4. Inflation eats up your savings over time !!!
What's wrong with just saving?
5. What does inflation do to your expenses?
₹
30,000
₹
40,000
₹
60,000
₹
80,000
Today 5 Years 15 Years 20 Years
Impact of Inflation
Impact of 5% yearly inflation on expenses
7. • Start Saving … earlier you start the better
• Progress from a Saving to Investing
• Put money to work rather than accumulating or keeping it idle
• You work hard to earn money …
So, make the money work hard for you
• Benefit from the Power of Compounding
Solution?
Investing - the safeguard against inflation
11. Fight INFLATION for you
Provide INCOME when you need it
Be ACCESSIBLE and USABLE in parts and portions
GROW in value and appreciate over time
Be REALISABLE at fair value and low cost
Proper Asset Allocation is the answer
Make your investments work for you
13. Investments that
Grow in Value
Investments that
Generate Income
Property Bonds
Gold NSC/KVP
Art Collection PPF
Equity Shares Bank / Company Deposits
Mutual Funds Mutual Funds
Are you investing in the right assets?
Asset Allocation should match your needs
15. • A mutual fund is the trust that pools the savings of a number of investors who share a
common financial goal.
• Anybody with an investible surplus of as little as a few hundred rupees can invest in
Mutual Funds.
• Money collected is invested by a professional fund manager in different types of
securities.
• Securities could range from shares to debenture, from Government Bond to money market
instruments, depending upon the scheme’s stated objective.
• Mutual Fund investment gives the market returns and not assured returns.
• In the long term market returns have the potential to perform better than other assured
return products.
• Investment in Mutual Fund is the most cost efficient as it offers the lowest charge to the
investor
What is a Mutual Fund?
21. As per SEBI guidelines on Categorization and Rationalization of schemes issued in October
2017, mutual fund schemes are classified as –
1. Equity Schemes
2. Debt Schemes
3. Hybrid Schemes
4. Solution Oriented Schemes – For Retirement and Children
5. Other Schemes – Index Funds & ETFs and Fund of Funds
• Under Equity category, Large, Mid and Small cap stocks have now been defined.
• Naming convention of the schemes, especially debt schemes, as per the risk level of
underlying portfolio (e.g., Credit Opportunity Fund is now called Credit Risk Fund)
• Balanced / Hybrid funds are further categorised into conservative hybrid fund, balanced
hybrid fund and aggressive hybrid fund etc.
Categorization of Mutual Fund Schemes
23. Invests in equities and equity related
instruments of companies
Seeking long term growth, but volatile
in the short term
Suitable for investors with higher risk
appetite and longer investment
horizon
Equity Funds
24. Multi Cap Fund*
• At least 75% investment in equity & equity related instruments
:) 25% in Large Cap Companies
:) 25% in Mid Cap Companies
:) 25% in Small Cap Companies
Large Cap Fund • At least 80% investment in large cap stocks
Large & Mid Cap Fund • At least 35% investment in large cap stocks and 35% in mid cap stocks
Flexi Cap Fund
• At least 65% investment in equity & equity related instruments. A
scheme investing dynamically across large cap, mid cap, small cap
stocks
Mid Cap Fund • At least 65% investment in mid cap stocks
Small cap Fund • At least 65% investment in small cap stocks
* Also referred to as Diversified Equity Funds
Equity Funds Categories
25. Dividend Yield
Fund
Predominantly invest in dividend yielding stocks, with at least
65% in stocks
Value Fund Value investment strategy, with at least 65% in stocks
Contra Fund
Scheme follows contrarian investment strategy with at least
65% in stocks
Focused Fund
Focused on the number of stocks (maximum 30) with at least
65% in equity & equity related instruments
Sectoral/ Thematic
Fund
At least 80% investment in stocks of a particular sector/
theme
ELSS
At least 80% in stocks in accordance with Equity Linked
Saving Scheme, 2005, notified by Ministry of Finance
Equity Funds
26. Deduction from taxable income of upto
Rs. 1,50,000 under Sec 80C
Invests predominantly in equity
Shortest lock-in period of 3 years as
compared to other tax saving options
Equity Linked Savings Scheme (ELSS)
28. Invest in different types of fixed income
securities
Aims to earn interest income and
capital appreciation
Suitable for investors seeking income at
moderate risk
Debt Funds
29. Overnight Fund • Overnight securities having maturity of 1 day
Liquid Fund
• Debt and money market securities with maturity of u
pto 91 days only
Ultra Short Duration Fund
• Debt & Money Market instruments with Macaulay
duration of the portfolio between 3 months - 6 months
Low Duration Fund
• Investment in Debt & Money Market instruments with
Macaulay duration portfolio between 6 months- 12
months
Money Market Fund
• Investment in Money Market instruments having
maturity upto 1 Year
Short Duration Fund
• Investment in Debt & Money Market instruments with
Macaulay duration of the portfolio between 1 year - 3
years
Debt Funds Categories
30. Medium Duration
Fund
• Investment in Debt & Money Market instruments with Macaulay
duration of portfolio between 3 years - 4 years
Medium to Long
Duration Fund
• Investment in Debt & Money Market instruments with Macaulay
duration of the portfolio between 4 - 7 years
Long Duration
Fund
• Investment in Debt & Money Market Instruments with Macaulay
duration of the portfolio greater than 7 years
Dynamic Bond • Investment across duration
Corporate Bond
Fund
• Minimum 80% investment in corporate bonds only in AA+ and above
rated corporate bonds
Credit Risk Fund • Minimum 65% investment in corporate bonds, only in AA and below
rated corporate bonds
Debt Funds
31. Banking and PSU Fund
• Minimum 80% in Debt instruments of banks, Public
Sector Undertakings, Public Financial Institutions and
Municipal Bonds
Gilt Fund • Minimum 80% in G-secs, across maturity
Gilt Fund with 10 year
constant Duration
• Minimum 80% in G-secs, such that the Macaulay
duration of the portfolio is equal to 10 years
Floater Fund
• Minimum 65% in floating rate instruments (including
fixed rate instruments converted to floating rate
exposures using swaps/ derivatives)
Debt Funds
33. Invest in a mix of equities and debt
Gain from a healthy dose of equities
but the debt portion fortifies them
against any downturn
Ideal for investors who are looking for a
mixture of safety, income and modest
capital appreciation
Hybrid Funds
34. SEBI has classified Hybrid funds into 7 sub-categories as
follows:
Conservative Hybrid
Fund
• 10% to 25% investment in equity & equity related instruments; and
• 75% to 90% in Debt instruments
Balanced Hybrid Fund • 40% to 60% investment in equity & equity related instruments; and
• 40% to 60% in Debt instruments
Aggressive Hybrid Fund • 65% to 80% investment in equity & equity related instruments; and
• 20% to 35% in Debt instruments
Dynamic Asset
Allocation or
Balanced Advantage
• Investment in equity/ debt that is managed dynamically (0% to 100% in equity
& equity related instruments; and
• 0% to 100% in Debt instruments)
Multi Asset Allocation • Investment in at least 3 asset classes with a minimum allocation of at least
10% in each asset class
Arbitrage Fund • Scheme following arbitrage strategy, with minimum 65% investment in equity &
equity related instruments
Equity Savings • Equity and equity related instruments (min.65%);
• debt instruments (min.10%) and
• derivatives (min. for hedging to be specified in the SID)
Hybrid Funds
36. Retirement Funds
• Lock-in for at least 5 years or till retirement
age whichever is earlier
Children’s Funds
• Lock-in for at least 5 years or till the child attains age
of majority whichever is earlier
Index Funds/ ETFs • Minimum 95% investment in securities of a
particular index
Fund of Funds
(Overseas/ Domestic) • Minimum 95% investment in the underlying
fund
Solution Oriented & Other Schemes
37. Portfolio replicates the index
Aims to provide returns in line with
index
Suitable for investors seeking returns
similar to index
Index Funds
38. • Index funds create a portfolio that mirrors a market index
• The securities included in the portfolio and their weights are the
same as that in the index
• The fund manager does not rebalance the portfolio based on
their view of the market or sector
• The fund offers the same return and risk represented by the
index it tracks
• The fees that an index fund can charge is capped at 1.5%
• Investors have the comfort of knowing the stocks that will
form part of the portfolio, since the composition of the
index is known.
Index Funds
39. • An ETF is a marketable security that tracks an index, a commodity, bonds, or
a basket of assets like an index fund.
• Unlike regular mutual funds, an ETF trades like a common stock on a stock
exchange. The traded price of an ETF changes throughout the day like any
other stock, as it is bought and sold on the stock exchange.
• ETFs are passively managed, which means that the fund manager makes only
minor, periodic adjustments to keep the fund in line with its index.
• Rather than investing in an ‘active’ fund managed by a fund manager, when
you buy units of an ETF you're harnessing the power of the market itself.
• Because an ETF tracks an index without trying to outperform it, it incurs
lower administrative costs than actively managed portfolios.
Exchange Traded Funds (ETFs)
40. • Gold ETF is a open ended scheme which invest pure physical gold
bullion of 99.5 per cent purity. The scheme may also invest gold
related instruments approved by SEBI and Gold Deposit Scheme of
banks up to 20% of net assets
• Gold ETFs issue units against gold held in the portfolio. Each unit
represents a defined weight in gold, typically one gram.
• The price of Gold ETF unit moves in line with the domestic price of gold.
• Gold ETF are benchmarked against the price of gold.
• Gold ETFs are considered as non-equity mutual funds for the purpose of
taxation.
⁻ Eligible for long-term capital gains benefits if held for 3 years
⁻ No wealth tax is applicable on Units of Gold ETFs
Gold Exchange Traded Funds
41. • International funds enable investments in markets outside India, by holding
in their portfolio one or more of the following:
• Equity of companies listed abroad.
• ADRs and GDRs of Indian companies.
• Debt of companies listed abroad.
• ETFs of other countries.
• Units of passive index funds in other countries.
• Units of actively managed mutual funds in other countries.
• International equity funds may also hold some of their portfolios in Indian
equity or debt.
• They can hold some portion of the portfolio in money market
instruments to manage liquidity.
International Funds
42. • Fund of funds are mutual fund schemes that invest in the units of other
schemes of the same mutual fund or other mutual funds (Hence FoF is also
known as multi-manager fund).
• Its portfolio contains Units of different underlying mutual fund scheme in which
the FoF has invested.
• The FoF will have two levels of expenses –
a) that of the scheme whose units the FoF invests in and
b) the expense of the FoF itself
• SEBI Mutual Funds Regulations have capped the total expenses that can be
charged across both levels
• FoF provide benefit of risk diversification and portfolio diversification with small
amounts of investment.
Fund of Funds (FoF)
43. • “Arbitrage” is the simultaneous purchase and sale of an asset to take advantage of the
price differential in the two markets and profit from price difference of the asset on
different markets or in different forms.
• Arbitrage fund buys a stock in the cash market and simultaneously sells it in the
Futures market at a higher price to generate returns from the difference in the price of
the security in the two markets. The fund takes equal but opposite positions in both
the markets, thereby locking in the difference.
The positions have to be held until expiry of the derivative cycle and both positions
need to be closed at the same price to realize the difference.
• The cash market price converges with the futures market price at the end of the
contract period. Thus it delivers risk-free profit for the investor/trader.
• Price movements do not affect initial price differential because the profit in one
market is set-off by the loss in the other market.
• Hence, Arbitrage funds are a good choice for cautious investors who want to benefit
from a volatile market without taking on too much risk.
Arbitrage Funds
44. Risk Return Type of Scheme
Higher Risk Higher Returns Equity Schemes
Moderate Risk Moderate Returns Hybrid Schemes
Low - Moderate Risk Low - Moderate Returns Debt Schemes
Very Low Risk Lower Returns Liquids Schemes
…. a matter of Risk Return Trade-Off
Mutual Fund Scheme - Which one to buy?
45. Overnight Funds
Liquid Funds
Ultra Short Term Funds
Short Term Funds
Gilt & Bond Funds
Debt-oriented Hybrid
Equity-oriented Hybrid
Equity Savings Funds
Large Cap Funds
Diversified Funds
Mid Cap Funds
Sectoral Funds
Debt Equity
>>Return<<
>>Return<<
>>Risk<<
Low Med High Low Med High
>>Risk<<
Risk / Return Hierarchy
47. • Scheme information document (SID)
• SID contains information that is specific to a each MF scheme.
