One may invest in equity markets by following the two investment strategies – active or passive. While active investing requires careful stock selection in the investment portfolio, passive investing refers to mirroring the benchmark index entirely.
Mutual funds have been emerging as a preferred investment option across the asset classes, including equity, debt, and gold. However, just like it is important to invest, it is equally important to periodically review the investments. Taking the first step in that direction, you refer your Statement of Account, which will help you know the details of your investments and many other vital details.
As the name suggests, an overnight fund is a fund that invests predominantly in overnight securities having a maturity of one day. Overnight mutual fund schemes are favoured investment categories amongst debt funds for the investors seeking a very short-term parking of surplus funds.
Let’s learn more about the salient features of overnight funds.
Retail investors have continued with their investments in mutual funds through Systematic Investment Plans (SIPs) with monthly SIP inflows in March 2020, hitting an all-time high of more than Rs. 8,600 crores.
Source - AMFI
However, with the ongoing volatility coupled with the impact on the regular income and cash flows, many investors are considering discontinuation of their SIPs.
Benjamin Graham, one of the early followers of fundamental analysis based investing and also Warren Buffett’s professor, had propounded the concept of Mr. Market way back in the nineteen forties to describe the contradictory and irrational traits of investors. Graham described Mr. Market as an investor prone to erratic swings of pessimism and optimism and since majority of the stock market is comprised of such investors, he felt that the market as a whole takes on these characteristics. His advice was that while Mr.
All mutual funds houses undertake KYC (Know Your Customer) compliance in pursuance of the Prevention of Money Laundering Act, 2002, and SEBI (Securities & Exchange Board of India) guidelines. This process is made mandatory by the market regulator so that the transactions are seamlessly linked to the investor. Since PAN is the compulsory document towards Proof of Identity, it serves as a unique link for the stakeholders concerning all the transactions in the financial markets, be it with stockbrokers, depository participants or mutual funds, etc.
A Corporate Bond Fund is an open-ended debt scheme predominantly investing in AA+ and above rated corporate bonds. These funds are mandated by SEBI to invest a minimum of 80% of total assets in AA+ and above rated corporate bonds. To further clarify, corporate Bonds are one of the predominant sources of funds for the companies willing to borrow from the market, apart from the borrowings from banks and financial institutions.
In mutual fund transactions, the time of receipt of the transaction and money affects the applicable Net Asset Value (NAV). To bring uniformity in the operational processes, SEBI (Securities & Exchange Board of India) has prescribed the cut-off timings for mutual fund transactions across all the mutual fund houses. Therefore, mutual fund transactions are processed based on the prevailing NAV of the respective scheme, if the fund house receives the transaction/ funds before the cut-off time.
Investors may choose to invest in equity markets through two primary investment strategies: active and passive. Active investing refers to the active selection of stocks in the portfolio depending on company fundamentals and other parameters. In contrast, passive investing refers to tracking a benchmark index and replicating its composition in the portfolio. When a scheme is actively managed, the fund manager decides which stock to invest and in what proportion to invest.
It is a known fact that the purchasing power of money reduces over time. An Rs. 2000 note today will fetch lower value a year later and further lower a decade later. Similarly, a Rs. 100 item will most likely not be available at the same rate a year later and available at much higher rates 10 years later. This happens due to the increase in prices of raw materials, input services etc. In normal parlance, this is referred to as inflation, which reflects the increase in prices of commodities and services across different periods.
