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Australian universities are a dream for many students aspiring to do higher education overseas. According to QS world rankings 2022, Australia’s 7 universities make it to the list.   As per Top University’s stats, “A 4-year degree in Australia costs up to $ 45000.”   The tuition fee varies between 30000 AUD - 50000 AUD a year, which is the average cost. Depending on the course and the university, tuition fees may differ. However, the tuition and living costs are comparatively high depending on individual circumstances.  As a parent, you must worry about overseas study costs. Here are the best ways to save and finance your child's Australian dream.  What are the estimated costs for studying a course in Australia? Degrees in Australia Approximate costsEnglish Language Study AUD 18,240/YearVocational Education Up to AUD 28,500/YearUG (Undergraduate Degree) Up to AUD 45,000/YearPG (Post-Graduation) Around AUD 48,000/Year Doctoral DegreeAround AUD 48,000/Year  How to plan finances for your child’s education in Australia?  So, these are some estimated costs of studying in Australia. The expenses differ according to the course chosen. Given the cost, here is how you can finance the child’s tuition fee and living expenses in Australia.  1. Applying for a scholarship  Every university aspires to nurture talents from around the world and to encourage students; universities offer scholarships based on merit. Students should keep a keen eye on such scholarships and apply for them. An eligible student may be able to cover their tuition fees throughout the course by getting the scholarship.  2. Applying for personal loans  The parent can apply for personal loans if a student does not qualify for funds, scholarships, or grants through different sources. Personal loans are easy to prepare for and have competitive interest rates. You can manage it feasibly by splitting the repayments. Such loans may be a good option for average students pursuing higher education at Australian universities.  Bachelor's for Australia Read More 3. Work while studying  In Australia, one can quickly get a part-time job that pays hourly. It will help the student financially but also help gain exposure to the different industries and how they function.  Students can work for different paid internships, apprenticeships, and as a trainee for other firms to fund their daily expenses and tuition fees.   4. Check out student loans   Student loans are high-interest loans taken for the specific purpose of funding overseas education. You can apply for these loans through lenders, the government, or financial institutions.  Eligibility criteria for student loans:  The applicant must be an Indian citizen.  The age must be 18 years, or their parents will have to take the loan on their behalf.  Admission confirmation from an Australian university is required.  The candidate must enroll in a course recognized by the funding institution, such as a job-oriented degree, diploma courses, etc.  The student/parent should keep up with the terms of the loan/loans and their tenure. They must assess the best option available. One can take student loans for a longer duration ranging from 10-20 years.  Expenses covered under the student loan include:  Tuition fees for the course.  Cost of accommodation of student.  Purchase books, laptops, and stationery as needed.  Other such expenses as required to complete the course.  Cost of study tours, project work, etc  5. Minimize the risk of investments  If you have been investing in your child's Australian dream for a long time, safeguard it. Shift these investments to a minimal-risk fund like an FD (Fixed Deposit) towards the last stages of the investment horizon. You can also switch to a savings account. It ensures safety and provides interest in your money.  How do I apply for an education loan? What documents do you need?  If you want to finance your child's education, make sure you have these documents:  Admission letter from the university  Study-related documents  Candidate's PAN number  Statements of the guarantor, borrower, or student's account  A copy of the income proof of the parent or guarantor  Proof of assets  FAQs How can I fund my studies in Australia?   You can fund your studies in Australia through various means such as scholarships, grants, part-time work, student loans, and financial aid. Research available scholarships and grants, explore part-time job opportunities, and inquire about student loan options to cover tuition fees and living expenses during your study period.  Do I need proof of funds to study in Australia?   Yes, international students typically need to show proof of sufficient funds to cover tuition and living expenses in Australia.  How many funds required for Australia?  The funds required for studying in Australia vary depending on the course, location, and duration of study. Generally, you'll need to show sufficient funds to cover tuition fees and living expenses.  Conclusion These are some ways to finance your child's Australian dream. What is the best option for you? TALK TO AN EXPERT