• Concise & detailed information that a prospective investor should know so as to take an informed
decision to invest
• Statement of Additional Information(SAI)
• SAI contains information with regards to each mutual fund and is common across all schemes of a
mutual fund.
• Key Information Memorandum (KIM)
• Abridged version of SID
• Simple to understand and contains key / essential information that investors need to be aware about
before they invest
One must read & understand scheme related documents before investing in a mutual fund
scheme.
Scheme Related Documents
48. • Fact sheets help you assess a scheme and
keep track of its performance
• Issued every month
• Easy to understand and provides a
snapshot of the scheme
• Show following key information at a
glance:
• NAV
• Returns
• Fund Managers managing the
portfolio
• Riskometer
• Other statistics allowing investors to
compare mutual funds and decide
which ones to invest in.
Fact sheet is like a score card
Factsheet
50. • All MF schemes offer a Direct Plan and Regular Plan for
investments
• You can invest –
• DIRECTLY i.e., without involving or routing the investment through any
distributor/agent in a ‘Direct Plan’ OR
• Through / with the help of a Mutual Fund agent/distributor in a
Regular Plan
• Direct Plan has a separate NAV, which is higher than the
normal “Regular” Plan’s NAV.
• Direct Plan has lower expense ratio as there is no
distributor/agent involved
Direct Plans & Regular Plans
51. • Growth Option
• Capital appreciation in the investment are ploughed back in the
scheme and are reflected in increase in the NAV.
• Investors do not receive any periodic payments.
• Suitable for investors who do not require regular income.
• Tax efficient
• Dividend Option
• Capital appreciation in the investment are paid / distributed to the
investors by way of dividend, periodically.
• Dividend payment is subject to availability of distributable surplus in
the MF scheme.
• On dividend payment NAV of the scheme drops.
• Dividends are tax-free in the hands of investors but are subject to levy
of Dividend Distribution Tax (DDT).
• Suitable for investors who require income cash flow.
• Under Dividend Reinvestment sub-option, the dividend proceeds are
reinvested in the same scheme and additional units are allotted.
Growth Option & Dividend Option
52. Lumpsum Investment – Initial + Additional
Systematic Investment Plan (SIP)
Systematic Transfer Plan (STP)
Inter Scheme Switches
Mode of Investing
54. What’s Inside-
Systematic Investment Plan (SIP) - It is not necessary that one has to “Start big” to “End
big”
SIP/SWP/STP – Tax aspect
SIP/SWP/STP – Effective retirement planning
Systematic Withdrawal Plan (SWP) – It can be used as a source of
regular cash flow
Systematic Transfer Plan (STP) - It is not difficult to invest a large sum
even “in volatile market”
55. Systematic Investment Plan (SIP): What is the basic mantra
It is not necessary that one
has to “Start big” to “End
big”
56. SIP: Your friend in need
A disciplined way of investing in
mutual funds and works on the
basic principle of regular
investment
What is it
It is not necessary to start the SIP
with a large amount. It can be
started with as low as ₹ 1000
What is the minimum
Investment amount
It allows a person to invest a predetermined
amount for a fixed interval in mutual funds.
The amount will be automatically deducted
from the bank account on a chosen date
How does it work
SIP can be done on daily, weekly,
monthly, and even quarterly
basis
What are the frequencies
covered
57. SIP: Advantages
It allows you to invest a fixed
amount at regular intervals for a
specified period which helps in
building a portfolio
Discipline
The average investment cost
comes down because investor
passes through all phases of the
market
Rupee cost averaging
Transaction cost for investment
via SIP is far lower compared with
investing directly in equities
Lower transaction cost
The longer one remains invested
higher would be the returns
Power of compounding
Hassle-free mode of investment
as amount gets debited
automatically with NACH/ Auto
Debit instructions
Convenience
58. SIP: Inflation reduces value of money
Assumption: Rate of return is 15% p.a. and inflation rate is @ 7%.
