What are Mutual Funds?
A mutual fund is a pool of money managed by a professional Fund Manager, who invests the same in equities, bonds, money market instruments and/or other securities according to the investment
Benefits of Mutual Funds
1. Diversification: One of the biggest advantages mutual funds give you is that of immediate diversification. You may not have enough money to spread your investments across asset classes, but by pooling money from thousands of similar investors, a mutual fund spreads your investment and hence, your risk. It ensures that you have not kept all your eggs in one basket and are safe from incurring huge losses from a single bad investment.
2. Professional Management: Another big benefit of investing in mutual funds is the professional expertise it provides for your investments. Asset Management Companies (AMCs) provide qualified fund managers who, with the help of strong research teams and their own expertise, pick the best options to meet the fund's objective. This saves you time and the stress of constantly monitoring your investments and wondering if you made the right buy or sell decision. With mutual funds, you do not have to worry about market swings.
3. Affordable: You may want to buy shares of large companies or want to invest in big companies in a particular sector of choice. However, you may not have the money to make a big investment. Mutual funds trade in big volumes, giving their investors the advantage of lower trading costs.
Anyone can start an investment in a mutual fund through a Systematic Investment Plan (SIP) with as little as Rs 500.
4. Well Regulated: In India, all mutual funds are regulated by the Securities and Exchange Board of India (SEBI). All mutual funds are required to follow transparent processes, as laid down by SEBI, protecting the interest of investors. Further, SEBI makes it compulsory for all mutual funds to disclose their portfolios every month
Types of Mutual Funds
1. Equity Funds
Equity funds allow investors to participate in stock markets. Though categorized as high risk, these schemes also have a high return potential in the long run. They are ideal for investors in their prime earning stage, looking to build a portfolio that gives them superior returns over the long-term.
2. Debt Funds
Debt funds invest a majority of the money in debt - fixed income i.e. fixed coupon bearing instruments like government securities, bonds, debentures, etc. They have a low-risk-low-return outlook and are ideal for investors with a low risk appetite looking at generating a steady income. However, they are subject to credit risk.
3. Solution Oriented Funds
Solution Oriented Funds help you invest for a specific goal by increasing discipline, as investors are less likely to withdraw from these corpuses until that goal is achieved, ensuring long term investing. Designed to provide investors an avenue for long term wealth creation specifically for the objectives of retirement planning or saving for children.
4. Hybrid Funds
Hybrid Funds are mutual fund schemes that divide their investments between equity, debt and/or other assets like gold. The allocation may keep changing based on market risks. They are more suitable for investors who are looking at a combination of moderate returns with comparatively low risk.
5. Index Funds
Index Funds are ideal for investors who want to invest in equity market but don’t want the hassle of stock research and selection. An index mutual fund follows the same strategy as the index it is based on and provides similar returns.
6. Tax Saving Funds
Tax Saving Funds offer tax benefits to investors. They invest in equities and are also called Equity Linked Saving Schemes (ELSS). This type of schemes has a 3-year lock-in period, the lowest amongst tax-saving instruments. The investments in the scheme are eligible for tax deduction u/s 80C of the Income-Tax Act, 1961.
Information on Mutual Funds
Daily NAV of various Mutual Fund schemes
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Central Bank of India is an AMFI Registered Mutual Fund distributor. Mutual Fund investments are subject to market risk. Read all scheme related documents carefully.
Commissions on Mutual Funds
As per SEBI circular: SEBI/IMD/CIR No. 4/ 168230/09, following are the details of the commission earned by Central Bank of India (AMFI Registered Mutual Funds Distributor ARN-39091) from various fund-houses, whose products are being distributed.
The rates are updated as and when rates are available from AMCs on a best effort basis. Please select the AMC for more details on the scheme wise commission structure.
Detailed Commission/Brokerage structure for each AMC