A globally proven investment vehicle, Mutual Funds invest in instruments of capital markets which have different risk return profile. As per the data available with AMFI (Association of Mutual Funds in India) the total Assets Under Management of all the Mutual Fund companies in India has crossed 2,00,000 crores as of January 2006. This fast growing industry is regulated by the Securities and Exchange Board of India (SEBI).
There are a wide variety of Mutual Fund Schemes that cater to an individuals needs, whatever the age, financial position, risk tolerance and return expectations. Based on the investment objective these schemes can be classified as follows :
Table on types of schemes
The advantages of investing in a Mutual Fund are:
- Professional Management: You avail of the services of experienced and skilled professional who are backed by a dedicated investment research team which analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme.
- Diversification: Mutual funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. You achieve this diversification through a Mutual Fund with far less money than you can do on your own.
- Convenient Administration: Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and unnecessary follow up with brokers and companies. Mutual Funds save your time and make investing easy and convenient.
- Return Potential: over a medium to long-term Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities.
- Low Costs: Mutual Funds are a relatively less expensive way to invest compared to directly investing in he capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors.
- Liquidity: In open-ended schemes, you can get your money back promptly at net asset value related prices from the Mutual Fund itself.
- Transparency: You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme, the proportion invested in each class of assets and the fund managers investment strategy and outlook.
- Flexibility: Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, you can systematically invest or withdraw funds according to you needs and convenience.
- Choice of Schemes: Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.
- Well Regulated: All Mutual Funds are registered with SEBI (Securities and Exchanges Board of India) and they function within the provisions of strict regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI.
We at Continuum do a comprehensive indepth analysis of every fund scheme, be it an existing one or a new one, before it is recommended to our clients. The analysis covers both quantitative factors like Performance History, Risk adjusted returns, Portfolio diversification, Size of the AUM etc., and qualitative factors like the Investment Strategy, Fund management style, Fund House performance, Investment Approach, Peer group comparision etc.,.
Apart from ensuring the suitability of the mutual fund schemes strategy & style with our Investors needs & risk profile, we also adopt a more holistic approach of building a well diversified portfolio consisting of funds from various fund houses and with different investment focus (Large Cap, Mid Cap, Contra, Thematic, Sectoral etc.,) in order to balance the risk and reward of the overall portfolio.