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Educational Articles

Educational Articles

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What is ESG?

While traditional investing has focused on financial metrics, sustainable investments aims to combine the best in class practices of traditional investing with insights about society to produce better outcomes for investors in the long term.

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Banking and Financial Services sector Mutual Fund

Banking and financial services sector is the lifeblood of any economy.

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Banking and Financial Services Funds: May be a good long-term opportunity for informed investors

Everyone wants to milk maximum returns from their investments, but high returns come with high risks.

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ESG investing – A noble investment strategy that may score on performance and morals

The imbalance in the ecosystem is increasingly visible with the rising number of disasters, such as wildfires, floods and droughts, with the latest being the Covid-19 pandemic.

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ESG - A sustainable investment opportunity for a greener world

Increasing stakeholder activism and globalization is shifting company and investor focus towards sustainable growth and development

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Equity Booklet 1 - Potential Wealth Creation Through Equity

We make investments with the expectation of future cash flows either as capital appreciation or income. Assets are economic resources which generate cash-flow. For individual investors, there are four major asset classes:-

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Equity Booklet 2 - Potential Wealth Creation Through Equity

There are two broad ways of investing in equity funds - investing in lump sum (one-time) and investing systematically. Systematic Investment Plan (SIP) and Systematic Transfer Plans (STP) are examples of systematic investments. One mode of investing is not necessarily better than the other methods.

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Investor Behaviour Booklet

Any financial investment can be said to give two kinds of returns: Investment Returns and Investor Returns. At first, they may seem more or less similar, however, they are quite different.

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Tax Reckoner 20-21

The rates are applicable for the financial year 2020-21 as per Finance Act, 2020.The Finance Bill, 2020 proposes to abolish income distribution tax and instead proposes to tax income from mutual fund units in the hands of the unit holders.

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What is Ultra Short Duration Fund?

Ultra short duration funds are fixed income mutual fund schemes which invest debt and money market securities such that the Macaulay Duration of the scheme portfolio is 3 months to 6 months. These funds are suitable for short term investments since they are less volatile and aim to produce more stable income compared to funds with longer duration profiles. Many investors get confused between liquid funds and ultra-short duration funds.

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Fund of Funds

Fund of Funds (FoF) is a mutual fund which invests in the units of other mutual funds including but not limited to index funds and ETFs.

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ELSS Booklet

ELSS or Equity Linked Saving Scheme is an open ended equity mutual fund that offers the dual-advantage of potential wealth creation and tax saving.

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SIP versus RD

Bank Fixed Deposits and Mutual Funds are the two most popular investment avenues for retail investors in India. RD or Recurring deposits and mutual fund Systematic Investment Plan (SIPs) are essentially deposit plans from your regular savings which goes to bank RD and mutual fund schemes respectively.

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What is PE Ratio?

Price to Earnings Ratio or Price to Earnings Multiple is the ratio of share price of a stock to its earnings per share (EPS). PE ratio is one of the most popular valuation metric of stocks.

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FD versus Debt Funds

Bank Fixed Deposits (FD) is the traditional investment vehicle for most Indian households. According to a recent RBI report nearly 50% of household financial assets in India are in FDs.

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Traditional Fixed Income instruments

Bank fixed deposits and Government small savings schemes have been the traditional investment choice of average Indian households.

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Debt Mutual Fund Schemes

Different investors have different investment needs depending on their financial situations, risk appetites and investment objectives.

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Factors to consider before investing in Debt Mutual Funds

Fixed Income or Debt funds offer a greater variety of products across the risk / return spectrum. It is, therefore, important for investors to select the right product according to their specific investment needs, risk appetite and investment tenure.

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Why invest in Debt Mutual Funds?

Debt funds are fixed income mutual fund schemes which invest in debt and money market instruments like CPs, CDs, Corporate Bond, T-Bills, G-Secs etc.

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SIP in Debt Mutual Funds

By investing a fixed amount every month (or any other interval) from your regular savings, you can invest over a long period of time and benefit from the power of compounding.

