Equity

When it comes to investing in mutual funds, data suggests that investors are highly inclined to invest in equity funds. As per the quarterly data for July - September 2022, about 9.2 crore folios featured equity schemes across the mutual fund industry, with the total Assets Under Management (AUM) of ₹14.64 lakh crores. In comparison, the number of folios in debt-oriented schemes stood at around 72 lakh. (Source: AMFI)

A Systematic Investment Plan (SIP) is an investment option for investors to invest in mutual funds periodically. Once a SIP is registered, the investment amount is automatically deducted from the bank account on the specified date and invested in mutual funds. This allows investors to make consistent investments towards their financial goals. 

Often ‘the more the merrier’, but sometimes ‘the lesser the better’. This holds true while investing in Mutual Funds too. Although Mutual Funds are popular for offering diversification, there is a type of scheme that adopts a focused and concentrated approach too.

The investment horizon plays a vital role in investing. Talking specifically about mutual fund schemes, equity mutual funds may be more suitable for long-term financial goals. Equities may be volatile over the short term but carry the potential of wealth creation over the long term.

Not all asset classes have been winners consistently in the investing world since different asset classes may react differently to macroeconomic events. As such, asset classes like equities, debt, gold, real estate etc., tend to perform in their respective economic cycles.

While equities may perform better during periods of high economic growth, debt may perform better during periods of decreasing interest rate scenario. Similarly, gold may be a better performer when asset classes like equity and debt seem volatile and uncertain, as gold is considered a safer investment option.

When investing in mutual funds, one must choose the mutual fund schemes that best suit their financial goals and risk appetite. In addition, selecting the equity investments basis their market capitalisation is one of the selection criteria, as different market cap segments carry different risk-reward trade-offs.

When it comes to mutual fund investing, investors can choose between actively and passively managed funds. While both aim to provide market-linked returns to the investors, these funds tend to differ on many parameters.

Mutual funds are increasingly becoming the preferred option for retail investors, thanks to the growing awareness of this most transparent and professional money manager. The consistent monthly SIP inflows is a reflection of investor’s changing preference towards mutual funds. The data released by the Association of Mutual Funds in India (AMFI) shows that investors channelised Rs. 10,351 crores in mutual funds through Systematic Investment Plans (SIPs) in September 2021 alone and Rs.

Debt funds are one of the five broad categories of mutual funds allowed by the Securities & Exchange Board of India (SEBI). Debt funds predominantly invest in debt securities and bonds. Such securities tend to provide income primarily through interest income from such securities.

The Monetary Policy Committee (MPC) conducted an off-cycle meeting between 2nd and 4th May 2022 to reassess the evolving inflation-growth dynamics post the April MPC meeting & took the following actions: