs that are too high to justify returns in line with the markets;

Passive-managed funds or ETFs: these are the ones I prefer because there is no management company that tries to beat the market but the fund simply replicates the reference benchmark. You can learn more about this in the article where I explain how I invest .

After that, let’s go ahead: below I offer you 5 tips for investing in mutual funds , giving you some tips also and not only to recognize those who, in a frankly bleak landscape, could actually improve the composition of the portfolio.

Funds almost never perform better than market benchmarks

When you are buying shares in a mutual fund, you are trying to beat the market, otherwise you would rely on particularly differentiated indices or ETFs to bring an aligned return on this or that market.

Things unfortunately are not always the case, in the sense that in 90% of the cases the mutual funds perform worse than the benchmarks of the reference market. Yes, although there is a management company of sapientini and pundits, ready, they say, to intercept trends first and foremost.

The chatter, however, as is often repeated, is zero, and it is to the rates of return on investment that we must look: the returns are, and it is precisely the paper that sings, lower than the market averages, even before inserting into the equation the substantial management commissions that this type of tools incorporate.

Differentiates, but only on solid markets

The differentiation is a concept as basic as often misunderstood accomplices’ also conflicting information that comes to those who are not exactly in the industry.

To differentiate means to have a portfolio made up of different securities by geographical origin, risk profile and sector. It is of little use to differentiate on different energy raw materials, on shares of the same sector (banking, tech, etc.), or between bonds of countries that have broadly the same trend. The differentiation must first of all be true, and protect us from the collapses of the sector. Secondly it must be solid, because in the name of differentiation we cannot include rubbish in our portfolio. The funds in this sense can certainly help us, provided we know what and why to choose.

Often the differentiation offered by mutual funds is only apparent, in the sense that portfolios of securities from the same sector are offered, which never protect us from the risks that an unsorted portfolio has inherent in its construction. Before choosing a good mutual fund, check the composition and the rules that the management company has given itself in order to change the portfolio itself.

ETFs differentiate and cost less

ETFs can be a good compromise because they offer you:

The replication of indices that by their nature are already differentiated: think of an ETF that has a predominant component of the US stock market – it will have in the reference basket tech, heavy industrial, energy, financial and banking stocks;

Extremely low commissions, which in some cases are even 90%, lower than those that are practiced by mutual funds;

The possibility of selling the shares through regulated markets, or through markets those are identical to the stock exchange, for greater liquidity and greater ease of management.

By choosing ETF vouchers, you can have all the positive sides of mutual funds, without exposing yourself to the most common problems that concern the management of actively managed funds.

June 27, 2019
Why Investing in Mutual Fund is a Smart Move
Mutual funds are one of the popular options when it comes to investing your money wisely. People who are looking for ways to increase their investment for securing their financial future can trust the mutual fund investments schemes.

Mutual fund is a type of investment where investors can choose a scheme based on their financial requirements, especially for those who don’t know much about investments. Mutual funds are created using the money from different investors and used in securities such as stocks, bonds, and other money market instruments and other assets. These funds are professionally managed and offer the investors capital gains against a small fee.

If you are looking for easy ways to invest your money that will provide you with handsome returns then you should invest in mutual funds.

Here are some of the best benefits of mutual fund investments:
1. It is Easier than you think
To begin with, mutual funds do not require any experience, knowledge of economics, or financial markets. Your portfolio will be managed by professionals and all you need to do is choose a program that matches your budget. One of the best things about the mutual funds is that it can be personalized for your use. You can choose from many types of investments types and reap the benefits.
1. Its Highly Affordable
Mutual fund investment is for everyone. No matter how much money you have you can always find the comfortable amount to invest in. You can choose to invest in as low as $1000 mutual fund purchase. There are different types of mutual funds and depending on their nature their prices can be very low. For example, if you choose a systematic investment program with a fixed dollar amount or fixed number of shares, your investment can be less than $3000.

If you compare the cost of maintenance of the portfolio like the transaction cost, costs to the brokerage firms and so on, you will find that they are less expensive than the other type of portfolios.
1. You can Easily Buy them
One of the key benefits of the mutual funds investments is that you can easily buy them. You can purchase from different sources like brokerage firms, mutual fund companies, insurance companies, online brokers and more. It only takes few minutes to open your account, for example in a mutual company fund like Vanguard Investments. This no-hassle feature of the mutual funds makes it one of the best ways people can invest. For people who would like something simple and less complicated ways to smartly invest their money, mutual funds are the bet options.
1. Diverse options
The mutual funds allow you to diversify your portfolio to maximize your returns. You can choose from various categories and types of mutual funds. Apart from investing in stocks, bonds and cash, you can also invest in some of the sub-categories like the sector funds. You learn as you grow your portfolio. It is one of the main benefits of the mutual funds that they are easy to understand. You can also fully manage your own portfolio and maximize your investment for a better financial future.
1. You can Rely on the Team
Usually the mutual fund investment portfolio is professionally managed by a team of experts. They do the research and analysis to find the best investments for you. You don’t have to do all the complicated things. You will saving hours of your time and leave the tasks to the team. This is why mutual funds are so great. Even with minimum knowledge, you can rest assured that your money is going in the right places.
1. So many Ways to Integrate Mutual funds
Mutual funds are flexible, diverse and versatile. Many people happily investment in the mutual funds and reap the benefits. You get to choose from all kinds of investments types, right from the automatic deposit, 401(k) plans, dividends, short-term savings, long-term savings, systematic withdrawal, annuity sub-accounts, and more. You will be happy to know that mutual funds are the most common types of securities investments in 401(k) plans and IRAs.
1. Its Transparent and Trustworthy
Mutual funds are and transparent, which is why so many people are willing to invest in it. You can easily avail the information you need for investment on the mutual fund company’s website or prospectus. You get what you pay for. If you have doubts about the efficiency and transparency of the mutual fund investment, then stop worrying. You can know everything you need to know or don’t need to know. You can easily make an informed investment decision with mutual funds.

Conclusion

A mutual fund investment is ideal for all type of investors whether new or old. It comes with many benefits and it is also secure so you can easily invest your money and enjoy all the perks.
November 9, 2018