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Debt Mutual Funds - Myth versus Reality

The risk of fixed income instruments is usually lesser than equity because issuer of fixed income instruments is contractually obliged to pay a certain rate of interest and principal on maturity of the instrument.

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Key Fixed Income Terms

If you read about fixed income investments in fund factsheets, scheme information documents, fund manager interviews, blogs, etc you will come across some technical terms which you may not understand.

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Equity as an asset class has the potential for wealth creation in the long term

We make investments with the expectation of future cash flows either as capital appreciation or income. Assets are economic resources which generate these cash-flows.

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Why Equity Mutual Funds?

Investors have realized that equity mutual funds are one of the good investment options which aim for long term wealth creation.

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Types of Equity Mutual Funds

Equity funds invest in shares of companies and other related securities. While all equity and equity related securities are subject to market risks, different types of equity securities have different risk profiles.

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Factors to consider when investing in Equity Mutual Funds

Mutual funds are increasingly becoming the preferred options for Indian households to invest their savings to beat inflation and create wealth. As per AMFI, total equity funds (including ELSS) AUM in March 2000 was around Rs 34,000 crores.

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What is SWP?

If investors want regular cash flow from their investments the automatic choice for many are bank fixed deposits or postal deposits. However, declining interest rates on these schemes have made investors worry about their future income needs. Mutual funds have a solution for this, called SWP.

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Why is Asset Allocation important

Greed & Fear Optimism Excitement Thrill EUPHORIA DESPONDENCY Anxiety Denial Fear Optimism Desperation Panic Depression Hope Relief Point of Maximum Fear & Potential Point of Maximum Greed & Risk Risk and returns are directly related but risk is a double edged sword.

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How does Portfolio Rebalancing happen

Let us understand the importance of asset rebalancing with the help of an example. Let us assume you invested Rs 1 lakh in the proportion of 70% equity and 30% debt in 1998. In the first example, you only did a one-time asset allocation at the time of your investment.

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Types of Asset Allocation / Hybrid Funds

These funds have a static asset allocation strategy with the flexibility to keep its asset allocation within prescribed ranges mandated by SEBI. SEBI requires these funds to invest 65 – 80% of their assets in equity or equity related securities and rest in money market or debt securities.

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Growth versus Dividend

Mutual funds offer two broad types of options – Growth and Dividend. There are several misconceptions about these options among lay investors.

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Importance of investor behaviour in market correction, Greed and Fear cycle

There is an old saying in Wall Street, “Financial markets are driven by two powerful emotions – Greed and Fear”.

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Information bias

Information bias is the tendency to seek and evaluate information, even if it may not be irrelevant from the perspective of the investor’s needs.

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Loss Aversion Bias

Loss aversion is a trait of investor behaviour wherein investors prefer to avoid a loss than to make an equivalent profit.

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Recency Bias

Recency bias is a psychological phenomenon where we give more importance to recent events compared to what happened a while back.

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Confirmation Bias

Investors have their own opinions or pre-conceived notions. Seeking information or opinions that supports their ideas or pre-conceived notions and ignoring information that is contrary to their pre-conceived notions is confirmation bias.

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Hindsight bias

Hindsight bias is a psychological trait which leads to investors overestimating their predictive abilities.

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What are alpha and beta in mutual funds?

The relationship between risk and return is a foundational concept in investments. You cannot get higher returns without taking risks. A good understanding of risk and risk adjusted returns is required when you evaluate mutual fund performance.

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XIRR in Mutual Funds

The primary objective of any investment is to get returns. Returns can be in the form of income or capital appreciation or both. The two most popular measures for MF returns are compound annual growth rate (CAGR) and XIRR in mutual funds.

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Aim to get more out of large cap investments by investing in Nifty Next 50

Equity, as an asset class, is an attractive investment avenue for investors with high-risk appetite and a long-term investment horizon. Within the equity universe, the safety quotient draws investors to large cap companies and often away from higher returns promised by small and mid-caps.

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Different types of mutual funds

There are different types of mutual funds in India depending on their structure, nature of investment, tax benefits, category of the scheme and investor goals etc.

