Benefits of Investing in Equity Market through Mutual Funds

1. Mutual Funds SimplifiedMutual Funds Simplified

2. What is a Mutual Fund?What is a Mutual Fund?
 A Mutual Fund is a trust that pools the savings of a
number of investors who share a common financial goal.
 The money collected through a scheme is then invested
in shares, debentures and other securities depending upon
the type of mutual fund.
 The income earned through these investments and the
capital appreciation are shared by you and other unit holders
in proportion to the number of units owned by each of you.
 It offers an opportunity for you to invest in a diversified,
professionally managed basket of securities at a relatively
low cost.

3. Mutual Fund Operation Flow ChartMutual Fund Operation Flow Chart

4. Objective of a Mutual FundObjective of a Mutual Fund
 Mutual Fund’s objective varies from scheme to scheme.
You can view the objective on the offer document upfront
Fund Objective What the fund will invest in
Equity (Growth) Only in stocks
Debt (Income) Only in fixed-income securities
Money Market In short-term money market instruments
Balanced Partly in stocks and partly in fixed-income securities

5. ….GroundGround Rules of Mutual FundRules of Mutual Fund
InvestingInvesting
 Identify Funds that match your Investment objectives.
 Evaluate Past Performance and compare with Peers
 Start by investing in diversified large cap funds
 Consider Fund Costs
 Factor in Tax Implications
 Look for Size and Credentials
 Monitor regularly and Review your portfolio
 Invest at Regular Intervals

6. Scan the Key DocumentsScan the Key Documents
Two key documents that highlight the
fund's strategy and performance.
The prospectus (legal document)
Shareholder reports (normally
quarterly).

7. Types of SchemesTypes of Schemes
 By Structure
 Open Ended Schemes
 Close Ended Schemes
 Interval Schemes
 By Investment Objectives
 Growth Schemes
 Income Schemes
 Balance Schemes
 Money Market Schemes
 Other Schemes
 Tax Saving Schemes
 Special Schemes
 Index Schemes
 Sector Specific Schemes

8. Power of SIP
Advantages
Disciplined investing
Convenience
Avoids timing the market
Rupee Cost Averaging

9. Benefits of Starting EarlyBenefits of Starting Early
Investing in a
Diversified MF -
SIP
@ 35 Yrs @ 40 Yrs
Monthly
Investment
Rs 5000 Rs 5000
Investment
Stopped @
60 Yrs 60 yrs
Total
Contribution
Rs 15,00,000 Rs 12,00,000
Growth (assume
15 % CAGR)
Rs
1,37,82,803.88
Rs 66,35,367.20

10. Professional Money Management
 Fund managers dynamically manage your
corpus through a consistent investment
strategy.
 Fund managers monitor market and economic
trends and analyze securities.
Diversification
 Diversification is one of the best ways to reduce risk.
 Mutual funds offer investors an opportunity to
diversify across various company stocks.
Why Mutual Funds?Why Mutual Funds?

11. Benefits of Investing ThroughBenefits of Investing Through
Mutual FundsMutual Funds
Liquidity
 Investors can sell their mutual fund units
on any business day.
 Receive the current market value on their
investments within a short time period
(normally three- to five-days).
Affordability
 The minimum initial investment for a
mutual fund s fairly low for most funds (as
low as Rs.500 ).

12. Benefits of Investing ThroughBenefits of Investing Through
Mutual FundsMutual Funds
Convenience
 Convenience of periodic purchase plans, automatic withdrawal
plans and the automatic reinvestment of interest and
dividends.
 Reports and statements .
Flexibility and variety
 Pick from conservative, blue-chip stock funds, Sectoral funds,
 Funds that aim to provide income with modest growth
 Those that take big risks in the search for returns.
 You can even buy balanced funds, or those that combine
stocks and bonds in the same fund.

13. Evaluating the Firm’s FinancialEvaluating the Firm’s Financial
PositionPosition
 Financial statement analysis.
Comparison to other similar firms.
Forecast direction for future.
Predict earnings and dividends.
Risk evaluation.

14. When To Sell Mutual Funds?When To Sell Mutual Funds?
 Exit of the Fund Manager
 Below par performance for the last 2 years
 Size of the corpus increases too fast.
 The Promoter of Mutual Fund is going through
financial difficulties.
 The scheme changes its investment objectives.
 Change in your goals
 You have earned enough from the fund

15. Investing in Mutual Fund throughInvesting in Mutual Fund through
usus
 NSE has launched Mutual Fund Service System
(MFSS).
 BSE Star allows you to trade in Mutual Fund.
 Buy and redeem units online through your trading
account.
 The units would be debited/credited to your demat
account.

16. For any further queries, visit our
website www.hdfcsec.com or call
our customer care @39019400
Thank you