To achieve the
required corpus
through SIP
mode
To achieve the
required corpus
by one time
investment
To achieve the
required corpus
through SIP
mode
To achieve the
required corpus
by one time
investment
59. SIP: Rupee cost averaging
SIP eliminates the need for timing the investment
It smoothens the impact of market volatility
It allows the investor to buy more units at lower price
The investor need not worry about how much to invest
and when to invest
SIP Investor Lump-Sum Investor
Month Unit Price Investment
Units
Purchased
Investment
Units
Purchased
1 106 1,000 9.43 12,000 113.21
2 95 1,000 10.53
3 94 1,000 10.64
4 104 1,000 9.62
5 104 1,000 9.62
6 90 1,000 11.11
7 99 1,000 10.10
8 101 1,000 9.90
9 92 1,000 10.87
10 90 1,000 11.11
11 108 1,000 9.26
12 108 1,000 9.26
SIP Investor Lump-Sum Investor
Total Investment 12,000 12,000
Total units purchased 121.44 113.21
Average unit price 98.81 106
Value after 9 months 13,115.70 12,226.42
Difference 889.28
At the end of 12 months, total units purchased under SIP mode will be
121.44 & cost per unit will be ₹ 98.81. Thus, the profit for an SIP investor
from the above investment will amount to ₹ 889.28 (₹ 13,115.70 – ₹
12,226.42)
Assumption: In first case, ₹ 1000 is invested every month for 12 months
through SIP mode while in other ₹ 12,000 is invested as a lumpsum.
60. SIP: Power of compounding
Albert Einstein regarded Compound interest as the 8th wonder
of the world
He famously advised that those who understand its power, earn through
it and those who do not, end up paying it
Amount Invested (per month) – ₹ 1,000 Amount Invested (per month) – ₹ 1,000
Time period – 30 years Time period – 35 years
Return – 12% pa Return – 12% pa
Total amount invested – ₹ 3,60,000 Total amount invested – ₹ 4,20,000
Maturity Value – ₹ 35.29 lakh Maturity Value – ₹ 64.95 lakh
Compounding is a true companion of an investor who is disciplined. It is superior to simple
interest as it earns interest on interest
Assumption: Rate or return in either case is 12%. ₹
1000 is invested every month. In the first case
investment period if 30 years while in second it is
35 years
61. SIP: Start early to create a larger corpus
The table above shows the maturity values for the monthly SIP of ₹ 1,000 at 12% for different time periods.
The more time one spends in the
market, the maturity value of the
investment increases
proportionately. As the graph
suggests, for a 5-year SIP, the final
value is 1.4 times of the principal
invested. Whereas it is 6.3 times
for a period of 25 years
SIPs have been one of the best investment strategies to reap long-term equity investment gains
Assumption: Rate of return in this case is assumed to be 12%
60,000
120,000
180,000
240,000
300,000
82,486
232,339
504,576
999,148
1,897,635
0
500,000
1,000,000
1,500,000
2,000,000
5 10 15 20 25
IN
RS.
Amount invested (in Rs.) Maturity value (in Rs.)
