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    What is Mutual Fund? Meaning, All About Mutual Funds

    The biggest challenge about investing is to decide where to invest. And, if you have been a newbie at investing, it can get more confusing. At this point in time, you might want somebody else to do the job for you. Guess what? It is possible with mutual funds. Mutual funds have been a popular investment option for their convenience, liquidity, returns, and safety. We will be learning more about what are mutual funds, its types, the features and benefits of mutual funds in the subsequent sections.

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    Abhishek Chakravarti

    BFSI Writer

    Abhishek is a financial writer with over 6 years of experience in the BFSI sector. Prior to his current stint with Max Life Insurance, he has worked with leading fintech startups. He specializes in writing about taxation and various investment products like ULIPs, retirement plans, guaranteed investment plans, mutual funds etc.

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    Sahil Rawal

    BFSI Expert

    Sahil Rawal is a digital & brand management specialist with over 10 years of experience in Financial Services Industry. Life insurance professional with expertise in digital marketing strategy, website content marketing and brand communication designed to increase brand awareness, drive engagement & sales.

    What is Mutual Fund Investment, and How Does it Work?

    Mutual funds are a professionally managed investment scheme that pools money from a large number of investors and subsequently invests this in multiple investment instruments like shares, stocks and bonds. Mutual Funds in India are governed by SEBI (Securities Exchange Board of India) guidelines.

    The investment decisions of a mutual fund are taken by a fund manager and a team of analysts who have in-depth knowledge of how different financial markets work. In return for the professional management of a mutual fund, the investors are required to pay an annual fee known as the total expense ratio (TER) of the mutual fund.

    How Do Mutual Funds Work?

    Since mutual funds have multiple investors who can invest different amounts, the assets held by a mutual fund are divided into small parts known as units. Investors can purchase units of the mutual fund from the Asset Management Company (AMC) based the cost of each unit known as the NAV (Net Asset Value). The larger the investment made by the investor the greater is the number of units that can be purchased. The NAV of a mutual fund varies based on the performance of the scheme’s investments. So, when the fund performs well, its NAV increases and investors make a profit on their investment. Similarly, when a scheme performs poorly, its NAV decreases and a loss is incurred by the investor.

    What are Different Types of Mutual Funds in India?

    Now that we know what is mutual fund in India, let us discuss its types. Mutual funds in India differ according to certain criteria. Here are the details of some of the different types of mutual funds in India:

    Classification on the basis of fund structure:

    This type of classification depends on the flexibility to sell and purchase individual mutual fund units.

    Open-ended: This type of mutual fund investment offers the highest flexibility in terms of the unit purchased or tenure. Open-ended mutual funds do not come with any specific constraint in terms of the quantity of units purchased or investment tenure. Investor has the liberty to trade however they want to and exit whenever they want to at the current Net Asset Value (NAV).

    Close-ended: In this type of mutual fund investment, the unit capital is fixed. In other words, the mutual fund company is restricted when it comes to selling more than the pre-decided limit. In addition, it has a fixed maturity date; an investor cannot withdraw from the fund before the maturity date.

    Interval Funds: As the name suggests, interval funds allow trading of the units during pre-decided transaction intervals. As per the rules of the scheme, the transaction period has to be at least 2 days, with a 15-day window between the two transactions.

    Classification on the Basis of Investment Objective

    The mutual funds can differ on the basis of the investment goals of the investor:
    Mutual Fund Price

    Growth Funds:

    This type of mutual fund invests in growth-oriented funds such as equity for capital appreciation. Growth funds are preferred by investors who have surplus sums that they can invest in high-risk instruments to gain high returns. In addition, they should be willing to have a medium or long investment horizon.

    Regular Income Funds:

    This type of mutual fund invests money in multiple debt assets such as certificates of deposits, bonds, and securities. Regular income funds have had a reputation for earning higher returns as compared to deposits. They offer a steady and regular income to investors. However, there is zero guarantee of returns as they depend on the performance of funds. The return is generated from the interest income and capital gains resulting from any fluctuations in the value of securities. As this mutual fund invests in debt mutual funds, it is ideal for risk-conservative investors who can invest for 2-3 years.

    Liquid Funds:

    Liquid funds are a sub-category of debt funds as they majorly invest in debt instruments for up to 91 days. This type of mutual fund comes with a maximum investment limit of 10 lakh. What makes liquid funds different from other debt funds is the calculation of Net Asset Value. The NAV is calculated for 365 days, while for others, only business days are accounted. The returns depend on the current short-term interest rate. Ideal for investors with a short investment horizon.

    Classification on the Basis of Asset Class:

    Mutual funds also differ on the basis of asset classes. Let us understand the bifurcation.

    Equity Mutual Funds:

    As the name suggests, equity mutual funds invest in stock or equity. As the investment is market-linked, the returns depend on the performance of shares in the market. These funds are known to generate high returns, but at the same time, they carry high risk.

    Large-cap Funds:

    Large-cap funds invest in large-capitalisation companies. These funds have the reputation of generating stable returns. They are also considered the safest when compared to all equity funds. Owing to the stock's reliability and good name, they are chosen by investors even during shaky market conditions. Large-cap funds do carry market risk, but this risk seldom takes a sudden plunge as the risk is diluted when other stocks perform well, even when one or two fail.

    Mid-cap Funds:

    As the name suggests, mid-cap funds invest in companies with moderate capital. The 65% allocation and distribution of funds is made in equity and equity-linked instruments of mid-cap companies. These companies are in their growth phase and looking to expand in the future. Consequently, mid-cap mutual funds happen to be more aggressive than large-cap mutual funds. Even though these funds offer high returns, they carry a high level of risk as compared to large-cap funds.

    Mutual Fund Online

    Small-cap Funds:

    This type of mutual fund invests in equity schemes of small capitalisation companies. This fund invests a minimum of 65% in equity and equity-related schemes of small-cap companies. Small-cap companies have a very high growth potential if everything goes right. As growth isn't guaranteed, it carries the highest risk but the highest returns.

    ELSS (Equity Linked Savings Scheme):

    An Equity Linked Saving Scheme, also known as ELSS, is one of the most preferred tax-saving instruments in the market. Not only do they help investors save on tax, but they also facilitate wealth creation. In addition, they come with a short lock-in period of 3 years. This type of mutual fund is appropriate for salaried individuals.

    Flexicap Funds:

    Flexi-cap funds invest in equity and equity-related financial assets across all market capitalisations – small, mid, and large-cap. Providing both value and growth to investors, these mutual funds are dynamic enough to strike a balance between returns and risk by shifting among them. These funds are not limited to investing in stocks with pre-decided capitalization. The fund is allocated to different capitalizations to mitigate the risks by reducing the volatility of a particular capital market.

    Sectoral/Thematic Funds:

    Thematic funds are inclined towards specific themes or trends, such as sustainability and clean energy, and therefore invest in companies matching the specific theme.

    Multi-cap Funds:

    Multi-cap mutual funds do not concentrate on a single market capitalisation but expand to all capitalisations and sectors. The investment in the fund assets is exposed to large-cap stocks to maintain stability and mid-cap and small-cap to yield growth potential. The underlying stocks can redeem their value in the bull market, where the manager capitalizes on the growth opportunities of both small and medium companies. Similarly, they bend towards large-cap stocks to take refuge when the market gets bearish.

    Value Funds:

    This type of mutual fund adheres to a value investment strategy. They invest in stocks of companies that have 'value' and the potential to grow in the future. These are the companies that have an underrated stock value, and stock value is not a faithful indicator of their worth. A company’s intrinsic value is determined by considering its business model, financials, competitive analysis, and management team, to name a few. If the company’s intrinsic value is more than the market value, it is regarded to have 'value.'

    Mutual Funds Calculation

    Contra Funds:

    Contra funds are an open-ended scheme with a unique investment principle. This type of mutual fund makes investments based on converse investment sentiments prevalent in the market. This means stocks of a company are purchased even when they are not performing well. Both under-performance and over-performance of stocks result in the distorted value of the asset, which the fund manager attempts to capitalize on. The core ideology behind this is that the low price of an asset would normalize in the long run. This type of mutual fund helps investors take advantage of the contrarian theory by generating returns from fluctuating market conditions. 65% of the investment is made into equity and related funds.

    Dividend Yield Fund:

    This type of mutual fund invests in stocks of companies that have a good record of distributing high dividends to the shareholders when the profit is high. It is important to note that these companies only allocate dividends when they earn profits. Ergo, a dividend yield fund, invests in highly profitable companies with a good reputation for allocating dividends.

    Focused Fund:

    A focused mutual fund holds a small variety of bonds and stocks that share a similarity. They can be focused on a limited number of stocks belonging to a limited number of sectors instead of holding a diversified combination. These funds hold positions in 20-30 companies or less, in contrast to funds that hold positions in more than 100 companies.

    International Funds:

    This type of mutual fund can invest in internationally located companies. These funds can help investors broaden their investment options, resulting in higher return potentials.

    Index Funds:

    An index fund monitors the performance of an underlying index, like the Sensex or Nifty. These funds adhere to their benchmark index unaffected by market conditions. These funds provide diversified exposure with lower management costs. Since Index Funds replicate the performance of the indices as a whole, they are considered to be suitable as only long-term investments.

    Exchange Traded Funds (ETFs):

    An Exchange Traded Fund, also known as ETF, can be traded on a stock exchange. ETFs are designed to monitor the performance of a particular index or a group of assets, such as stocks, bonds, or commodities. By investing in an ETF, an individual can gain exposure to a diverse range of assets without having to buy each asset individually. ETFs offer several benefits, including low costs, tax efficiency, and ease of trading. They have become increasingly popular lately as a method for investors to gain diversified exposure to various markets and sectors.

    Types of Mutual Funds

    Debt Mutual Funds:

    Debt fund is a type of investment fund that chiefly invests in fixed-income securities, such as bonds, treasury bills, and corporate debt. The main objective of debt mutual funds is to generate income for investors through interest payments on the underlying securities. These funds are typically less volatile than equity mutual funds, making them a popular choice for investors who seek stable returns and have a lower risk appetite.

    Liquid Funds:

    Liquid funds are a kind of debt mutual fund that invests in short-term money markets instruments such as treasury bills, commercial papers, and certificates of deposit. These funds are known for their high liquidity and low-risk profile, making them a popular investment option for those looking to park their idle money for a short period of time. They are regarded as a safe investment option available, with the potential to generate higher returns than traditional savings accounts or fixed deposits. These funds typically have no exit load or lock-in period, making them a flexible option for investors who need quick access to their funds.

    Overnight Funds:

    Overnight funds are a type of debt mutual fund that primarily invests in overnight securities, such as repo and reverse repo agreements, treasury bills, and cash reserves. As the name suggests, these funds typically have a noticeably short investment horizon of one day, making them one of the most secure investment options available in the market. In addition, they are regarded to be one of the most liquid investment options, with low volatility and no credit risk. They offer a higher rate of return than traditional savings accounts and are an ideal option for those looking to park their idle funds for a brief period of time. Additionally, overnight funds have no exit load or lock-in period, making them a highly flexible investment option.

    Ultra-Short Duration Funds:

    Ultra-Short Duration Funds invest in fixed-income securities with a maturity period of 3 to 6 months. These funds are ideal for investors who seek a slightly higher return than traditional liquid funds without taking on too much risk. Ultra-Short Duration Funds typically invest in a mix of high-quality debt securities, including government securities, certificates of deposit, and corporate bonds. They are designed to provide stable returns over a short-term investment horizon and are less volatile than longer-term debt mutual funds. These funds also offer the benefit of lower credit risk and high liquidity. Ultra-Short Duration Funds may be suitable for investors with a low-to-medium risk profile who are looking for a flexible investment option with higher returns than savings accounts or fixed deposits.