Equity Linked Savings Schemes, also known as ELSS, are mutual fund investment plans that enable income tax reduction. They are also referred to be tax-saving funds for this reason. According to section 80c of the Income Tax Act, taxpayers may invest up to INR 1.5 lakh in certain stocks and deduct that amount from their taxable income. ELSS is one of the securities that has been legalized; other securities include PPF, postal savings such as NSC, tax-saving FDs, NPS, etc.  Features of ELSS mutual funds  Equity makes up a huge part of the portfolio of ELSS funds.  They all have mandatory lock-in periods, although theirs is the shortest at only three years.  You profit from tax savings in addition to capital growth from equity investment.  If you want a consistent income, you can choose dividend payouts, or you can choose growth for capital growth.  Entry or exit loads are not present in ELSS Mutual Funds.  Long-term returns from good ELSS Funds are in the 10 – 12% range, among the greatest of all financial vehicles in the tax-saving category. ELSS does, however, carry some risk.  Advantages of best ELSS mutual funds  Only 10% of the gains are taxed on earnings.  There is no upper investment limit.  The three-year lock-in period is the shortest of all Section 80C options.  Investors are not required to have extensive market understanding. The return on your investment is maximized by expert fund managers who have exceptional experience managing mutual funds.  The potential returns are significantly larger when comparing ELSS mutual funds to other tax-saving options like PPF or NPS Top 10 ELSS Mutual Funds Read More Who should invest in ELSS mutual funds?  A Hindu Undivided Family (HUF) or any individual may invest in ELSS. It is only appropriate for individuals who are knowledgeable enough, have the capacity for risk, and are committed to their investments over the long term. Young investors who are just starting their professional careers can make long-term investments. Young investors are the best candidates for ELSS since they have the time to fully harness the power of compounding and earn significant profits while saving up to Rs 46,800 in annual taxes. Options for investing in the best ELSS Mutual Funds  1. Growth Option  The holder won't get any benefits in the form of dividends under the growth option. Gains are received by the investor during redemption, which increases the profits by increasing the entire NAV. The one word of caution is that there is a market risk associated with the returns. It's possible that markets don't always favor investors.  2. Dividend reinvestments option  This is a choice whereby the investor reinvests dividends to raise the NAV. This is a wise move, especially if the market is performing well and is expected to do so in the future.  3. Dividend option  An investor who chooses this option receives timely advantages in the form of fully tax-free dividends. Only when there are excessive profits over and above are dividends issued.  Source: Pexels How to evaluate the best ELSS mutual funds  1. Fund returns  To check that the fund has remained stable over the years, compare its performance to that of its peer competitors. An investor can invest in the suggested funds based on these criteria.  2. Expense ratio  The expense ratio shows how much of your investment is used to manage the fund. Higher take-home returns were the result of a decreased expense ratio. It goes without saying that you should select the fund with the lower expense ratio.  3. Fund History  Select investment companies with a track record of steady performance over a lengthy period, such as five to ten years. Based on its benchmark and the caliber of the equities in its portfolio, a fund's performance is represented. A fund will provide significant returns if it outperforms its benchmark or if the stocks perform better.  4. Financial Parameters  To analyze a fund’s performance, consider a number of criteria, including Standard Deviation, Sharpe ratio, Sortino ratio, Alpha, and Beta. A fund that has a higher beta and standard deviation is riskier than one that has a lower beta and deviation. Because they give better returns for each additional risk you take, choose funds with a higher Sharpe ratio.  Building trust in the fund is mostly dependent on the fund manager. The fund manager is crucial because choosing the right stocks and building a solid portfolio are what enable the fund to generate high returns. Their competency skills and experience help to build confidence in this regard. Why do you invest in ELSS Funds? Read More Best ELSS Funds to Invest in 2023 Fund Name and their 3-Year Compound Annual Growth Rate (3Y CAGR) Fund Name 3-Y CAGR Quant Tax Plan 33.6% Bank of India Tax Advantage Fund Eco 24.4% Bank of India Tax Advantage Fund 23.8% Union Long-Term Equity Fund 20.6% Canara Robeco Equity Tax Saver fund 20.2% UTI Long-Term Equity Fund 19.3% Mirae Asset Tax Saver Fund 19.2% DSP Tax Saver Fund 18.5% UTI Long Term Equity Fund 17.8% Kotak Tax Saver Scheme 17.1% Principal Personal Tax Saver Fund 16.8% Baroda ELSS 96 Plan A 16.3% SBI Magnum Long Term Equity Scheme 16.3% ICICI Prudential Long Term Equity Fund Tax Saving 15.5% Invesco India Tax Plan 15.1% Tata India Tax Savings Fund 15% Baroda BNP Paribas ELSS Fund 13.8% SBI Magnum Long-Term Equity Scheme 12.9% Nippon India Tax Saver ELSS Fund 12.7%  FAQs Are ELSS funds better than mutual funds?   