1.4 times
1.9 times
2.8 times
4.2 times
6.3 times
62. Systematic Transfer Plan (STP): What is the basic mantra
It is not that difficult to invest
a large corpus even “in a
volatile market”
63. STP: Understanding the basics
What is it
STP refers to Systematic Transfer
Plan whereby an investor is able
to invest lump sum amount in a
scheme and regularly transfer a
fixed or variable amount into
another scheme
When does it make sense
When markets are volatile it
makes sense to start an STP from
debt to equity fund instead of
doing an one time investment in
an equity oriented fund
How does it work
An investor invests a lump sum
amount in one scheme, usually a
low-risk fund, and regularly
transfers a pre-defined amount
into another scheme for long-
term wealth creation
What should be kept in mind
It is a risk mitigation strategy and
thus the objective is not to
maximize profit but to optimize
returns
64. STP: Typical approach
Transfer n
Transfer 1
Value of Fund A
decreasing over time
Value of Fund B
increasing over time
Fund A Fund B
65. STP: Types and when it can be used
Fixed STP
Capital appreciation STP
Both the strategies can be used by the investor depending upon the requirement
▪ In fixed mode, the systematic
transfer amount remains consistent
▪ Irrespective of the overall market
conditions, a fixed amount is
invested in the second fund
▪ This mode is normally used when
investment is transferred from low-
risk debt to equity funds
▪ In capital appreciation mode, the
initial lump sum amount that is
invested say in a debt fund remains
consistent
▪ The capital appreciation part is
transferred to the second fund say
an equity fund
▪ This strategy works for the
conservative investor who wants to
protect the capital and take some
risk with the returns
66. STP: Final thoughts
Understanding the
asset classes and
overall markets
Disciplined investing
Risk mitigation
strategy
Systematic transfer plan is a risk mitigation strategy which will protect
the investor from any adverse loss but also cap the returns to some
extent
STP like SIP will only yield the desired result if the investor
remains committed to the objective and does not break the
investment based on short-term market movement
The investor should also understand the asset classes to some extent and
where they currently stand. When the equity market is at its peak, it
would be unwise to transfer the fund from debt to equity, similarly when
the markets are close to their multi-year lows, it would be counter
productive to transfer the funds from equity to debt
03
01
02
67. Systematic Withdrawal Plan (SWP): What is the basic mantra
It can be used as a source of
regular cash flow
68. SWP: Understanding the basics
What is it
It is technically the reverse of SIP
wherein one invests a lump sum at the
beginning and withdraws a fixed
amount at regular intervals to generate
regular cash flow. It can be started in
equity, debt or hybrid funds
How does it work
The mechanism is just like SIP. An investor
needs to instruct the asset management
company (AMC) to redeem units on a
predetermined date and credit a fixed sum
into the bank account. The fund’s value
and number of units will reduce to the
extent of each withdrawal
What is the frequency of payouts
The frequency is generally monthly or
quarterly. It can also be semi-annual or
annual depending upon the need of the
investor
What should one keep in mind
The investor should try to Increase the
withdrawal amount every year to beat
inflation
69. SWP: Advantages
Taxation
Partial redemption
Averages out the market
Regular Cash Flow
It provides regular cash flow to the investor. It is
very effective financial tool for those looking for
fixed source of income every month, like elderly
citizens
Rupee cost averaging helps the investor in SWP
plan as well. In a rising market, the investor takes
advantage of the averaging out with each
redemption
Withdrawal through SWP route is taxable @ 15%
incase of short term capital gain and Nil incase of
long term capital gain if the capital gain amount is
less than Rs. 1 lakh per financial year.
SWP does not require redemption of entire
investment and investor can take care of his/her
financial need by partial redemption every month
systematically without doing any paperwork
70. SWP: Types and when it can be used
Fixed SWP
Capital appreciation SWP
Both the strategies can be used by the investor depending upon requirement
▪ In fixed mode, the systematic
withdrawal amount remains
consistent
▪ Irrespective of the overall market
conditions, a fixed amount is
credited in the bank account
▪ This mode is important when
steady flow of income is the
requirement
▪ In capital appreciation mode, the
initial lump sum amount remains
consistent
▪ The payout is the capital
appreciation that is made due to
the performance of the fund
▪ Since the payout depends upon
the market, this mode is
important when the initial corpus
is more important then the
monthly flow of income
71. SWP: Effective usage in different scenario
Retirement Planning
▪ Investment in a debt oriented
mutual fund along with other
instruments like bank FD
▪ Regular payouts to supplement
regular income
Investment Strategy
▪ Bonus or one time payout can
be invested in a liquid or ultra
short term mutual fund
▪ This amount can then be used
for the next six or 12 months
Start-up
▪ Everyone wants to be an
entrepreneur. But before
quitting job, regular source of
income is very important
▪ SWP is idle for this and one can
invest in debt mutual fund
72. SIP SWP STP: Taxation
Investment Type Comment Description
SIP Every installment considered as fresh investment
▪ Each investment has to be held for at least 12 months to be
eligible for LTCG benefits
SWP Investment is actually redeemed at particular interval
▪ If the amount is withdrawn from Debt mutual fund -
▪ Investment is held for <3 year, tax as per the investor's
tax slab
▪ Investment is held for > 3 year, 10% without indexation
and 20% with indexation
▪ If the amount is withdrawn from Equity mutual fund -
▪ LTCG is NIL* if investment is held for > 1 year
STP
Investment moving from debt mutual fund to equity
mutual fund
▪ If the source fund is Debt mutual fund -
▪ Investment is held for <3 year, tax as per the investor's
tax slab
▪ Investment is held for > 3 year, 10% without indexation
and 20% with indexation
▪ If the source fund is Equity mutual fund -
▪ LTCG is NIL* if investment is held for > 1 year
* Income-tax at the rate of 10% (without indexation benefit) to be levied on long-term capital gains exceeding Rs. 1 lakh provided transfer of such units is subject to STT plus applicable charges.