    Mutual Fund Investment

    Low Duration Funds:

    Low Duration Funds are a type of debt mutual fund that primarily invests in fixed-income securities with a maturity period of 6 to 12 months. They are ideal for investors who seek slightly higher returns than traditional liquid funds or ultra-short duration funds, with lower risk. Low-duration funds typically invest in a mix of high-quality debt securities, including government securities, corporate bonds, and money market instruments. These funds are designed to provide stable returns over a short-term investment horizon and are less volatile than long-term debt funds. Additionally, low-duration funds have the benefit of lower credit risk and high liquidity. Low-duration funds may be suitable for investors with a low-to-medium risk profile who are looking for a flexible investment option with higher returns than savings accounts or fixed deposits.

    Medium Duration Funds

    Medium Duration Funds are a type of debt mutual fund that primarily invests in fixed-income securities with a maturity period of 3 to 4 years. These funds aim to offer a balance between the stability of low-duration funds and the potential for higher returns of long-duration funds. According to experts, these funds are best suited for investors with a medium to high-risk appetite and a longer investment horizon of up to 4 years.

    Medium Duration Funds typically invest in a mix of high-quality debt securities, including government securities, corporate bonds, and money market instruments. These funds may provide higher returns than low-duration funds and ultra-short-duration funds, but they also come with a higher level of risk. It is important to understand the investment strategy and risk profile of medium-duration funds before investing.

    Medium to Long Duration Funds

    Medium to Long Duration Funds is a type of debt mutual fund that primarily invests in fixed-income securities with a maturity period of 4 to 7 years. These funds aim to provide a balance between the stability of low-duration funds and the potential for higher returns of long-duration funds. According to experts, these funds are best suited for investors with a medium to high-risk appetite and a longer investment horizon of 5 years or more.

    Medium to Long Duration Funds typically invests in a mix of high-quality debt securities, including government securities, corporate bonds, and money market instruments. These funds may provide higher returns than low-duration funds and medium-duration funds, but they also come with a higher level of risk. It is important to understand the investment strategy and risk profile of medium to long-duration funds before investing.

    Mutual Fund SIP Investment

    International & Domestic Fund of Funds (FoFs):

    International and Domestic Fund of Funds are mutual funds that invest in a combination of various mutual funds. International Fund of Funds invests in foreign mutual funds that invest in stocks, bonds, and other securities outside of the investor's home country. Domestic Fund of Funds, on the other hand, invest in a combination of mutual funds within the investor's home country.

    Children's Fund:

    This type of hybrid mutual fund helps an investor to save for their child's future. Children’s mutual funds often known as Gift schemes typically have a lock-in period of 5 years and can be redeemed in the long-term to pay for planned expenses like children’s education expenses, marriage, etc.

    Retirement Fund:

    This type of mutual fund is an open-ended scheme with an initial lock-in period of 5 years that helps investors in retirement planning for the long-term. This type of fund invests in low-risk investments such as government securities to provide a steady income to the individual. However, a retirement mutual fund also invests in equity and debt securities to gain returns and ensure your investment grows.

    There are several more types of mutual funds based on asset class. Here is a brief:

    Type of FundBrief
    Dynamic Bond FundsThese funds participate in money market instruments such as government securities, corporate bonds etc. They do not have any restriction on duration or maturity of the securities.
    Corporate Bond Funds

    Minimum 80% investment in corporate bonds only in AA+ and above rated corporate bonds

    Credit Risk FundsMinimum 65% investment in corporate bonds, only in AA and below rated corporate bonds
    Floater Fund Money Market FundsMinimum 65% is invested in floating rate instruments.
    Banking & PSU FundsMinimum 80% in debt instruments of banks, PSUs, public financial institutions, and municipal bonds
    Gilt FundsMinimum 80% in G-secs, across maturity
    Gilt Funds with 10 year constant durationMinimum 80% in G-secs, such that the Macaulay duration of the portfolio is equal to 10 years
    Short Duration Funds Investment in Debt & Money Market instruments with Macaulay duration of the portfolio between 1 and 3 years
    Hybrid Mutual FundsThey are a blend of equity and debt investments.
    Balanced Hybrid FundsThese hybrid funds invest at least 65% of in equity instruments and the remaining in debt securities.
    Aggressive Hybrid Funds

    These schemes make a compulsorily investment of at least 65% and up to 80% in the equity asset class and 20- 35 % in debt asset class.

    Conservative Hybrid FundsThey invest 10-25% equity instruments. The remaining 75-90% is invested in debt instruments.
    Multi-Asset Allocation FundsThese funds make investments in at least three asset classes. The allocation needs to be at least 10% in each asset class.
    Arbitrage FundsThey aim to generate returns by exploiting price discrepancies in different markets.
    Equity Savings FundsThese funds aim to balance risk and returns by investing in derivatives, equity, and debt. The asset allocation ranges between 65 to 100% in equity and 0-35% in debt asset classes.

    Ways/modes of Mutual Fund Investment

    Following are the modes of mutual fund investment:

    •  Lump-sum Investment: This mode allows the investor to invest in one-go. Lump-sum investments are typically made in order to time markets and purchase mutual fund units at low NAV when markets are down.
    •  Systematic Investment Plan: Also known as SIP (systematic investment plan), this type of mutual fund investment enables the investor to grow the wealth corpus steadily through systematic and regular deposits in the scheme.
    •  Systematic Transfer Plan: A systematic transfer plan enables investors to move their financial resources between schemes without any inconvenience. This shift takes place periodically, helping investors gain market advantage by switching between securities when they provide higher returns. It protects the interests of an investor at the time of market fluctuations to minimise loses and maintain investor interest.

    How To Invest in Mutual Funds?