ELSS funds are a type of mutual fund that invests primarily in equity, providing the potential for higher returns and tax benefits.  What are the advantages of ELSS over the tax-saver FD?  The advantages of ELSS (Equity Linked Savings Scheme) over tax saver Fixed Deposits (FDs) include the potential for higher returns due to equity investments, tax benefits under Section 80C with a limit of 1.5 lakh INR, and the opportunity for wealth creation through long-term equity market exposure.  What are the advantages of ELSS funds?   The advantages of ELSS (Equity Linked Savings Scheme) funds include the potential for higher returns due to equity investments, tax benefits under Section 80C of the Income Tax Act, and a lock-in period of three years, which encourages long-term investment.  TALK TO AN EXPERT

ICICI Prudential Mutual Fund is the second-largest asset management company in India. With over Rs 5 Lakh crore, the AMC is among the most trusted names in the mutual fund space. ICICI offers products across asset classes. https://www.youtube.com/watch?v=tdwqQH0xkFw ICICI Prudential India Opportunities Fund Investment Objective The scheme's primary objective is to generate long-term capital appreciation by investing in opportunities presented by special situations such as corporate restructuring, Government policy and/or regulatory changes, companies going through temporary unique challenges, and other similar instances.  Investment Process   Concentrated portfolio: The scheme would take concentrated exposure to high-conviction stocks.  Market cap and sector Agnostic: The scheme has the flexibility to invest across market caps. Also, the scheme may take aggressive sectoral positions.  Bottom-up Approach: The investing style is a bottom-up stock picking style because the core of its investment strategy is identifying companies in special situations requiring rigorous 360-degree stock research.  Portfolio Composition  The fund had invested more than 66.49% of the funds in large-cap companies, 28.94% in mid-cap companies, and the remaining 4.57% in small-cap companies. Also, the fund is diversified across various sectors such as Pharma & Biotechnology, Automobiles, Banks, Telecom-Services, Finance, etc. The top five sectors hold approximately half of the portfolio. Note: Data as of 30th June. 2023. Source: ICICI Pru AMC, Value Research  Top 5 Holdings Name Sector Weightage % Oil and Natural Gas Corporation Ltd. Oil 9.03 Sun Pharmaceutical Industries Ltd. Pharma and Biotech 7.76 Bharti Airtel Ltd. Telecom Services 6.76 NTPC Ltd. Energy 6.40 Infosys Ltd. Information Technology 5.40 Note: Data as of 30th June 2023. Source: ICICI Pru AMC Performance Since Inception  If you had invested 10,000 at the fund's inception, it would now be valued at Rs 22,240. Note: Fund performance as of 30th June 2023 since launch; Inception Date:15th January 2019.  Source: icicipruamc.com  The fund has performed consistently and has generated an annualized return of 19.64% since inception. The fund has outperformed both benchmarks consistently.  Invest in Fund Fund Manager  Mr. Sankaran Naren and Mr. Roshan Chutkey ably manage the fund. Mr. Sankaran Naren has over 31 years of experience, and Mr. Roshan Chutkey has over 14 years of experience.  Who Should Invest?  The scheme is suitable for investors with an appetite for volatility and who would like to benefit from taking concentrated stock bets. Investors looking to benefit from investment opportunities presented by special situations such as corporate restructuring, Government policy and/or regulatory changes, companies going through temporary unique challenges, or other similar instances face time to time may consider investing in the scheme.  Why Invest in ICICI Prudential India Opportunities Fund?  Special situations are unique situations that companies may face from time to time.   These situations present an investment opportunity to a fund manager who can foresee and interpret the implications of that opportunity.  ICICI Prudential India Opportunities Fund has performed consistently following this investment strategy.    Ideal Time Horizon  One should look at investing for a minimum of five years or more.  Investment through Systematic Investment Plan (SIP) may help tackle broader equity market volatility.  Conclusion  The scheme provides access to well-researched companies currently undergoing special situations and provides a higher return potential. This allows investors to generate high returns over the long term by taking aggressive risks. Also, the fund has consistently outperformed its benchmark. Hence, investors seeking to invest for a long-term time horizon to generate high returns with higher risk through exposure to the banking and financial sector can consider this fund.  DisclaimerThis is not recommendation advice. All information in this blog is for educational purposes only.

