| What is a Fund of Funds (FoF) Mutual Fund scheme ? Posted: 13 Dec 2011 05:01 AM PST A scheme that invests primarily in other schemes of the same mutual fund or other mutual funds is known as a FoF scheme. An FoF scheme enables the investors to achieve greater diversification through one scheme. It spreads risks across a greater universe. --------------------------------------------- Buy Mutual Funds Online by selecting the Mutual Fund Schemes. Invest in Mutual Funds Online Mutual Funds Online Download Mutual Fund Applications / Forms from all AMCs: Download Mutual Fund Applications  |
| HDFC Gold Exchange Traded Fund — A Gold Exchange Traded Fund Posted: 13 Dec 2011 02:52 AM PST HDFC Mutual Fund "HDFC Gold Exchange Traded Fund", an open ended Gold Exchange Traded Fund (ETF). The minimum investment amount of the scheme is Rs 5,000. Investment Objective — HDFC Gold Exchange Traded Fund The investment objective of the Scheme is to generate returns that are in line with the performance of gold (and gold related instruments including derivatives, subject to tracking errors HDFC Gold Exchange Traded Fund – Asset Allocation The scheme will invest 90 –100 percent in gold bullion with medium to high risk profile. The scheme is also likely to invest up to 10 percent in debt securities and money market Instruments with low risk profile. Load Structure of HDFC Gold Exchange Traded Fund The scheme will not charge any entry and exit load. The scheme will be benchmarked against domestic price of physical gold. Minimum investment — HDFC Gold Exchange Traded Fund An investor has to invest a minimum of Rs 5000 and any amount thereof. The face value
is Rs. 100 and it will be issued at a premium equivalent to the difference between the allotment price and the face value. Each unit is approximately equal to one gram of gold. Fund Manager of HDFC Gold Exchange Traded Fund Mr Anil Bamboli is the fund manager of HDFC Gold Exchange Traded Fund. He has over 14 years of experience in Fund Management and research. He has rich experience in managing income schemes and equity schemes. Investment rationale — HDFC Gold Exchange Traded Fund Investors, who missed the opportunity to invest in gold, can invest in HDFC Gold Exchange Traded Fund. Many analysts still feel that lot of steam is still left for upward price movement in gold.  |
| What are the different types of mutual fund schemes ? Posted: 13 Dec 2011 12:46 AM PST Schemes according to Maturity Period:
A mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity period.
Open-ended Fund/ Scheme
An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis. These schemes do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices which are declared on a daily basis. The key feature of open-end schemes is liquidity.
Close-ended Fund/ Scheme
A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis.
Schemes according to Investment Objective:
A scheme can also be classified as growth scheme, income scheme, or balanced scheme considering its investment objective. Such schemes may be open-ended or close-ended schemes as described earlier. Such schemes may be classified mainly as follows:
Growth / Equity Oriented Scheme
The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.
Income / Debt Oriented Scheme
The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations.
Balanced Fund
The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 40-60% in equity and debt instruments. These funds are also affected because of fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds.
Money Market or Liquid Fund
These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money, government securities, etc. Returns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods.
Gilt Fund
These funds invest exclusively in government securities. Government securities have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes.
Index Funds
Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc These schemes invest in the securities in the same weightage comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as "tracking error" in technical terms. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme.
There are also exchange traded index funds launched by the mutual funds which are traded on the stock exchanges. --------------------------------------------- Buy Mutual Funds Online by selecting the Mutual Fund Schemes. Invest in Mutual Funds Online Mutual Funds Online Download Mutual Fund Applications / Forms from all AMCs: Download Mutual Fund Applications  |
| Baroda Pioneer Mutaul Fund FMP 90 Day Posted: 12 Dec 2011 10:23 PM PST Baroda Pioneer Mutual Fund has extended the new fund offer (NFO) period of Baroda Pioneer 90 Day FMP-Series 5. Now, the NFO will close on December 19, instead of December 12.  |
| Can a mutual fund change the nature of the scheme from the one specified in the offer document? Posted: 12 Dec 2011 09:18 PM PST Can a mutual fund change the nature of the scheme from the one specified in the offer document? Answer is Yes. However, no change in the nature or terms of the scheme, known as fundamental attributes of the scheme e.g.structure, investment pattern, etc. can be carried out unless a written communication is sent to each unitholder and an advertisement is given in one English daily having nationwide circulation and in a newspaper published in the language of the region where the head office of the mutual fund is situated. The unitholders have the right to exit the scheme at the prevailing NAV without any exit load if they do not want to continue with the scheme. The mutual funds are also required to follow similar procedure while converting the scheme form close-ended to open-ended scheme and in case of change in sponsor.  |
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