    The first and foremost step of investing in mutual fund is to select the mutual fund company of your choice. Once that is done, create an investment account with the mutual fund house. You would have to complete your KYC (Know Your Customer) to get started. After the successful verification, you can start investing in mutual funds keeping your considerations in mind.

    Mutual Funds India

    What are the documents required to invest in mutual funds?

    You need to submit basic ID and address proofs as a part of KYC procedure. These ID proofs include Aadhaar card, and PAN card.

    Benefits of Investing Mutual Funds

    Mutual funds may come with a few risks. However, the returns are higher than any other investment plans, and mutual funds come with various risk management measures. Hence, investors are keener on investing in Mutual Funds than in any different investment plan.

    Here are a few of the many advantages of investing in mutual funds:

    •  Affordable and Convenient: What makes mutual benefits the best investment option is the flexibility and affordability of the mutual funds. For many investors, it is non-affordable to purchase all units of a single mutual fund. Some investors may be new to the concept of mutual funds and try it for the first time. Such investors can start by investing a smaller amount. If you are a working professional, you can invest through Systematic Investment Plan (SIP). With an SIP, you can invest money monthly or quarterly as per your budget or convenience and you can also estimate your future investment corpus using a SIP calculator.
    •  Liquidity: One of the significant benefits of investing in mutual funds is the 'liquidity' of the funds. This liquidity feature applies to the units of open-ended mutual funds. An investor can liquidate (redeem) the units to fulfil your financial needs at any time on any business day (opening days of the stock market or banks). After liquidating your units, the amount is credited to your account within 2-4 days, depending on the scheme of your mutual funds.
    •  Professional Management: Some investors may be a new mutual fund investor or may not have the required knowledge or enough time to research different mutual fund schemes and purchase stocks. Mutual funds are managed by professionals with experience and expertise in actively buying, selling, and monitoring investments. Professional portfolio management is the most significant benefit of investing in mutual funds. The experts timely inspect the investments and rebalance the portfolio accordingly to meet the scheme's objective.
    •  Low Cost: Another beneficial point of mutual funds is their low cost. As a result of higher economies of scale, mutual fund schemes have a low expense ratio. The expense ratio is the per unit cost required for running and managing a mutual fund. The lower the expense rate, the higher the returns on investment.
    Best Mutual Fund Options
    • 5. Risk Diversification: The value of investments is changeable and may rise or fall. Investing in mutual funds is beneficial as you can simultaneously invest in multiple asset categories to reduce the risk. By diversifying your investment, the threats cognate with one asset can be countered by the others.
    • 6. Tax Benefit: Under sector 80C of the Income Tax Act, investments in ELSS (Equity Linked Savings Scheme) offer an accumulated tax exemption of up to ₹1.5 lacs in the three-year lock-in tenure of the scheme. Additionally, the taxation rules of mutual fundsin India focus primarily on the gains from investment and not on the income tax slab of the investor.

    Disadvantages of Mutual Funds

    The four sweeping disadvantages of mutual funds are the cost required to manage the mutual funds, the lock-in period of the scheme, dilution, and fluctuated returns.

    •  Management Cost: As mentioned earlier, mutual funds are operated by fund managers and market analysts. The enumeration of these individuals comes from the investors and other operations costs of the funds. It is advisable to consider the total funds' management charges.
    •  Lock-in Period: Lock-in periods can be significantly disadvantageous as you cannot withdraw your investments before the specified time. Penalties will be applied to the investor if the amount is withdrawn before the lock-in period. Currently,
    •  Dilution of Profits: As diversifying the investments can reduce the risk of loss, it may dilute profits. Hence, you should not invest in multiple mutual funds at the same time.
    •  No Guaranteed Returns: As described earlier, the value of the funds is changeable depending on the marketing conditions. Due to the fluctuation in the value, the returns on the investment are not guaranteed to be profitable.

    Common Terms Related to Mutual Funds

    Mutual funds are the most-affordable plans, where you can flexibly choose to invest in different assets and securities. Before investing in mutual funds, here are a few terms you must know:

    •  Net Asset Value (NAV): The most common term to be familiar with is the Net Asset Value or NAV. It defines the price of a mutual fund unit. NAV is calculated as the ratio of total net assets to the total number of units issued. The total net asset value is the market value of the entire mutual fund.
    •  Asset Management Company (AMC): An AMC or Asset Management Company is a registered organization that handles asset management and investment divisions for mutual funds. All AMCs must register with SEBI and operate by the SEBI guidelines.
    What is Mutual Fund
    • 3. Systematic Investment Plan (SIP): SIPs are the most commonly invested mutual funds. It is the best option for working professionals who are getting paid monthly. In a Systematic Investment Plan, the investor can invest a small amount at different intervals, such as weekly, monthly, or quarterly.
    • 4. Asset Under Management (AUM): Asset Under Management indicates the sum and the size of the assets controlled by the respected AMC. Due to daily new investments, the AUM of the funds keeps changing.
    • 5. Exit Load: Exit load in a mutual fund defines the fee that an investor is required to pay upon exiting from a mutual fund. It is charged to deter investors from withdrawing from the investment maid.

    How Do Tax Saving Mutual Funds Work?

    Tax saving mutual funds, Equity Linked Saving Scheme (ELSS funds) offers tax benefits to the investors. According to the section 80C of the Income Tax Act 1961, an investor can get an accumulated tax benefit of up to ₹1.5 lacs, on an open-ended equity fund, in the entire lock-in tenure of the scheme. ELSS funds while being a popular Section 80C investment option are also categorised as diversified equity funds, that primarily invest in stocks of multiple organizations as per the investment aim of the fund. The objective of tax saving mutual funds is to maximize capital appreciation over the period.

    Should You Invest in Mutual Funds?

    Investing in mutual funds depends entirely on the needs and financial situation of the investor. However, mutual funds are gaining popularity among millennials due to their numerous advantages to investors. If you are optimistic about investing in mutual funds, you must learn as much as possible about mutual funds and their pros and cons. You can invest in mutual funds with the approach of the 50:30:20 rule. The rule suggests spending 50% of your earnings on your needs, 30% on your wants and leisure items, and 20% must be saved for emergencies.

