Fact: Investors, who believe mutual funds investment is meant only for affluent investors, then the assumption itself is wrong. Mutual fund investors can start their investment journey with as low as an SIP of Rs. 100 in certain schemes provided by MFs.
So, someone who is just earning Rs 10,000 per month and wanted to invest 10% of his income, can also start mutual funds SIP.
Fact: Dematerialisation is holding financial securities in an electronic form in a Demat account. While, Investing in direct equities compulsorily require Demat a/c. for mutual funds, this is not so.
An investor can transact in Mutual funds without opening a Demat account. Demat a/c however, is mandatory for transacting in Mutual Fund ETFs.
Fact: Rating of mutual fund schemes is based on multiple parameters as structured inhouse by various rating agencies. Rating is based on the Past performance of the schemes. However, it is good indicator in understanding the style, consistency & other variables for gauging the scheme well before investing. But the same doesn’t hold true for future performance and investing. Investors should consult financial adviser before making any investment decision.
Fact: The above stated myth is a general misconception among investors since, investors associate mutual fund NAV with the equity Share price. One needs to keep in mind that the NAV of a scheme is nothing but a reflection of the market value of the underlying securities held by the fund on any day. A high NAV does not mean the fund is expensive. In fact, high NAV indicates a good performance of the scheme over the years. Preferring low NAV over high NAV can be erroneous strategy.
Yes, a lower NAV would give you more units, and a higher NAV would put lesser number of units in your hand, but remember the value of your investment in both cases would be same.
Fact: Today, Mutual fund offers investment exposure to not only Equity as an asset class, but includes Debt, money market, commodities, Real Estate & International equity as well. For instance, an investor looking for a liquidity solution can look at Overnight/Liquid Funds as an option to invest for the short term.
An investor has a wide range of option to select from the schemes of various mutual fund houses to invest that would match with one’s investment objective and meet one’s financial goal.
Fact: While past returns will indicate the consistency of the fund’s performance during good & rough times and the Fund Manager’s intellect in handling the scenario well in comparison with peer schemes in the same category. However, the same doesn’t hold true in the future as well. Past performance may or may not sustain in future. Investors should consult financial adviser before making any investment decision.
Investors should periodically relook at their portfolio investments and accordingly take wise decision.