image

  1. Home
  2. >
  3. Mutual Fund
  4. >
  5. Features of Mutual Funds

2000+ schemes | Tax saving | One-step buy and sell process

Features of Mutual Funds

  • Diversification of your portfolio

    Mutual funds help you diversify your investment portfolio by allowing you to invest across asset classes.

  • Management by professionals

    Mutual funds are managed by trained professionals who work to achieve the fund's investment objective and maximise returns.

  • Choice of investments and modes

    Individual objectives can be met across mutual fund schemes. You also have the added flexibility of investing through lump sums and systematic investment plans (SIPs).

  • transparency

    Affordability

    You can start investing in mutual funds with an amount as low as Rs. 100 for lump sums and SIPs.

  • 0% commission

    You can invest in direct plans and skip on commissions, fees, and other charges.

Growth and diversification with mutual funds

A mutual fund (MF) pools money from several investors and invests in securities such as stocks, bonds, and short-term debt. They are managed by highly qualified and experienced professionals who invest according to the fund's guidelines and track performance.

Mutual funds are broadly classified based on asset classes into equity, debt, and hybrid funds.

You can invest in mutual funds quickly with Bajaj Finance and offer your investments a greater opportunity to grow.

Equity Funds are mutual fund schemes that primarily invest in company stock. These are further categorised into several groups depending on how they are managed or where they invest. Large-cap, mid-cap, index funds, and concentrated funds are examples of equity fund types.

Debt Funds are mutual fund schemes that invest in fixed income securities such as government bonds, debentures, corporate bonds, and other debt instruments to produce a steady income stream. These are reasonably safe investment choices that have the potential to help you build wealth. There are various types of debt funds as per your need and investment horizons.

Hybrid Funds are mutual fund schemes that invest in more than one asset class. They usually invest in a mix of equity and debt securities, but they may also invest in gold or real estate. These are useful for reducing portfolio risk by investing in asset classes with low correlation.

Mutual Funds Eligibility Criteria

The following categories of people/entities are eligible to purchase units of most schemes of mutual funds:

  • Resident Indian citizen/NRI/PIO/OCI, above the age of 18
  • Minors, i.e. persons below the age of 18: need to invest through their guardians
  • Hindu Undivided Family (HUF)
  • Foreign investors
  • Companies/corporate bodies and Partnership Firms, registered in India
  • Registered Societies and Co-operative Societies
  • Private Trusts, Religious and Charitable Trusts
  • Association of Persons or Body of Individuals, whether incorporated or not
  • Banks (including Co-operative Banks and Regional Rural Banks), Financial Institutions and Investment Institutions
  • Foreign Portfolio Investors and other Mutual Funds, registered with SEBI
  • International Multilateral Agencies approved by the Government of India
  • Army/Navy/Air Force, Para-Military Units, Universities and Educational institutions
  • Scientific and Industrial Research Organizations

Currently, only resident Indian citizens above the age of 18 years can invest in mutual funds through our platform.
 

How to onboard and invest in Mutual Funds

We are in the process of adding Direct Mutual Funds to the Bajaj Finserv App, where you can get yourself onboarded in just 5 minutes

Invest with Bajaj Finance

Investing in mutual funds is going to be easier than ever. Bajaj Finance is coming soon with an online investment platform where you can invest in various mutual funds at your fingertips.

Why should you invest in mutual funds with Bajaj Finance

  • One place to invest in mutual funds of all Asset Management Companies (AMCs)
  • Paperless 2 min account opening process
  • 0% commission paid out to agents/distributors
  • Zero account opening charges
  • Convenient investments and portfolio tracking through Mobile App
  • A single view of all your MF investments across the industry
     

Fees and charges for Mutual Funds

There is no advisory or platform fee applicable on your mutual funds; however, regular asset management company (AMC) charges may be applicable.

Most AMCs charge expense ratio – the annual fee charged by all AMCs for managing mutual fund schemes and exit load at the time of redemption. This amount usually varies from one scheme to another.