    Frequently Asked Questions (FAQs)

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    If you wish to make a reasonable sum by investing in mutual funds, consider investing by availing the benefits of a systematic investment plan . This will enable you to mitigate the impact of changing market conditions and if you stay invested for the long-term, you have good chance of growing your wealth significantly.

    Yes, you can lose money in a mutual fund. Mutual funds come with a few risks. If the securities or assets held by a fund lose their value, you may lose some or all of your money invested in that mutual fund.

    Investors can usually redeem their funds after the completion of the objective of the investment made. The funds can be redeemed in parts or entirely by choosing all units to withdraw. Investors can also select to redeem the gained sum and keep the principal invested. Units bought through a trading account can be redeemed by contacting the broker or placing a redemption request online. If the funds are purchased via the mutual fund's website, the investor can redeem them by filling out a form on the website and submitting it to the AMC.

    Investing in mutual funds is a good idea as the returns are higher. Apart from a higher return on investment, mutual funds offer multiple risk management measures to ensure safe investment.

    Actively managed funds are funds in which either a manager or a management team actively participates and decides on investing the fund's money into various assets or securities. Before investing in an active or passive investment fund, the investor should inspect its situation and the requirement of the type of investment.

    Mutual funds and stock investments are both good options for investing your money. However, the differences between the two make the former a better choice as it has significant advantages for the investor. Mutual funds can be the most affordable investment plan with a higher return on investment. You are responsible for managing your share investments, while fund managers manage mutual funds. Unlike share investments, you can get Section 80 C tax benefits by investing in ELSS mutual funds.

    Investing in mutual funds depends on the requirements of the investor. Passively managed funds follow the market index to operate. Unlike active plans, they are managed by any team or individual. As no identity operates passive funds, they are cheaper than active ones.

    With a diversity of options, you can invest in mutual for the shorter and longer term. Industry experts advise investing in longer terms as the returns are higher, so you can accumulate greater redemption money in the longer term. Investors can invest in more extended plans with more than three years to avail themselves of tax benefits.

    Hybrid mutual funds, also known as asset allocation funds, are investment schemes where investors can invest money in two or more asset classes, or a combination of equity and debt investments formulated to meet the scheme's investment objectives. Hybrid funds are safer than equity funds and offer better returns than debt funds.

    Debt mutual funds come with three common types of risks: credit risk, interest rate risk, and liquidity risk.

    Equity mutual funds are considered ideal investment options for newbie investors or investors who lack knowledge of investing the right amount in funds. An equity fund is seen as a 'risky investment' as it comes with a significant degree of market risk.

    Investing in mutual funds entirely depends on the budget and financial requirements of the investor. One should invest after considering the scope and requirements to improve their financial future. Other factors to consider before choosing the investment type are the risk appetite of the investment, the lock-in period of the investment, and the return on investments.

    Based on the risk scale from very low to high-risk funds, it is advisable to start with investing in very low-risk mutual funds. Liquid funds and short-term funds (from one month up to one year) are considered low-risk mutual funds as they are less volatile as compared to most equity schemes. These mutual funds are best for fulfilling short-term financial goals. Nevertheless, investors can choose any mutual fund based on knowledge, economic growth and their financial goals and preferences.

    ARN NO: PCP/MF/050623

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    economictimes.indiatimes.com/industry/banking/finance/banking/is-investing-money-in-mutual-funds-good-or-should-i-go-for-stocks/articleshow/90917078.cms

    www.amfiindia.com/investor-corner/knowledge-center/what-are-mutual-funds-new.html

    www.amfiindia.com/investor-corner/knowledge-center/types-of-mutual-fund-schemes.html

    cleartax.in/s/mutual-fund-types

    paytm.com/blog/mutual-funds/what-are-flexi-cap-funds-are-they-the-same-as-multi-cap-funds

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    economictimes.indiatimes.com/mf/analysis/medium-to-long-duration-funds-definition-features-risks-performance/articleshow/84894463.cms

    www.amfiindia.com/investor-corner/knowledge-center/SEBI-categorization-of-mutual-fund-schemes.html

    www.axismf.com/mutual-fund-knowledge-centre/articles/systematic-methods-of-investments-sip-stp-swp?amp

    www.amfiindia.com/investor-corner/knowledge-center/advantages-of-investing-in-mutual-funds.html

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    BEWARE OF SPURIOUS PHONE CALLS AND FICTITIOUS/FRAUDULENT OFFERS

    IRDAI clarifies to public that:

    • • IRDAI is not involved in activities like selling insurance policies, announcing
      bonus or investment of premiums.
    • • Public receiving such phone calls are requested to lodge a police complaint.

    IRDAI - Registration No. 104. ARN/Web/01/21042021 Category: Life. Validity: Valid.
    Corporate Identity Number (CIN):U74899PB2000PLC045626.
    Trade logo displayed belongs to Max Financial Services Ltd. and Axis Bank Ltd .respectively and with their consents, are used by Max Life Insurance Co. Ltd

    All Rights Reserved. An ISO 9001:2008 Certified Company.

    Max Life Insurance Company Limited is a Joint Venture between Max Financial Services Limited and Axis Bank Limited.

    Corporate Office :

     Max Life Insurance Co. Ltd. 11th Floor, DLF Square Building, Jacaranda Marg, DLF City Phase II, Gurugram (Haryana) - 122002.

    Operation Center :

     Max Life Insurance Co. Ltd, Plot No. 90-C UdyogVihar, Sector 18, Gurugram (Haryana) - 122015.

    Customer Helpline: 1860 120 5577 (9:00 A.M to 6:00 P.M Monday to Saturday) * Call charges apply.

    Online Helpline - 0124 648 8900 (09:00 AM to 09:00 PM Monday to Saturday).

    Fax Number:0124-4159397.