73. SIP SWP STP: Retirement Planning
Using SIP/STP/SWP effectively for retirement planning
✓ Start investment in equities early through SIP
✓ Starting early will help in accumulating
retirement corpus with lower monthly
investment
✓ SIP gives benefit from market volatility and
accounts for “rupee cost averaging”
Smart
Investor
Pre-Retirement
Post-Retirement
✓ Post retirement, the entire retirement corpus
is in debt mutual fund due to the STP option
✓ Instead of redeeming the entire corpus at one
go, the retired individual can withdraw
amount equivalent to their household needs
through SWP option
✓ SWP allows regular income during retirement
through regular withdrawal and also some
returns as the balanced corpus remains
invested in debt mutual fund
✓ Investments done in equity mutual funds
should be transferred systematically into debt
mutual funds when retirement approaches
✓ It is necessary to reduce risk and can easily be
done through STP
✓ Through STP, predefined amount will be
transferred from equity scheme to debt
scheme of the same fund house
SIP
STP
SWP
74. SIP SWP STP: Recap
SIP
In Systematic Investment Plan, a fixed sum of money is debited from one’s bank
account at a predefined frequency (weekly, bi-monthly, monthly etc.) and
invested in a mutual fund
STP
In Systematic Transfer Plan, a fixed sum of money is transferred from source
mutual fund (where the amount is already invested upfront) to target mutual
fund at predefined frequency on a specified date
Mutual Fund
Bank
Target Scheme
Source Scheme
SWP
In Systematic Withdrawal Plan, a fixed sum of money is withdrawn from one’s
mutual fund statement at a predefined frequency (normally monthly)
Bank
Mutual Fund
SIP
✓ Rupee cost averaging
✓ Compounding
✓ Allows regular investment
SWP
✓ Works well in both rising
and falling market
conditions
✓ Meets short term
objective
STP
✓ Rupee cost averaging in
rising market
✓ Helps in retirement
planning
Advantages
76. Pre-requisites
1. KYC (Know Your Customer) Process
2. PAN Card
3. Bank Account
Steps to complete KYC Process
Visit any MF Branch Investor Service Centre / Branch with required KYC
Documents, namely –
i. Address Proof → Aadhaar Card, Passport, Tel. bill etc.
ii. Identity Proof → PAN Card, Aadhaar Card, Passport, Voter’s card etc.
Submit Completed KYC form with photograph with required documents
After completing KYC, you can open a MF Folio with any Mutual Fund and start
investing .
Steps for Investing in Mutual Funds
78. • One can invest in a Mutual Fund scheme Offline or Online
• Offline (physical application) mode
• Duly completed scheme application form signed by all applicants
• Cheque or bank draft for the amount to be invested
• Submit the above at the branch office or designated Investor Service
Centres (ISC) of mutual funds or Registrar & Transfer Agents & MFU
• Online mode
• Websites of the respective Mutual Funds
• Websites of Mutual Fund Distributors
• Buy mutual funds units through NSE – MFSS and BSE - StAR MF just like
a company stock
• MF Utilities (MFU) a technology based shared service platform for MF
transactions promoted by the mutual fund industry for participating
mutual funds.
How to invest in a Mutual Fund Scheme?
