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Grow Rich With Mutual Funds

Monday, February 03, 2014
By Dominic Rebello

The Association of Mutual Funds in India (AMFI) with an aim to expand the mutual fund investor base across India, has recently started a multi-city radio campaign called "Mutual Fund - Savings Ka Naya Tareeka". The radio campaign urges individuals from across the strata to use the mutual fund route to regular savings on a long term basis.

But, the campaign is ineffective as it only touches the aspect of fear amongst investors towards a new avenue of investing. In a country where the literacy level is low and financial literacy even lower, it is very difficult to bring forth the correct picture of how one can invest, beat inflation and grow rich through mutual funds. Also the risk factor plays an important part in the mind of the investors.

The concept of Mutual Fund is quite easy to understand, but at the same time the complex nature of the schemes are difficult to understand for the common man. Mutual Fund is basically an investment vehicle that allows many investors to pool their resources in order to purchase stocks, bonds and other securities. These collective funds are called Assets Under Management (AUM). These AUMs (funds) are then invested by expert fund managers appointed by mutual fund companies. These mutual fund companies are called Asset Management Company (AMC). The combined underlying holding of the fund is known as the 'portfolio', and each investor owns a portion of this portfolio in the form of units. A person can track his/her investment status on a day to day basis by simply referring to the Net Asset Value (NAV). The NAV is the price per unit or exchange-traded fund's (ETF) per-unit value. In both cases, the per-unit rupee amount of the fund is calculated by dividing the total value of all the securities in its portfolio, less any liabilities, by the number of fund shares outstanding.

A person can calculate his net worth every day by just referring the Net Asset Value (NAV). The NAV per unit is computed once a day based on the closing market prices of the securities in the fund's portfolio. NAV is the value of an entity's assets less the value of its liabilities.

The two main types of mutual fund schemes are open ended and close ended. The open ended schemes allow investors to buy and sell units at any point of time. They do not have any fixed maturity date, whereas the close ended schemes has a fixed maturity period and investors can invest only during the initial launch period.

Mutual Fund Update
Tata Balanced Fund declares dividend
Tata Mutual Fund has announced dividend under the monthly dividend option under Plan A and Direct plan of Tata Balanced Fund. The record date for declaration of dividend is February 05, 2014. The amount of dividend will be Rs 0.20 per unit under each plan on the face value of Rs 10 per unit.

IDFC Equity Opportunity - Series 1 announces dividend
IDFC Mutual Fund has announced dividend under the IDFC Equity Opportunity - Series 1. The record date for declaration of dividend is February 03, 2014. The quantum of dividend (Rs per unit) on the face value of Rs 10 per unit will be: IDFC Equity Opportunity - Series 1 – Regular - Dividend Option: Rs 1.50 IDFC Equity Opportunity - Series 1 – Direct - Dividend Option: Rs 1.50.

UTI Mutual Fund launches UTI Banking & PSU Debt Fund
UTI Mutual Fund has launched a new fund named as UTI Banking & PSU Debt Fund, an open ended income scheme. The investment objective of the scheme is to generate steady and reasonable income with low risk and high level of liquidity from a portfolio of predominantly debt & money market securities by Banks and Public Sector Undertakings (PSU). The New Fund Offer (NFO) is open for subscription from January 27, and will close on January 30, 2014. The scheme will re-open for continuous purchase and redemption from 6 February 2014 onwards. The New Fund Offer price for the scheme is Rs 10 per unit.

BNP Paribas Short Term Income Fund announces change in exit load
BNP Paribas Mutual Fund has announced that with effect from January 27 the load structure of BNP Paribas Short Term Income Fund, an open ended income scheme shall be 0.50% for redemption within 6 months, against the previous, 0.50 % for redemption within 3 months.

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