    Email ids: service.helpdesk@maxlifeinsurance.com

    Website: www.maxlifeinsurance.com

    Max Life Insurance is integrated with licensed NBFC FinVu(Cookiejar Technologies Pvt. Ltd. for sharing policy details with regulated Financial Information Users within the Account Aggregator ecosystem after obtaining the Policy holder's consent. Read more about Account Aggregator framework here.

    *Life insurance coverage is available in this product. For more details on risk factors, Terms and Conditions please read the prospectus carefully before concluding a sale. You may be entitled to certain applicable tax benefits on your premiums and policy benefits. Please note all the tax benefits are subject to tax laws prevailing at the time of payment of premium or receipt of benefits by you. Tax benefits are subject to changes in tax laws. Trade logo displayed belongs to Max Financial Services Ltd. and Axis Bank Ltd. respectively and with their consents, are used by Max Life Insurance Co.

    Insurance is the subject matter of solicitation. For more details on the risk factors, Terms and Conditions, please read the sales and rider prospectus carefully before concluding a sale. Tax benefits are eligible for tax exemption on fulfilling conditions mentioned under Section 10(10D) of income tax act 1961. Tax exemptions are as per our understanding of law and as per prevailing provisions of income tax at 1961 . Policy holders are advised to consult tax expert for better clarification /interpretation. Please note that all the tax benefits are subject to tax laws at the time of payment of premium or receipt of policy benefits by you. Tax benefits are subject to changes in tax laws. The monthly Income Benefit and Terminal Benefit may be taxable subject to extra premium being loaded at underwriting stage.

    Disclaimers for Market Linked Plans & Saving plans:

     

    THE UNIT LINKED INSURANCE PRODUCTS DO NOT OFFER ANY LIQUIDITY DURING THE FIRST FIVE YEARS OF THE CONTRACT. THE POLICYHOLDER WILL NOT BE ABLE TO SURRENDER/WITHDRAW THE MONIES INVESTED IN LINKED INSURANCE PRODUCTS COMPLETELY OR PARTIALLY TILL THE END OF FIFTH YEAR.

    Unit Linked Insurance Products (ULIPs) are different from the traditional insurance products and are subject to the risk factors. The premium paid in the Unit Linked Life Insurance Policies is subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. Max Life Insurance is only the name of the insurance company and Max Life Online Savings Plan (UIN: 104L098V05) is only the name of the unit linked life insurance contract and does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges from your Insurance agent or the Intermediary or policy document of the insurer. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these funds, their future prospects or returns.

    Max Life Online Savings Plan is a Unit Linked Non Participating Individual Life Insurance Plan (UIN104L098V05)

    *#Some benefits are guaranteed and some benefits are variable with returns based on the future performance of your Insurer carrying on life insurance business. The assumed rates of return (4% p.a. and 8% p.a.) shown in the illustrative example are not guaranteed and they are not the upper or lower limits of what you might get back as the value of your Policy depends on a number of factors including future investment performance. The guaranteed and non-guaranteed benefits are applicable only if all due premiums are paid.The Maturity Benefit shown in the illustrative example are inclusive/exclusive of taxes.

    ^*Disclaimer: Applicable for Titanium variant of Max Life Smart Fixed-return Digital (Premium payment of 5 years, Policy term of 10 years) and a healthy female of 18 years old paying Rs.3,60,000/- annually (exclusive of all applicable taxes)

     

    Privacy Policy

    ^^On completion of policy term

    The savings indicated is the maximum premium difference as compared with offline plan & depends on the variant purchased.

    ^*All claims that qualify for InstaClaim™ will be paid within 1 working day from date of submission of all mandatory documents else Max Life will pay interest at Bank Rate as on beginning of financial year in which claim has been received (4.65 % p.a. for FY’20) for every day of delay beyond one working day. Interest shall be at the bank rate that is prevalent at beginning of the financial year in which death claim has been received.

    Claims for policies completed 3 continuous years. All mandatory documents should be submitted before 3:00pm on a working day.Claim amount on all eligible policies4 is less than Rs. 1 Crore. Claim does not warrant any field verification.Mandatory Documents :> Original policy document > Original/attested copy of death certificate issued by local municipal authority > Death claim application form (Form A) > NEFT mandate form attested by bank authorities along with a cancelled cheque or bank account passbook along with nominees photo identity proof > Discharge/Death summary attested by hospital authorities or FIR & Post Mortem Report/viscera report (in case of accidental death)

    7CMO Asia BFSI Excellence Award 2019

     

    5Criteria applicable only for “Term plans” for Graduate, Indian resident with declared income >= 10 lacs with CIBIL score >= 650 (salaried) and >= 700 (self-employed) with no disclosed medical condition

    4InstaClaim TM is available for all versions of (UIN:104N118V06). Mandatory Documents : • Original policy document • Original/attested copy of death certificate issued by local municipal authority • Death claim application form (Form A) • NEFT mandate form attested by bank authorities along with a cancelled cheque or bank account passbook along with nominees photo identity proof • Discharge/Death summary attested by hospital authorities or FIR & Post Mortem Report/viscera report (in case of accidental death)

    ##

    Tax conditions :

    ##

    Save 46,800 on taxes if the insurance premium amount is Rs.1.5 lakh per annum and you are a Regular Individual, Fall under 30% income tax slab having taxable income less than Rs. 50 lakh and Opt for Old tax regime ~# Save 54,600 on taxes if the insurance premium amount is Rs.1.5 lakh per annum for life cover and 25,000 for critical illness cover and you are a Regular Individual, Fall under 30% income tax slab having taxable income less than Rs. 50 lakh and Opt for Old tax regime.

    3The discount is applicable if you are a salaried employee with a corporate. During policy issuance, Max Life may call for proof of employment if required. In case proposer when asked is not able to prove the employment part, discount offer will be discontinued and additional premium as applicable will have to be paid for processing of the case.

