Debt Funds

Debt funds are mutual funds that invest in fixed income securities like bonds and treasury bills. Gilt fund, monthly income plans, short term plans, liquid funds, and fixed maturity plans are some of the investment options in debt funds. Apart from these categories, debt funds include various funds investing in short term, medium term and long term bonds.
Debt funds are preferred by individuals who are not willing to invest in a highly volatile equity market. A debt fund provides a steady but low income relative to equity. It is comparatively less volatile.

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Birla Sun Life Frontline Equity Fund - Plan A (G)

Investment Objective: An open-ended growth scheme with the objective of long term growth of capital, through a portfolio with a target allocation of 100% equity by aiming at being as diversified across various industries and or sectors as its chosen benchmark index, BSE 200.
Fund Type: Open-Ended
Investment Plan: Growth
Launch date: Aug 30, 2002
Benchmark: S&P BSE 200
Asset Size (Rs cr): 2,935.67 (Dec-31-2012)
Minimum Investment: Rs.5000
Fund Manager: Mahesh Patil
Exit Load: 1.00%
Load Comments: Exit Load of 1% if redeemed within 365 Days from the date of allotment.
Website: http://www.birlasunlife.com

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Invest in Mutual Fund

Mutual Fund can be defined as an investment company that acquires funds from investors, and then invests the money in a diversified portfolio of investment securities. The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities. When you invest in a mutual fund, you are buying shares of the mutual fund and become a shareholder of the fund. Each scheme of a mutual fund can have different character and objectives. Mutual funds issue units to the investors, which represent an equitable right in the assets of the mutual fund.

If you do not want to go in for a risky venture and have security for the amount invested. You would want to maximize your returns on investment. or if you may not have the time or knowledge to actively manage your money. In this case, you would want a professionally managed firm to look after your investment needs and spend in profitable avenues. Mutual funds offer a safer way to reach your goals.They are a convenient and cost effective method of obtaining diversification and professional management. They generally buy and sell securities in volume, which allows investors to benefit from lower trading, management and research costs. Fund performance is subject to frequent reviews by various publications and rating agencies, making it possible for investors to conduct direct comparisons between funds.

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Mutual Fund Classification

By Structure:

1. Open-ended scheme
2. Closed-ended scheme
3. Interval schemes

 By Investment Objective:

1. Growth schemes
2. Income schemes
3. Balanced schemes
4. Money Market schemes

Other Schemes:

1. Tax saving schemes
2. Special schemes
3. Index schemes
4. Sector specific schemes

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Regional Mutual Fund

Regional mutual fund is a mutual fund that confines itself to investments in securities from a specified geographical area, such as Europe or Asia. A regional mutual fund will generally look to own a diversified portfolio of companies based in and operating out of its specified geographical area. The objective is to take advantage of regional growth potential before the national investment community does. They may be some regional funds whose objective is to invest in a specific segment of the region's economy, such as banking, energy etc.

For the investor, the primary benefit of a regional fund is that he/she increases his/her diversification by being exposed to a specific foreign geographical area. For the average investor, these funds are beneficial as most investors don't have enough capital to adequately diversify themselves across many investments in the region. Regional funds select securities that pass geographical criteria. Regional funds differ from the international mutual funds in the sense that international mutual funds have a diversified portfolio with investment spanning all across the world, where as regional funds invest in companies in one specific region or nation. Regional funds carry more risk as compared to international mutual funds because their investments are less diversified geographically.

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No Load Mutual Fund

Normally Mutual funds can be classified into two types - Load mutual funds and No-Load mutual funds. No Load Fund is a mutual fund in which shares are sold without a commission or sales charge. The reason for this is that the shares are distributed directly by the investment company, instead of going through a secondary party. This is the opposite of a load fund, which charges a commission at the time of the fund's purchase, at the time of its sale, or as a "level-load" for as long as the investor holds the fund.

No load funds have several advantages over load funds. Firstly, funds with loads, on average, consistently underperform no-load funds when the load is taken into consideration in performance calculations. Secondly, loads understate the real commission charged because they reduce the total amount being invested. Finally, when a load fund is held over a long time period, the effect of the load, if paid up front, is not diminished because if the money paid for the load had been invested, as in a no-load fund, it would have been compounding over the whole time period.

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Money Market Mutual Fund

A money market fund is a mutual fund that invests solely in money market instruments. Money market instruments are forms of debt that mature in less than one year and are very liquid. Treasury bills make up the bulk of the money market instruments. Securities in the money market are relatively risk-free. Money market funds are generally the safest and most secure of mutual fund investments. The goal of a money-market fund is to preserve principal while yielding a modest return. Money-market mutual fund is akin to a high-yield bank account but is not entirely risk free. When investing in a money-market fund, attention should be paid to the interest rate that is being offered.

Money market funds are of two types:

1. Institutional Money Market Mutual Funds: These funds are held by governments, institutional investors and businesses etc. Huge sum of money is parked in institutional money funds.

2. Retail Money Market Mutual Funds: Retail money market funds are used for parking money temporarily. The investment portfolio of money market funds comprises of treasury bills, short term debts, tax free bonds etc.

Money market mutual funds are one of the safest instruments of investment for the retail low income investor. The assets in a money market fund are invested in safe and stable instruments of investment issued by governments, banks and corporations etc.

Generally, money market instruments require huge amount of investments and it is beyond the capacity of an ordinary retail investor to invest such large sums. Money market funds allow retail investors the opportunity of investing in money market instrument and benefit from the price advantage. Money market mutual funds are usually rated by the rating agencies. So, check for the fund ratings before investing.

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International Mutual Fund

International mutual funds are those funds that invest in non-domestic securities markets throughout the world. Investing in international markets provides greater portfolio diversification and let you capitalize on some of the world's best opportunities. If investments are chosen carefully, international mutual fund may be profitable when some markets are rising and others are declining. However, fund managers need to keep close watch on foreign currencies and world markets as profitable investments in a rising market can lose money if the foreign currency rises against the dollar. In recent years international mutual funds have gained popularity. This can be attributed to removal of trade barriers and expansion of economies, which has sparked off growth in various regions of the world.

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Fund of Funds

A fund of funds (FoF) is an investment strategy of holding a portfolio of other investment funds rather than investing directly in shares, bonds or other securities. This type of investment is also known as multi-manager investment. There are different types of 'fund of funds', each investing in a different type of collective investment scheme, for  example 'mutual fund' FoF, hedge fund FoF, private equity FoF or investment trust FoF. Investing in a collective investment scheme may increase diversity compared to a small investor holding a smaller range of securities directly. A FoF manager will try to select the best performing funds to invest in based upon the managers past performance and other factors. If the FoF manager is skillful, this additional level of selection can provide greater stability and take on some of the risk relating to the decisions of a single manager. As in all other areas of investing, there are no guarantees for regular returns. As a fund of funds invests in the scheme of other funds, it provides a greater degree of diversification. Instead of investing in different stocks of mutual funds and keeping records of all of them, it is much easier to invest and track only one fund which in turn invests in other mutual funds.

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