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Mutual Funds

HDFC Sales brings to you a variety of Mutual Funds provided by HDFC Mutual Fund.

Ensure that your hard-earned money reaches its potential by investing through Mutual Funds. To create a wealth-building portfolio you need to have proper knowledge about the diversified funds available and choose the right ones which suit your needs. To help you make an informed decision we have listed some points that you must consider before investing.

An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by investment managers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in the scheme information document.

HDFC Sales brings to you a variety of Mutual Funds.For a retail investor who does not have the time and expertise to analyse and invest in stocks and bonds, mutual funds offer a viable investment alternative.

This is because:

  • Mutual funds provide the benefit of cheap access to expensive stocks.
  • Mutual funds diversify the risk of the investor by investing in a basket of assets.
  • A team of professional fund managers manages them with in-depth research inputs from investment analysts.
  • Being institutions with good bargaining power in markets, mutual funds have access to crucial corporate information which individual investors cannot access.

There are several benefits of investing in a Mutual Fund.

  • Small investments:Mutual funds help you to reap the benefit of returns with small investments through a portfolio spread across a wide spectrum of companies. Such a spread would not have been possible without their assistance.
  • Professional Fund Management:Professionals having considerable expertise, experience and resources manage the pool of money collected by a mutual fund. They analyse markets and the economy to select good investment opportunities.
  • Spreading Risk:: An investor with a limited amount of funds might be able to invest in only one or two stocks/ bonds, thus increasing his or her risk. However, a mutual fund will spread its risk by investing in a number of sound stocks or bonds, across sectors, so the risk is diversified, along with taking advantage of the position it holds. Also, in cases of liquidity crisis where stocks are sold at a distress, mutual funds have the advantage of the redemption option at the NAVs (Net Asset Values).
  • Transparency and easy access to information:Mutual Funds regularly provide investors with information on the value of their investments. Mutual Funds also provide complete portfolio disclosure of the investments made by various schemes and also the proportion invested in each asset type, and clearly layout their investment strategy to the investor.
  • Liquidity: Closed-ended funds have their units listed at the stock exchange, thus they can be bought and sold at their market value. Over and above this, the units can be directly redeemed to the Mutual Fund as and when they announce a repurchase. In open-ended funds, the units are available for subscriptions redemption on all business days on an on-going basis.
  • Choice: The large number of Mutual Funds offers the investor a wide variety to choose from. An investor can pick up a MF scheme depending upon his risk/ return profile.
  • Regulations: All mutual funds are registered with SEBI and they function within the provisions of strict regulation designed to protect the interests of the investor.

On the basis of Objective

  • Equity Funds/ Growth Funds: Funds that invest in equity shares are called equity funds. They carry the principal objective of capital appreciation of the investment over medium to long-term. The returns in such funds are volatile since they are directly linked to the stock market. They are best suited for investors who are seeking capital appreciation. There are different types of equity funds such as Diversified funds, Sector specific funds and Index based funds.
  • Diversified Funds: These funds invest in companies spread across sectors. These funds are generally meant for risk-taking investors who are not bullish about any particular sector.
  • Sector Funds: These funds invest primarily in equity shares of companies in a particular business sector or industry. These funds are targeted at investors who are extremely bullish about a particular sector.
  • Index Funds: These funds invest in the same pattern as popular market indices, like CNX Nifty Index and BSE Index. The value of the index fund varies in proportion to the benchmark index.
  • Tax Saving Funds: These funds offer tax benefits to investors under the Income Tax Act. Opportunities provided under this scheme are in the form of tax rebates u/s 88, savings in Capital Gains u/s 54EA and 54EB and deductions u/s 80C. They are best suited for investors seeking tax concessions.
  • Debt / Income Funds: These Funds invest predominantly in high-rated fixed-income-bearing instruments like bonds, debentures, government securities, commercial paper and other money market instruments. They are best suited for medium to long-term investors who are averse to risk and seek capital preservation. They provide regular income and safety to the investor.
  • Liquid Funds / Money Market Funds: These funds invest in highly liquid money market instruments. The period of investment could be as short as a day. They provide easy liquidity. They have emerged as an alternative for savings and short-term fixed deposit accounts with comparatively higher returns. These funds are ideal for Corporates, institutional investors and business houses who invest their funds for very short periods.
  • Gilt Funds: These funds invest in Central and State Government securities. Since they are Government backed bonds they give a secured return and also ensure safety of the principal amount. They are best suited for medium to long-term investors who are averse to risk.
  • Balanced Funds: These funds invest in both, equity shares and fixed-income-bearing instruments (debt), in prescribed proportion. They provide a steady return and reduce the volatility of the fund while providing some upside for capital appreciation. They are ideal for medium- to long-term investors willing to take moderate risks.

In an open-ended mutual fund there are no limits on the total size of the corpus. Investors are permitted to enter and exit the open-ended mutual fund at any point of time at a price that is linked to the net asset value (NAV). In case of closed-ended funds, the total size of the corpus is limited by the size of the initial offer.

Mutual Funds give returns in two ways - Capital Appreciation or Dividend Distribution.

  • Capital Appreciation: An increase in the value of the units of the fund is known as capital appreciation. As the value of individual securities in the fund increases, the fund’s unit price increases. An investor can book a profit by selling the units at prices higher than the price at which he bought the units.
  • Dividend Distribution: The profit earned by the fund is distributed among unit holders in the form of dividends. Dividend distribution again is of two types. It can either be re-invested in the fund or can be paid to the investor.

HDFC Sales is a Mutual Fund Distributor registered with Association of Mutual Funds of India (ARN 39103). HDFC Sales is not an Investment Advisor and does not provide any investment or financial planning advice. The information provided on our website is for informational purposes only and it should not be considered as financial advice. Please consider your specific investment requirements before choosing any investment or designing a portfolio that suits your needs. Mutual fund investments are subject to market risks. Please read the scheme information and other related documents before investing.