    CI Rider disclaimers:

    MAX LIFE CRITICAL ILLNESS AND DISABILITY RIDER (UIN- 104B033V01) available as a rider on payment of additional premium.

    >Extended cover of up to 85 years is available with gold and platinum variant only

    @ 64 critical illnesses covered in platinum and platinum plus variant on payment

    22 critical illnesses covered in gold and gold plus variant

    6 The life insurer is eligible for a discount on renewal premium under regular pay variant by accumulating Healthy Weeks as per terms and conditions of the rider

    *^Total premiums paid inclusive of any extra premium but exclusive of all applicable taxes, cesses or levies and modal extra. Return of premium option is available on payment of additional premium.

     ~ Conditions for premium break : Available at an additional premium for policies with policy term greater than 30 years and premium payment term greater than 21 years. Option to skip paying premium for 12 months. 2 premium breaks will be available during the premium payment term separated by an interval of at least 10 years

    ~1 Conditions for Special exit value:

    Option to receive all premiums paid back, at a specified point in the term of the policy (free of cost). Available when Return of Premium variant is not chosen. No additional premium to be paid.

    ~2 Voluntary Top-up Sum assured:

    Option to double your insurance cover, basis underwriting, at the time of your need by increasing your sum assured up to an additional 100% of base sum assured, chosen at inception

    ^^*^^Free look period conditions:

    The policyholder has a period of 30 days from the date of receipt of the policy document, to review the terms and conditions of the Policy, where if the policyholder disagrees to any of those terms or conditions, he / she has the option to return the Policy stating the reasons for his objections. The policyholder shall be entitled to a refund of the premiums paid, subject only to deduction of a proportionate risk premium for the period of cover and the expenses incurred by the company on medical examination of the lives insured and stamp duty charges.

    ^Individual Death Claim Paid Ratio as per audited financials for FY 2022-2023

    8https://www.moneycontrol.com/news/business/economy/buy-term-insurance-now-as-rates-may-rise-from-april-1-4930921.html

    2Total premium will be charged at the time of the policy issuance (subject to underwriting’s decision).

    3The guaranteed benefits are available with selected life insurance plans & are applicable if all due premiums are paid

    4Tax benefits as per prevailing tax laws, subject to change

    Terms and conditions for availing 5% employee discount:

    <Due to system constraints, employee is requested to select 5 Lakh and above income which can be changed to actual amount on the information page.

    1 The 5% employee discount will be refunded to you once your policy is issued. Submit your documents for getting your policy issued and get 5% employee discount


    9

    The percentage savings is for a regular pay Max Life Smart Secure Plus Plan ( A Non Linked Non Participating Individual Pure Risk Premium Life Insurance Plan, UIN - 104N118V06)– Life Option for 1 cr life cover for a 35 year old, non-smoker male for a policy term of 40 years vs a 10 year policy term with the same details’

    ~*Standard premium for 24-year old healthy male, non-smoker, 25 years policy term,25 year premium payment term (exclusive of GST) for Max Life Smart Secure Plus Plan (UIN:104N118V06)

    **Healthy non-smoking male, 24 years, 2 cr cover,25 years policy term,25 year premium payment term, exclusive pf GST for Max Life Smart Secure Plus Plan (UIN:104N118V06)

    ~~Healthy non-smoking male, 24 years, 1 cr cover,25 years policy term,25 year premium payment term, exclusive pf GST for Max Life Smart Secure Plus Plan (UIN:104N118V06)

    Max Life Smart Wealth Plan| A Non-Linked, Non-Participating, Individual Life Insurance Savings Plan| @Rs.9,68,800/- as lump sum at the end of 15 years, for 35 years old healthy male.

    ARN - ARN/Web/01/21042021

    Past performance of the investment funds do not indicate the future performance of the same. Investors in the Scheme are not being offered any guaranteed / assured returns.The premiums & funds are subject to certain charges related to the fund or to the premium paid.

    The premium shall be adjusted on the due date even if it has been received in advance.

    For Total Installment Premium -**Total Installment Premium is the Premium payable as per premium paying frequency chosen, it excludes GST and applicable taxes, cesses or levies, if any; and includes loadings for modal premiums, Underwriting Extra Premium and Rider Premiums if any.

    For Return of Premium -~The Return of Premium Option is available on payment of Additional Premium. Premium does not include amount paid for riders and is excluding taxes, cesses and levies. Upon Policyholder's selection of Return of Premium variant this product shall be a Non-Linked Non-Participating Individual Life Insurance Savings Plan.

    For Riders -#Applicable Rider available on the payment of Additional Premium is Max Life Critical Illness and Disability Rider | Non-Linked Non-Participating Individual Pure Risk Premium Health Insurance Rider |UIN: 104B033V01 . Critical Illness and Disability Rider variant opted is Platinum Plus which covers 64 critical Illnesses. The rider cover will only be paid in scenarios where customer is diagnosed with listed 64 critical illnesses or total and permanent disability. Rider will terminate after major critical illness claim is paid to the policyholder. In case customer requests for cancellation of rider only, the solution as a whole will be cancelled and not just the individual rider.

    For Additional Benefits -##On Payment of Additional Premium. The accident cover will only be paid in scenarios where death occurs due to accident.

    *~Disclaimer | Max Life Smart Secure Plus Plan. A non-linked non-participating individual pure risk premium life insurance plan |Benefit available with special exit value -Total premium paid inclusive of any extra premium but exclusive of all applicable taxes, cesses or levies & modal extra. The premium calculated as per Standard premium for 30 year old healthy male, non-smoker, 40 years policy term, 40 years premium payment term (exclusive of GST) for Max Life Smart Secure Plus Plan.

    6

    Applicable for Titanium variant of Max Life Smart Fixed-return Digital plan (Premium payment of 5 years and Policy term of 10 years) and a healthy male of 18 years paying Rs. 30,000/- per month (exclusive of all applicable taxes) with 7.50% return. Life Insurance is available with this product.