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How to use mutual funds for children’s education planning?

The cost of higher education in India has been growing in double digits (in percentage terms) over the last 20 years. The cost of 4 year engineering education (B.Tech/B.E) in the top Government institutes is around Rs 9 – 10 lakhs. In some of the top private institutes, cost of engineering education can be as high as Rs 15 – 20 lakhs. The cost of medical education is similar, if not a little higher. In the next 10 years, applying an inflation rate of 10%, the cost of engineering or medical education may be in Rs 25 – 45 lakhs. MBA from one of the top institutes will cost you around Rs 20 lakhs. 10 years from now, you should be prepared to fork out Rs 50 lakhs for your child’s MBA.

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Choose the right SIP amount to reach your goal

Today with the advent of digital platforms, investors may find it easy to open a SIP account online compared to the traditional way of investing by filling up an application form. In fact, you can open SIP account online from the comfort of your home. Please note that to open SIP online, KYC is a mandatory requirement. To be KYC compliant, your address proof, and PAN Card etc.

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How does goal based investment work

You must have heard that SIP investing is for the long term and also that you can reach your financial goals by investing in mutual funds through SIP route. While there is no denying the above fact, the reality is that simply investing in mutual funds for long term via SIP may not help you achieve your financial goals.

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How to invest in SIP in India

Mutual Fund SIP is a simple tool that helps you to invest regularly in mutual fund schemes of your choice. You can start a SIP with a frequency of your choice: daily, weekly, monthly or quarterly. However, you must check with the AMC in whose scheme you want to start a SIP as all AMCs may not offer all the frequencies mentioned herein.

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How to open SIP account online

Good investment advisors are increasingly endeavouring that their investors do not make random investments in mutual funds and instead map these with their various financial goals. Most Indian investors do not have a structured approach to savings and investments. Most people do not have saving targets as the amount of money they save depends on their spending habits.

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Midcap Funds seek long term growth opportunities for investors

Mid Cap Funds provide an able alternative for investors to derive benefit from mid cap stocks over the long term.

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Large Cap Funds

Large Cap Funds are those that only invest in the top 100 listed companies, across sectors to acquire the benefits of diversification.

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Focused Funds

Focused Funds, as the name suggests, concentrate only on high conviction quality stocks which have the potential to create wealth in the long term.

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Different types of mutual funds

There are different types of mutual funds in India depending on their structure, nature of investment, tax benefits, category of the scheme and investor goals etc.

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Diversify your portfolio

Diversification is one of the most important aspects, if not the most important aspect of financial planning and portfolio management. We will see how you may use mutual funds to diversify your investment portfolio.

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Inverted yield curve

Over the past two weeks, investors who follow markets on the web or social media may have come across the term, “Inverted Yield Curve”. In this article we will discuss, what yield curve inversion is and what are implications on markets.

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Exchange traded funds

While awareness about Exchange Traded Funds (ETFs) is quite low in India, these funds are gaining traction amongst investors over the last few years. In the last 5 years, the mutual fund industry assets under management (AUM) in ETFs have grown at a CAGR of more than 100%. In the developed markets, ETFs and index funds are hugely popular with investors.

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Tax Benefits of Investing in Mutual Funds

Mutual funds, on the other hand, are one of the most tax friendly investment options available to Indian investors.

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Benefits of Investing in Mutual Funds

Mutual fund is a financial instrument which pools the money of different people and invests them in different financial securities like stocks, bonds etc. Each investor in a mutual fund scheme owns units of the fund, which represents a portion of the holdings of the scheme.

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What is SIP

SIP is a method of investing a fixed amount, regularly – monthly or quarterly in a mutual fund scheme. SIP allows you to buy the units of your selected scheme on a date chosen by you. An investor can invest a pre-determined fixed amount in a chosen scheme every month or quarter, depending on his convenience through post-dated cheques or through ECS (auto-debit) facility.heme owns units of the fund, which represents a portion of the holdings of the scheme.

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Tax Reckoner 2019-20

Snapshot of Tax rates specific to Mutual Funds

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How to use mutual funds for children’s education planning?

The cost of higher education in India has been growing in double digits (in percentage terms) over the last 20 years. The cost of 4 year engineering education (B.Tech/B.E) in the top Government institutes is around Rs 9 – 10 lakhs. In some of the top private institutes, cost of engineering education can be as high as Rs 15 – 20 lakhs. The cost of medical education is similar, if not a little higher. In the next 10 years, applying an inflation rate of 10%, the cost of engineering or medical education may be in Rs 25 – 45 lakhs. MBA from one of the top institutes will cost you around Rs 20 lakhs. 10 years from now, you should be prepared to fork out Rs 50 lakhs for your child’s MBA.

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Information on KYC, Registered Intermediaries and Grievance Redressal.

KYC is an acronym for “Know Your Customer”. In order to invest in any mutual fund, an investor needs to be KYC compliant. The Securities and Exchange Board of India (SEBI) has prescribed certain requirements under the Prevention of Money Laundering Act 2002 for Financial Institutions and Financial Intermediaries including Mutual Funds to know their Customers.

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What is Top Up SIP and how does it work

Mutual fund Systematic Investment Plan (SIP) is an effective and convenient way which may create wealth in the long term.

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Why should Millennials look at ELSS?

Millennials are a very important demographic segment in India, constituting nearly half of our workforce. Growing up in post liberalization lifestyle and spending habits of millennials are different compared to previous generations.

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Why should salaried class look at ELSS?

There are several provisions in the Income Tax Act wherein salaried individuals can save taxes, but Section 80C of the Income Tax 1961 Act provides the biggest tax saving opportunity.

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ELSS versus PPF

Public Provident Fund (PPF) is one of the popular traditional 80C tax savings options in India. There are several reasons for PPF’s popularity among tax payers.

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INVESTING AT MARKET PEAKS

Don’t get deterred by peaks, equity investing is a long term game. The Indian stock market represented by the S&P BSE Sensex had a fairly good last quarter of 2019, crossing the 40,000 points by the year end and closing above 41,000 points in January.

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How to use mutual funds for retirement planning

Retirement planning is one of the most ignored topics among the working population because most people feel that retirement is far away and nearer term priorities seem important. Once they get near the retirement date, many people realize that they have not saved enough for their retirement and fear losing their financial independence. Retirement is the culmination of the decades of hard work you put in your career. This should be the golden period of your life and you should be free from financial worries.

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How to use mutual funds in goal planning

Most Indian investors do not have a structured approach to savings and investments. Most people do not have saving target; the amount of money they save depends on their spending habits. Likewise, most people invest in an ad-hoc way. When they have accumulated a sufficiently large amount of savings, they invest it in bank FDs, Post Office small savings schemes, stocks, bonds, mutual funds etc without any specific goal in mind.

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Save Tax And Seek To Create Wealth

Indians have historically favoured traditional fixed income instruments for their investments (normal as well as tax savings). This, however, does not marry well in terms of prudent financial planning, especially since the country has one of the largest young population in the world. Indeed, the median age of India’s population is far below those of the most comparable economies as well as the world, which means most Indians have a long vesting period of investment.

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3 S of Financial Planning

3 S of financial planning are Systematic Investment Plan (SIP), Systematic Transfer Plan (STP) and Systematic Withdrawal Plan (SWP). SIP is a periodical investment of fixed amount in a particular MF Scheme.

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AMFI Booklet - Savings ka naya tarika

The concept of a Mutual Fund works on pooling resources with one common objective in mind. In other words, a Mutual Fund is made up of money that is pooled together by a large number of investors. Their money is given to a professional (referred as fund manager) to invest in a basket of stocks and/or other financial instruments such as bonds/commodities.

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Equity Mutual Funds in the new tax regime

With the introduction of a 10% tax on long-term capital gains and dividends, equity-oriented mutual funds will feel the pinch as their returns will now be reduced to some extent. However, investors should not feel demotivated because equities still remain efficient as compared to other asset classes in the long term.