Frequently Asked Questions

1. What are mutual funds?

A mutual fund is an investment option that consists of pooled money from various investors that is later invested in stocks, securities, money market, bonds, etc. These investments are managed by well-qualified professionals. The funds may be collected as a lump sum amount or through a Systematic Investment Plan (SIP), as per the investment objective and strategy of the fund.

2. How are mutual funds categorised?

Mutual funds are generally classified according to asset classes. Most mutual funds are divided into equity, debt, and hybrid.

Equity: These mutual funds invest primarily in equity stocks (up to 100%). ELSS/Tax saver subcategory within equity allows tax benefits under section 80C of the Income Tax Act, 1961 and has a lock-in period of 3 years.

Debt: These mutual funds invest in debt instruments like bonds, treasury bills, etc. (except equity).

Hybrid: Hybrid mutual funds invest in a combination of equity and debt investments.

3. What are direct MF plans? How are they different?

An AMC offers two plans in mutual funds, i.e. direct plan and regular plan. A direct plan is directly offered by a fund house without the involvement of agents or third-party distributors. Such plans have a lower expense ratio than regular plans. Apart from the expense ratio, everything else stays the same.

4. What is MF rating? What does the rating of MF signify?

A rating is a metric based on the mutual fund's historical risk and returns performance. This serves as a way to compare different funds of the same category over a period of time. Mutual Funds are rated by independent agencies such as CRISIL, Value Research, Morningstar, and others.

5. What is an MF portfolio?

A mutual fund portfolio gives you an insight into all your mutual fund investments at one glance.

6. What is KYC, and why is it required?

KYC stands for 'Know Your Customer'.

This is a mandatory process set up by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI). It verifies your identity and address details while capturing information related to your financial status and occupation. It is a centralised process (stored in a central database) and comes in handy as customers need not submit their documents repeatedly for new investments.

7. What are the documents required for KYC?

Below are the required documents for individual investors:

i) Proof of Identity: PAN Card

ii) Proof of Address (Any 1): Aadhaar / Passport / Driving license / Voter ID

iii) Bank Details

Please note: This platform is available for Individual investors only.

8. I am an NRI. Can I invest through your platform?

Currently, NRIs won't be able to invest through our platform.

9. I do not have a PAN card; can I invest in MF?

PAN cards are mandatory for MF investments. We request you to apply for a PAN and then proceed.

10. I have an existing mutual fund investment. Do I still need to do KYC verification?

MF account creation is a prerequisite for investing in our platform. If your KYC is already registered, you will not be required to submit your POI & POA details.

11. What are SIP and Lump sum investments?

There are two ways of investing in mutual funds – Lump sum and SIP.

Lump sum is a method of investing a corpus at one go. It is usually used when an investor tries to time the market.

SIP is a method of investing a fixed amount at regular intervals, similar to a recurring deposit. The most crucial benefit of SIP is averaging the cost of buying, and investors don't have to time the market constantly.

12. What is SWP?

SWP, Systematic Withdrawal Plan, is a mutual fund facility where the investor can withdraw fixed amounts regularly, like on a monthly or quarterly basis. The investor may choose to withdraw only the gains or sell a few units and get the money. It is ideal for people who need a source for regular income.

13. What are growth and dividend options?

A growth option is where the profits gained on the funds remain invested in the market, which grows along with the principal amount invested. And, the dividend option is where the profits are paid back to the investor periodically instead of investing it in the market.

14. What are large-cap funds?

Large-cap funds are primarily invested in companies with the highest market capitalisation (from the top 100 stocks).

15. What are mid-cap funds?

Mid-cap funds are those which are mainly invested with companies having mid-ranged market capitalisation. (From stocks listed in top 101-250).

16. What is AUM?

AUM, meaning Assets Under Management, indicates the value of the total assets a company manages. It is an indicator of a given company's success.

17. What is a folio number?

A folio number is a unique identifier issued by an asset management company (AMC) to help you identify the holdings within a specific mutual fund.

18. What is NAV?

Net asset value (NAV) is the market value of the funds. These values change every day and are the price at which an investor will buy or sell it.