    ##

    Policy continuance benefit is not available with lifelong wealth variant. **The accrued income will be accumulated on an annual basis at the prevailing reverse repo rate (publish on RBI’s website).

    #

    With “Save the date”, you can choose to take your annual income to any special date in a year.

    ***Available with early wealth variant. Income benefit will be paid as per selected plan terms.

    ~

    Accidental death benefit is available in call variants except for Single premium variant. Life insurance coverage is available in this product.

    #~

    Term Insurance plan bought online directly from Max Life Insurance has no commissions involved.

    ~1

    Max Life Smart Secure Plus Plan, A non-linked non-participating Individual Pure Risk Premium Life Insurance Plan| Standard Premium for 30 year old healthy male, non-smoker, 40 years policy term, 40 year premium payment term (exclusive of GST) for Max Life Smart Secure Plus Plan| ~1 Conditions for special exit value: Option to receive all premiums paid back, at a specified point in the term of the policy (free of cost). Available when Return of premium variant is not chosen. No additional premium to be paid. Option to receive all premiums back (exclusive of GST). Flexibility of exiting the plan early. Special Exit Value cover applicable till age 68 & above (of your age). T&C Apply.

    6

    Applicable for Titanium variant of Max Life Smart Fixed-return Digital plan (Premium payment of 5 years and Policy term of 10 years) and a healthy male of 18 years paying Rs. 30,000/- per month (exclusive of all applicable taxes) with 7.50% return. Life Insurance is available with this product.

    **

    Max Life Critical illness and Disability (UIN- 104B033V01) available as a rider on payment of additional premium. 64 critical illnesses covered in platinum and platinum plus variant on payment.

    *

    Available on Payment of Additional Premium. The accident cover will only be paid in scenarios where death occurs due to accident.

    7

    Available with Max Life Smart Wealth Plan (UIN: 104N116V08)

    8

    Available with Max Life Smart Fixed-return Digital Plan (UIN:104N123V04). The guaranteed benefits are available with selected life insurance plans & are applicable if all due premiums are paid.

    **Disclaimer: Standard premium for 24-year old healthy male, non-smoker, 25 years policy term,25 year premium payment term (exclusive of GST) for Max Life Smart Secure Plus Plan (UIN:104N118V06) with a life cover of Rs. 50 lakh.

    **Disclaimer: Standard premium for 24-year old healthy male, non-smoker, 25 years policy term,25 year premium payment term (exclusive of GST) for Max Life Smart Secure Plus Plan (UIN:104N118V06) with a life cover of Rs. 75 lakh.

    **Disclaimer: Standard premium for 24-year old healthy male, non-smoker, 25 years policy term,25 year premium payment term (exclusive of GST) for Max Life Smart Secure Plus Plan (UIN:104N118V06) with a life cover of Rs. 1.5 Cr.

    **Disclaimer: Standard premium for 24-year old healthy male, non-smoker, 25 years policy term,25 year premium payment term (exclusive of GST) for Max Life Smart Secure Plus Plan (UIN:104N118V06) with a life cover of Rs. 2 Cr.

    **Disclaimer: Standard premium for 24-year old healthy male, non-smoker, 25 years policy term,25 year premium payment term (exclusive of GST) for Max Life Smart Secure Plus Plan (UIN:104N118V06) with a life cover of Rs. 5 Cr.

    **Our Life insurance policies cover COVID-19 life claims under life insurance claims, are subject to applicable terms and conditions of the policy contract and extant regulatory framework.

     

    Disclaimer~*Standard premium for 24-year old healthy female,non-smoker, 25 years policy term, 25 year premium payment term (exclusive of GST) for Max Life Smart Secure Plus Plan (UIN:104N118V06)

    ~^Disclaimer: 5 year return (CAGR – Compound Annualised Growth Rate) from Max Life High Growth Fund (ULIF01311/02/08LIFEHIGHGR104) as on 31/05/2023| 2Nifty Midcap Free Float 100% (5-year return) | For more details on risk factors, terms and conditions and products offered.

    ^~The assumed rates of return (4% p.a. and 8% p.a.) shown in the illustrative example are not guaranteed and they are not the upper or lower limits of what you might get back. The value of your policy depends on a number of factors including future investment performance. The amount shown is for a 30-year-old healthy male, with 10 years premium payment term, and 35 years policy term with Max Life Online Saving Plan (Unit Linked Non Participating Individual Life Insurance Plan | Life Insurance is available in this product).

    **Disclaimer | Max Life Smart Secure Plus Plan. A Non Linked Non Participating Individual Pure Risk Premium Life Insurance Plan. | **Standard Premium for 24 Year Old Healthy Female, Non-smoker, 25 Years Policy Term, 25 Year Premium Payment Term (exclusive of GST) for Max Life Smart Secure Plus Plan. | For Male, the Total premium to be paid in 25 years is Rs.2.09 lakhs (exclusive of GST). ~As compared to the similar modal points of Male, Female has to pay Rs.13,800 lesser premium than male for the entire policy term (exclusive of GST).

    ~3Disclaimer: A 35 year old female opting for a life cover of Rs. 1 Cr till the age of 75 years pays Rs. 3,319 monthly for 10 years while a 35 year old male will pay Rs. 4,168 monthly for 10 years

    7Disclaimer : Rs. 1,00,29,587 after 14 years at policy maturity on monthly investment of Rs. 16,600 for 12 years for 30 year old male with Max Life Smart Wealth Plan – Long Term Variant. A non-linked non-participating individual life insurance savings plan. The guaranteed benefits are applicable only if all due premiums are paid. Total premiums paid is exclusive of GST. Life Insurance is available in this product. ARN: WP/SWP/250723.

    Disclaimer: ~10 year CAGR of Nifty SmallCap 250 Quality50 index as on 24/07/2023. Max Life Nifty Smallcap Quality Index Fund is passively managed Index fund that tracks the Nifty SmallCap 250 Quality50 index (subject to tracking error).