<p>When investing in the market, opting for stocks with reasonable valuations and a higher margin of safety may provide a safety cushion. <strong>P/E Ratio </strong>(Price to Earnings Ratio) can help the investors gauge the valuation multiples for a given company or scheme, which can then be used to compare other companies or mutual fund schemes.</p>
<p><strong>What is P/E ratio?</strong></p>
Mutual funds have been steadily emerging as an attractive investment option for retail investors and have become one of the intelligent avenues to invest money. This is because it's convenient to invest in mutual funds, and there are many schemes to choose from.
Across different mutual fund schemes, the investment portfolio may be managed actively or passively. While active investing requires making active investment decisions by the fund managers, passive investing tracks benchmark indices instead of fund managers making independent investment decisions.
The MPC voted 5-1 to raise the policy repo rate by 50bps to 5.90% while maintaining its stance as “withdrawal of accommodation” which was broadly in line with expectations. The MPC statement noted that the “Emerging market economies (EMEs) are facing intensified pressures from retrenchment of portfolio flows, currency depreciations, reserve losses, and financial stability risks, besides the global inflation shock. As external demand deteriorates, their macroeconomic outlook is becoming increasingly adverse.”
<p>Mutual funds are emerging as a preferred investment option amongst investors owing to the convenience of investing. One can invest in lump sum mode or through a Systematic Investment Plan (SIP). Under an SIP, the investment amount will be deducted from the investor's bank account periodically and invested in the specified mutual fund scheme.</p>
In today's world, investors may often feel spoilt for choice amongst the many options available for investing. With a wide variety of mutual funds to choose from, they may struggle to find a suitable scheme for themselves.
“Quality is never an accident; it is always the result of intelligent effort”
— John Ruskin, English writer and critic
Usually, when someone speaks about the quality of life, they refer to the quality of sleep, meals, exercise and work-life balance. The better invested they are in the above factors, the higher their quality of life can be. And, when someone describes the quality of the city they live in, they attribute it to the quality of infrastructure, housing, conveyance and the overall standard of living.
Mutual funds cater to a wide range of investors. They create a portfolio of securities from the money pooled in by different investors, and professional fund managers make the investment decisions.
Mutual funds charge certain expenses through the scheme’s Total Expense Ratio (TER). This includes fund management fees, selling and distribution costs, investor awareness expenses, etc. Most of these expenses, and even the aggregate TER, are under the oversight of SEBI (Securities & Exchange Board of India), and they are subject to specified limits under SEBI guidelines.
Exit load is a charge levied on mutual fund investments if the investor makes a redemption before the end of the specified holding period. It is not uniform across mutual fund schemes; it may differ per the chosen scheme's investment objective and time horizon.
Exit load is applied to protect investors' financial interests, discouraging them from redeeming their investments too early. It may bring an essence of discipline in investors to remain invested for the scheme's minimum applicable time period and reap reasonable returns.
With the evolution of financial markets, people may find themselves flooded with several options for investing their savings. These include fixed/recurring deposits, mutual funds, government bonds, stocks, etc. Among these options, investing in benchmark indices may pose a transparent investing strategy to equity investors, as they will be exposed towards a pre-defined basket of stocks.
The Association of Mutual Funds in India (AMFI) is an industry association dedicated to nurturing and developing the Indian Mutual Fund Industry professionally and ethically. To protect and promote the interest of the mutual fund industry, Asset Management Companies (AMCs), and investors, AMFI aims to enhance and maintain professional standards for the AMCs and distributors through the Code of Conduct.