19. What is the lock-in period for investment?

A lock-in period is decided for specific funds, wherein the investors can't redeem or sell their units without paying a charge (exit load). For instance, ELSS, which are tax-saving mutual funds, have a lock-in period of 3 years in which investors can't exit at all. An exit load of 1% is usually charged if equity funds are withdrawn before a year. However, investors may sell their funds any time after the lock-in period.

20. What is redemption?

Redemption is when investors choose to withdraw their investments at the applicable Net Asset Value (NAV). It can be done either online or offline.

21. Why are mutual funds subject to market risk?

Mutual funds are market-linked, and there is no way to predict the market. The value of an asset can increase or decrease, which makes them subject to market risk.

22. What is an expense ratio?

The expense ratio is the annual maintenance charge that an AMC charges its investors to finance the expenses incurred in managing a mutual fund.

23. What is exit load?

Exit load is the fee an investor is liable to pay to the Asset Management Companies (AMCs) while redeeming funds or exiting prematurely (before the lock-in period ends).

24. Why is exit load charged?

The exit load is charged mainly to discourage investors from redeeming their units during the lock-in period. The number of premature redemption is discouraged as there are charges imposed on it.

25. What is the tax implication on redemption?

Gain or Loss on redemption of Mutual Funds is called Capital Gains/Loss. The period of holding investment defines whether it is Short-term Capital Gain (STCG) or Long-term Capital Gain (LTCG).

The rate of tax depends on the holding period of the investment and the type of asset.

Equity Funds:

i) Minimum holding period for LTCG - 1 year

ii) Tax implication in case of STCG - 15% + 4% cess = 15.60%

iii) Tax implication in case of LTCG - 10% + 4% cess = 10.40% (if the long-term gain exceeds Rs. 1 Lakh)

Non - Equity Funds:

i) Minimum holding period for LTCG - 3 year

ii) Tax implication in case of STCG - As per the tax rate of the investor (30% + 4% cess = 31.20% for investors in the highest tax slab)

iii) Tax implication in case of LTCG - 20% with indexation

Funds:

Dividend distribution tax (DDT) in case of both Equity and Non-equity - 10% TDS (Tax deducted at source) on dividend income exceeding Rs. 5,000

The information being shared is on a best effort basis. Please consult an independent tax consultant before taking the final decision.

Disclaimers

Mutual Funds are subject to investment risks and Investor should read all scheme related documents carefully. Bajaj Finance Limited (‘BFL’) is registered with RBI as a deposit accepting Non-Banking Financial Institution, and with AMFI as a distributor of third party Mutual Funds (shortly referred as ‘Mutual Funds’). Mutual Funds are distributed by BFL on a non-discretionary and non-participation basis. BFL does NOT provide investment advisory services in any manner or form. BFL does NOT perform risk profiling of the investor and also does NOT carry independent research or analysis and NO customised/personalised suitability assessment is done by BFL. Further, BFL does NOT provide any guarantee of return on investment. Hence, the final investment decision shall at all times exclusively remain with the investor alone and BFL shall not be liable or held liable for any consequences thereof. Mutual Funds are available to resident Indians only on our platform and NOT available to any person residing outside the territorial jurisdiction of India.
Bajaj Finserv Direct Limited, (“BFDL”) is registered with SEBI as Investment Advisor (Registration no. INA000016083) for making available direct plan of mutual fund to its customer. In case any customer/investor evinces interest in making investments in Mutual fund direct plans, such customer/investor would be merely referred by BFL to BFDL, without risk or responsibility on the part of BFL.

People Also Considered

Fixed Deposit

The assured way to make your savings grow

APPLY NOW
Digital Health EMI Network Card

Digital Health EMI Network Card

Instant activation with a pre-approved limit of up to Rs. 4 Lakh

GET IT NOW

Insurance

Protection for your family, against unforeseen circumstances

APPLY NOW

Loan Against Fixed Deposit

Secured and hassle-free finance for all your needs

APPLY NOW

Did you know, a good CIBIL score can help you get a better deal on loans and credit cards?