A mutual fund is a professionally managed investment scheme in which investors get an opportunity to invest their money in a diversified portfolio of stocks & shares, corporate debentures, government bonds & other money market instruments. Mutual fund schemes are offered by Asset Management Companies such as, SBI AMC, Reliance AMC, HDFC AMC, ICICI AMC etc. Each scheme offered by an AMC has an investment objective which could for example be providing a steady monthly income or long term wealth creation. It is important for an investor to a choose mutual fund scheme whose objectives align with their own financial goals. Corporate debenture – A medium to long term debt or loan taken by a company at a fixed rate of interest. Similar to a fixed deposit, but in this case, instead of a bank a company pays the investor the interest. Government bond – Long term debts or loans raised by the government in order to fund various public projects and undertakings. The investor in return is payed a fixed percentage of interest. Money market Instruments – Short term liquid debts raised by organizations to fund their working capital requirements. They pay the investors a fixed percentage of interest.
Mutual fund investments offer numerous benefits to its investors. 1. The most prominent being high rates of return. It is not uncommon to witness equity mutual funds yield over 25% returns in a year as against investments in a savings account or Fixed deposit which typically yield returns between 3.5% to 6.25%. 2. Capital gains made on equity mutual fund investments are completely tax free after a year of staying invested. 3. A single unit of a mutual fund gives the investor an exposure to numerous stocks in the market. This diversification minimises the risk associated with market fluctuations. So when one company or a sector does poorly the outperformance of the other sectors provide positive returns to the investor.
One may start a monthly investment plan on Rightfunds platform with as little as rupees 5000.
KYC stands for Know – Your – Customer. As per the law laid down by Securities Exchange Board of India it is mandatory for all investors to complete a one time KYC Process before they can begin investing. The process involves providing a signed Pan card copy, signed Aadhar card copy, signed KYC form & a cancelled Cheque leaf. Rightfunds provides a way for its customer to complete the KYC process online with minimal paper work.
Money is transferred directly from the customer’s account to the bank account of the Asset Management Company (Rightfunds does not receive any investors money into its own account). The transfer may be done via online banking or through a one-time bank mandate that the customer signs when he opens an account with Rightfunds. The purchase orders are routed through the Bombay stock exchange where they are executed.
Like purchases, withdrawals can also be done online. The withdrawal option can be found at Home page>Account statements>withdraw. Once a withdrawal request is placed money is credited back to the customer’s bank account within 3-5 working days.
No, we do not charge our customers anything. No setup fees, No subscriptions charges or hidden costs. Rightfunds platform is completely free to use for its customers. We are compensated by the Asset Management Companies who pay us a small commission for the funds we disburse through our website.
Tax saving mutual funds are essentially equity orientated schemes that invest in the stocks & shares of numerous companies. Under section 80C of the Indian Income tax act an individual can save up to 1.5 Lakhs in taxable income each year by investing in tax saving mutual funds. Tax saving mutual funds have the lowest lock in periods of 3 years when compared to other post office and PPF schemes whose average tenure ranges from 5-15 years. Also historically tax saving mutual funds have provided much superior returns compared to their counter-parts.
Not all mutual funds are built the same. ‘Debt mutual funds’ essentially invest in debt instruments that offer a fixed rate return which is not in any way linked to market volatility. ‘Equity mutual funds’ on the other hand invest in the stock market and hence their returns are tied to the market fluctuations. However, an equity mutual fund invests in numerous companies in which case the risk in diversified. Also these are handled by well qualified professionals who track and monitor each and every market movement. This makes mutual fund investments many times safer than investing directly in the stock market by oneself.
If you earn an income or have some savings, then mutual funds are for you. You’ve worked hard to earn money, if you do not invest it wisely the money will lose its value over the years to come as things around you get expensive. At the moment you put your money in a fixed deposit or a savings account which pays you 3.5-6% interest barely beating inflation. Why not give mutual funds a try some of which have yielded over 20% percent returns year on year for the last 10 years. Sign up to know more…
While one cannot guarantee returns, historically equity mutual funds have provided returns between 18-25%, balanced mutual funds have provided returns between 14-16% and Debt mutual funds between 7-12% (depending upon the type of debt fund) over the last five years. The difference in the returns generated is a product of the risk each type of mutual fund takes to generate them. In the long run (5-7 years) the risk taken becomes negligible.
Net asset value of a scheme is similar to the share price of a company, except that it reflects the collective price of numerous companies that the scheme has invested in. Mathematically it may calculated as follows:
Net Asset Value (NAV) = (Assets – Debts) / (Number of Outstanding units)Where,
Assets = Market Value of mutual fund investments + Receivables + Accrued Income. Debts = Liabilities + Expenses (Accrued)
Capital gains are the returns you make on your investments. In the case of equity mutual funds capital gains are completely tax free after a year of staying invested. For debt mutual funds the capital gains are indexed (i.e. the effect of inflation on the profits is subtracted) prior to taxation, when investments are held for a period of 3 years. When an investor invests in Tax saving mutual funds not only are the capital gains exempt from being taxed after a year but also the principal amount (up to rupees 1.5 lakhs per year) is exempt from being taxed as given under section 80C of the Indian income tax act.
At Rightfunds we filter over 2000 mutual fund schemes to offer roughly 25 that cater to every investment objective. Some factors that we analyse while filtering the schemes include: Beta Ratios, Sharpe ratios, Percentage of exposure to small, mid and large cap stocks, exit loads, average assets managed by the scheme, benchmarks, cumulative experience of the fund manager, Reaction to market volatility via point to point comparison with peers, portfolio churn rate, average maturity of the fund, modified duration, % of papers which are credit rated > AA, % of government securities etc. In order to assist us with this complex process of filtering and dynamically monitoring various mutual fund schemes we have built sophisticated software that automatically updates itself every day based on market behavior.
Yes, apart from being able to execute orders, Rightfunds will also let you track each of your investments and provide you with a daily Investment summary. You can track your absolute return as well as the compounded aggregate growth rate of your entire portfolio. We also provide detailed account statements containing the folio number, date of purchase, units held, current market value, eligibility for Long term capital gains etc. in an exportable excel format. If you are not KYC compliant which is a mandatory requirement in order to begin investing in mutual funds, you may complete your E-KYC online while signing up with Rightfunds.
The graph below shows the value of Rupees 10,000 invested in various asset classes over the last 5 years.
Securities Exchange Board of India (SEBI) formulates policies and regulates mutual fund activity in India. Association of Mutual funds in India (AMFI) lays down guidelines in its AMFI Code of Ethics in order to ensure mutual funds are distributed in the right manner. They also address investor grievances related to mutual funds. Apart from the above the Reserve Bank of India (RBI) & Ministry of finance are also key stake holders in the mutual fund industry.
Rightfunds does not receive or store your money. When you place an order on the Rightfunds platform money is directly sent to the Asset Management Company eg. SBI AMC, HDFC AMC etc. When an investment is executed the AMC provides the investor with a unique ‘Folio Number’ the investor may redeem his units at any time by submitting a redemption form directly to the AMC quoting his unique folio number.
Orders placed before 12:30pm are executed on the same day, after 12:30 pm they are executed the next day. It may however take 2-3 business days for a successful purchase to reflect on your portal. Orders placed over the weekend are executed the next working day.