79. • Withdrawing your money from Mutual Fund scheme is called as Redemption or Repurchase
• You can withdraw full or partial amount or even a specific number of units
• Offline mode to redeem your mutual fund investments
• Unit holder needs to submit a duly filled and signed Redemption Request
form to the AMC's or the Registrar’s designated office
• All holders have to sign the Redemption form
• The proceeds from the redemption will be credited to the registered bank
account of the first named unit holder
• Online mode to redeem your mutual fund investments
• Log-on to the ‘Online Transaction’ page of the desired Mutual Fund
• Select the Scheme and the number of units (or the amount) you wish to
redeem and confirm your transaction.
How to withdraw your money?
80. • A mutual fund provides relative return, with respect to its benchmark.
• Returns have to always be seen in comparison with a fund’s benchmark
• Appropriate benchmarks should be used to evaluate a fund’s performance
• The return of a fund should be measured over a period of time,
representative of recommended holding period and objectives of the fund
• Debt funds are held for shorter periods
• Equity funds are held for longer periods
• The return of the fund has to be adjusted for the risk it has assumed to
generate the return.
• Higher return with higher than proportionate risk, is a case of underperformance,
compared to a fund with higher return at lower risk
Performance Evaluation Principles
81. • The NAV (net asset value) is the market value of all
the funds investments less liabilities and expenses,
divided by outstanding number of units for the firm.
• NAV is important as it is the basis for valuing an
investor’s holding of units in a mutual fund, and the
relative appreciation of the same
• Mutual Fund NAVs are published daily on AMFI’s
website, Mutual Fund Websites, leading newspapers,
etc.
What is NAV?
82. • Mutual funds are required to ‘Label’ their schemes
on the following parameters:
• Nature of scheme in an indicative time horizon
(short/medium/long term)
• A brief about the investment objective (in a single
line sentence) followed by kind of product in
which investor is investing (Equity/Debt).
• Level of risk, depicted by ‘Riskometer’ as under:
• Low - principal at low risk
• Low to Moderate - principal at low to moderate risk
• Moderate - principal at moderate risk
• Moderately High -- principal at moderately high risk
• High - principal at high risk
• Very High – principal at very high risk
• A disclaimer saying: “Investors should consult their
financial advisers if they are not clear about the
suitability of the product.”
Product Labelling
83. • Facility that enables an individual unitholder (including sole proprietor of
sole proprietary concern) to nominate a person, who can claim the Units
held by the unitholder or the redemption proceeds thereof in the event of
death the unitholder.
• If the Units are held jointly by more than one person, all joint unit holders
are required to together nominate a person in whom all the rights in the
units would vest in the event of death of all the joint unit holders.
• Nomination can be made either at the time of initial application for
purchase of Units or subsequently.
• Nomination once made can be changed subsequently any time and any
number of times.
Nomination
84. • In case nomination is not made by a Unitholder, the Units would be
transmitted to the account of legal heir(s), depending whether the
deceased person has left behind a Will and as per applicable succession
law, which involves lengthy (and sometimes expensive & cumbersome)
procedure.
• Nomination is a simpler and inexpensive way to make things easy for one’s
near and dear ones to claim the money in your mutual fund folio, demat
account or bank account expeditiously, through minimal paper after one’s
death.
• To claim the Units after the death of a unitholder, the nominee has to
complete the necessary formalities, such as completion of KYC process,
along with proof of death of the unit holder, signature of the nominee duly
attested, furnishing of proof of guardianship in case the nominee is a minor,
and such other document as may be required for transmitting the units in
favour of the nominee(s).
Why is Nomination important?
85. Complaint to Mutual Fund
• Contact the Investor Relations Officer of the Mutual Fund
• Name and contact details of the Investor Relations Officer are
available in the Scheme Information Document and also on
the website of the concerned mutual fund.
Complaints Redressal Mechanism
86. SEBI has provided a centralized web
based complaints redress system on
its portal, named 'SCORES’.
If you are not satisfied with the
response from a particular Mutual
Fund/company/intermediary, you may
then lodge an online complaint with
SEBI through SCORES to get your
complaint redressed.
SEBI takes up the complaints
registered via SCORES with the
concerned company / mutual fund /
intermediary for timely redressal.
To log on to SCORES System, please visit http://scores.gov.in/
SEBI Complaints Redress System
