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Mutual Funds – Overview

A mutual fund is a pool of money managed by a professional Fund Manager. The money is in turn invested in equities, bonds, money market instruments and/or other securities. The income / gains generated from this collective investment is distributed proportionately amongst the investors.

Benefits of Mutual Funds Investment

Types of Mutual Funds

There are multiple types of mutual funds available in the market for investing. They can be broadly categorized according to their asset allocation. Investors can decide which fund to invest in based on their risk appetite as well as the investment amount.

Systematic Investment Plan (SIP)

SIP is a facility offered by mutual funds to invest in a disciplined and consistent manner, allowing one to invest a fixed amount of money at pre-defined intervals in a choice of mutual fund.

Benefits of SIP

Frequently Asked Questions

How to check Mutual Fund KYC status?

Investors can check their KYC status on Just follow these steps

Click “KYC Inquiry” > Enter “PAN” & “Captcha Code” in the required field > Click on “Submit” > Your KYC status will be displayed.

What is a Mutual Fund?

A mutual fund is a pool of money managed by a professional Fund Manager by investing in equities, bonds, money market instruments and/or other securities. The income / gains generated from this collective investment is distributed proportionately amongst the investors after deducting applicable expenses.

What is a Systematic Investment Plan (SIP)?

A SIP allows an investor to invest regularly. One puts in a small amount every month that is invested in a mutual fund. A SIP allows one to take part in the stock market without trying to second-guess its movements.

What are the types of Mutual Funds?

  • Equity Funds- Equity Funds primarily invest in equity shares. Minimum 65% in equity shares is mandatory for Equity funds. They carry the principal objective of capital appreciation of the investment over a medium to long-term investment horizon.  The size of an equity fund is determined by a market capitalization, while the investment style, reflected in the fund's stock holdings, is also used to categorize equity mutual funds.
  • Debt Funds- Debt Funds invest in fixed-income securities like bonds, securities and treasury bills – Fixed Maturity Plans (FMPs), Gilt Fund, Liquid Funds, Short Term Plans, Long Term Bonds and Monthly Income Plans among others – with fixed interest rate and maturity date.
  • Hybrid / Balanced Funds- Hybrid funds invest in both debt instruments and equities to achieve maximum diversification. They are ideal for medium- to long-term investors willing to take moderate risks.
  • Gold Funds- Gold funds invest directly or indirectly invest in gold reserves. Investments are usually made on stocks of gold producing and distributing syndicates, physical gold, and on stocks of mining companies. It is a convenient way to invest in an asset without having to purchase the commodity in its physical form.

What are the benefits of investing in Mutual Funds?

For investors, there are various benefits of investing through mutual funds:

  • Professional Management
  • Tax efficiency
  • Liquidity
  • Regulatory transparency.
  • Diversification
  • Convenience

What happens when an SIP payment is missed in-between?

Since SIPs are a long-term investment option, it is fine if you skip a few payments in-between. Investments made so far will continue to earn a return and you can withdraw it anytime. However, you would accumulate lower wealth than what you had initially expected and may miss your financial goals if you are too irregular. 

What are the expenses incurred in a Mutual Fund scheme?

The offer document indicates the maximum-allowed expense ratio for each scheme you are considering to invest. The monthly fact sheet and the half-yearly mandatory disclosures allow you to see the actual expenses charged per scheme.

Can the SIP tenure be changed after investments have started?

Investing in Mutual Fund through SIP offers a lot of flexibility. Investors can control the amount they want to invest, tenure for which they want to invest, frequency with which they want to invest (weekly, monthly, quarterly, etc.).

Can minors invest in Mutual Funds?

Anyone under the age of 18 (minor) can invest in Mutual Funds, with the help of parents/legal guardians until the age of 18. The minor must be the sole account holder represented by the parent/guardian. Joint holding is not allowed in a minor’s Mutual Fund folio.

Can NRIs Invest in Mutual Funds in India?

Yes, an NRI can invest in mutual funds in India as long as he/she adheres to the Foreign Exchange Management Act (FEMA).

Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Past performance is not indicative of future returns. Please consider your specific investment requirements before choosing a fund or designing a portfolio that suits your needs. IDFC FIRST Bank Ltd. is a registered Mutual Fund Distributor with ARN Code 110136.

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