Beginner

Exchange Traded Funds (ETFs) are passive investment options that offer direct investment exposure to underlying indices or commodities like silver, gold etc. As per SEBI Guidelines, an ETF must deploy at least 95% of its assets in securities of the underlying index.

Fund managers are mandated to track the specified index and implement changes in the investment portfolio as and when the changes happen in the index constitution. They cannot go beyond the index composition or their respective weights.

Advantages of Exchange Traded Funds

One may invest in mutual funds in two modes – lumpsum or staggered manner, i.e., through Systematic Investment Plans (SIPs)/Systematic Transfer Plans (STPs). When one invests in lumpsum, the investment is done in one go, while through SIP/ STP, one makes investments in instalments in a designated scheme.

When planning to invest in markets, investors often find themselves in a dilemma of choosing whether to invest in stocks directly, or through Exchange Traded Funds (ETFs). Some investors may find direct stock investments interesting and exciting since there is more control over investment decisions, and they can track the stock prices over stock exchanges.

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.”

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.

When investing in mutual funds, it's recommended to review your investment portfolio periodically. During such a portfolio review, the primary objective would be to identify mutual fund schemes that aren't performing well, and replace them if needed.

The investment portfolio may contain assets from different fund houses and across various Demat accounts. This is where a Consolidated Account Statement comes into the picture.

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.