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Equity Saving Fund: Striking a balance between Equity, Debt and Arbitrage.

Equity savings fund essentially generate returns by investing in equity, debt and arbitrage opportunities. This last component sets them apart from other hybrid funds. Essentially, the fund manager looks to exploit the pricing inefficiencies in the cash and derivatives segments of the equity market.

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Focused Fund: Seeks power of conviction and concentration

The basic tenet of investment is not to put all eggs in one basket - aim for diversification. While it is essential to reduce the overall risk of portfolio by spreading investment in different securities, but just adding more number of stocks to equity portfolio usually diminishes the incremental benefit of diversification beyond a point.

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Get smart with Variable Transfer Plan

Most investors look at investment whenever they have lump sum amount of money in their hands, however in case of investments in equity, this may go awry especially at times when markets are trending at record highs like currently.

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Not just numbers, analyses your behavior too for fruitful investing

Investing is not only a science, involving numeric analysis, but also an art, involving one's behavior, emotions and attitude. Benjamin Graham, the father of value investing, rightly said: “the investor's chief problem - even his worst enemy - is likely to be himself.

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Make place for debt funds in your portfolio

The equity market's stellar performance has beckoned many investors to take huge exposure to the asset class. Though equity is one of the best wealth creators in the long term, it is prudent to include a less risky asset class such as debt to balance the investment portfolio.

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Midcap funds seek long term growth opportunities for investors

By investing in mid cap funds, investors may enjoy the following benefits as well

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Plan for your golden years with Mutual Funds

India is a young nation enjoying the gift of demographic dividend with its youth entering the workforce in large numbers. Young investors should have a high risk-taking appetite, but the asset allocation mix of our country is not in sync with the risk profile as bulk of household savings is put in banks’ fixed deposits.

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Top up your wealth with SIP Top-up

Systematic Investment Plans (SIPs) offered by mutual funds need no introduction. They are quite popular among retail investors - a convenient way to invest regularly. But often, inertia sets in and SIPs do not mirror the rise in income. The industry's new feature Top-up takes care of just that.

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Use goal-based investing to achieve your lifetime goals

Most of us make investments with a single-minded focus on maximizing returns. This often leads to investment mistakes like trying to time the market. Fear and greed become the driving forces so that when markets turn volatile, investors tend to pull out their money or they typically increase their investments when the markets are already over-heated. This results in ill-planned and directionless investing.

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Save Tax And Seek To Create Wealth

Indians have historically favoured traditional fixed income instruments for their investments (normal as well as tax savings). This, however, does not marry well in terms of prudent financial planning, especially since the country has one of the largest young population in the world. Indeed, the median age of India’s population is far below those of the most comparable economies as well as the world, which means most Indians have a long vesting period of investment.

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Exchange Traded Fund: Power of Passive Investment

ETFs are types of Mutual Funds that aim to track the performance of a specific index such as NIFTY 50, NIFTY Next 50, NIFTY Bank etc. These ETFs can be based on indices tracking various

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Invest in ELSS. Aim to prosper

ELSS or Equity Linked Saving Scheme is an open ended equity mutual fund that offers the dual-advantage of potential wealth creation and tax saving. These funds have a statutory lock-in

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How to Invest in volatile market?

The last one month may have been scary for many investors especially those who are facing a full blown bear market for the first time. In the last one month, Nifty 50 has fallen 32% and is trading below 8000.

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Remain Invested In SIPs For Deliverance From Market Volatility, Shouldn’t You?

Systematic Investment Plans, or SIPs as they are popularly called, have caught the fancy of investors in recent years. Average monthly net flow into the investment vehicle has ballooned from Rs 3,122 crore as of April 2016, when the Association of Mutual Funds in India began disclosing the data, to Rs 8,513 crore as of February 2020.

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Asset Allocation: The Key To Help In Your Financial Success

If you have an opportunity to make your own team in IPL, what will you do? Take all the best batsman or make a team of all types of bowlers or make a good mix of batman’s, bowlers and fielders. To win a match it is important to have good mix of players with different skill sets.

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Systematic Withdrawal Plan – A good alterative to meet regular pay out needs

Financial planning is not only about saving and investing. In fact, ensuring cash flow to meet planned expenses is avital component of financial planning. On this account, mutual funds with dividend option have been one of the preferred go-to investment vehicles.

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Debt Mutual Fund – A stable and steady investment choice

Bank fixed deposits and Government small savings schemes have been the traditional investment choice of average Indian households. As per Reserve Bank of India’s Quarterly Estimates of Household Financial Assets and Liabilities, Rs 4,753 billion was invested in bank FDs in FY 2018 (latest year for which data is available from RBI).

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How Do You Measure Investment Returns?

Once you start investing, or for that matter even before you start, one question that may have struck you is “What returns will I make from this product?” While there is enough past information available on performance figures, whether short term or long term, it is necessary for you to also understand how exactly are those figures calculated and how do you read them?

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Risk Adjusted Return

When you compare the performance of two investments or check returns of your portfolio, you should not only consider the returns generated by the investments but also the amount of risk taken to earn these returns.

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Indexation

If you sell an asset such as bonds, shares, mutual fund units, property etc; you must pay tax on the profit earned from it. This profit is called Capital Gains.

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Arbitrage Funds

Arbitrage is simultaneous buying and selling the same underlying security or its derivatives in different market segments to make risk free profits.

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Build core portfolio around large cap ETFs with an aim to beat volatility

In the three months ended April 27, 2020, Nifty 50 TRI and Nifty Next 50 TRI fell just 23% and 19%, respectively, compared with 29-37% by mid-caps and small caps.

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Aim to enjoy three benefits in one investment opportunity

The Covid-19 pandemic has had a large bearing on the global as well as domestic financial markets. Even the hitherto steady fixed income space is shaken.

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Equity Funds vs Debt Funds

Mutual funds offer a wide range of investment solutions for different investment needs, tenures and risk appetites. Different investors have different financial goals and risk appetites depending upon their stages of life and financial situations.

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Direct vs Regular Mutual Fund Plan

Every mutual fund scheme has two plans – Direct and Regular plans. There are three key differences, all inter-related, if you compare direct vs regular mutual funds – how you purchase, the price (NAV) and ongoing cost (total expense ratio).

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Active Duration Management Vs Duration Roll Down

In fixed income investing, usually two broad types of strategies are employed ‒ hold to maturity or accrual and duration management.

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How to invest in Mutual Funds

Mutual funds have become one of the most popular investment choices for retail investors in India. At the end of May 2020 total assets under management (AUM) of the mutual fund industry stood at Rs 24 lakh Crores.

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How to choose mutual funds?

Mutual funds offer investment solution for a variety of investment needs for investors in all age groups.

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What is NAV and how it is calculated?

If you are a new mutual fund investor you would like to know what is NAV in mutual fund. NAV or Net Asset Value is the unit price of a mutual fund scheme.

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Open Ended vs Close Ended

Mutual funds in India are differentiated as two types, based on their investment structure – i.e. whether they are open-ended funds or closed-ended funds. The difference between open ended vs close ended funds is a function of investment flexibility and the ease with which they can or cannot be bought or sold.

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How inflation affects You

The rise in the prices of goods and services and, subsequently, the fall in the purchasing power of each rupee is called inflation. As inflation rises, every rupee will buy a lower quantity of goods.

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Guide to be a good investor

An investment in knowledge pays the best interest. – Benjamin Franklin Rightly said, it is very important to know why and where are we investing.

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Exit load in mutual funds

Mutual Fund exit load is a fee charged by the mutual fund houses if investors exit a scheme partially or fully within a certain period from the date of investment, as specified in the Scheme Information Document.

The materials are a part of Investor Education and Awareness initiative of Mirae Asset Mutual Fund.

For information on one-time KYC (Know Your Customer) process, Registered Mutual Funds and procedure to lodge a complaint in case of any grievance. Click here!

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