NAV or Net Asset Value refers to the price of the mutual fund at which an investor can buy or sell units of the mutual fund. The NAV of a mutual fund indicates its market value. Hence, one can view NAV and its current performance to assess the mutual fund's current performance to a certain extent. An investor can determine the fund value by identifying the percentage fluctuation in the mutual fund’s NAV.   A mutual fund house hires an accounting firm that calculates the net asset value of the mutual fund. According to the SEBI guidelines, mutual funds must display their NAV publicly by regularly updating them on the AMFI and AMC websites on business days.  How to calculate NAV for a mutual fund?  The formula to calculate the NAV of a mutual fund is:   Net Asset Value = [Total Asset Value— Expense Ratio] / Number of Outstanding units  In the above formula, the TAV refers to the mutual fund investment's market value and the accrued income, receivables less accrued expense, outstanding creditor debts, liabilities, etc.  The expense ratio refers to the fee you pay to the AMC for managing your investments. The expense ratio directly impacts the investors' returns. Direct plans offer a lower expense ratio while regular plans have a higher ratio. In direct plans, the investors manage their own investments by eliminating the middleman!  https://www.youtube.com/watch?v=6_0eNgRHRho Generally, there are two categories of mutual fund assets:  Scheme with fundamental liquid funds like cash  Securities which include bonds and stocks  When you subtract, you will get the net asset value when you subtract the overall expense ratio from its asset value. You can standardize the asset value for each unit by dividing it by the total outstanding units. This will give you the NAV. So, this is important to learn before calculating the mutual NAV using the given formula.  There is a difference between the total and net asset value of any mutual fund. The total asset value includes stocks, bonds, and cash. All of this is considered at the market value or the mutual fund's closing price. The total interest obtained from the fund, its dividends, and liquid assets includes the total asset value. Moreover, the outstanding debt to creditors, expenditures, or other liabilities is essential to the total asset value.  A mutual fund involves a variety of costs. The overall annual expenditures incurred by the mutual fund scheme are included in the expense ratio, which is deducted from the total asset value to determine NAV. Its management fees, operating costs, transfer agent fees, custodian and audit fees, as well as distribution and marketing expenditures, are all included in the expense ratio.  When is NAV calculated?  Since the price of the security, such as stock or bonds, fluctuates often, the NAV of a mutual fund cannot be determined during stock market hours. NAV can be determined after the trading day has ended and the closing bell has rung. It is determined using the fund's shares' daily closing prices. What do high and low NAV indicate?  The NAV of a fund does not indicate how costly or inexpensive it is. The NAV only informs you of a mutual fund scheme's current worth per unit. A high NAV could merely represent a mutual fund scheme's successful performance. It also suggests that the strategy has been in existence for a while.  Few distributors highlight the low NAV when offering new fund offers. They make the investors believe that a low NAV will give them a high return. But that’s where they mistake the NAV of the mutual fund with the company’s stock price. The low stock price indicates that it is available for a bargain price. However the same rule cannot be applied to the NAV of the mutual fund. So, basically, you cannot judge how cheap or expensive a fund is by its NAV value.   NAV impacts only the quantity of units you receive. You receive fewer units from a mutual fund scheme with a high NAV, but the value of your investment stays the same. The mutual fund's performance and your returns hold more value. Difference between NAV and stock price  Many investors tend to confuse the mutual fund's NAV with the stock market price. So, while you are investing in a mutual fund, you may think that a low net asset value would mean a low price; hence, it can be an excellent investment. But that's precisely where you can get wrong.  The market price of a company's stock and the NAV of a mutual fund is very different. Investors can purchase a firm's shares once it is listed on the stock market. The stock exchange lists the price of the company's shares. This indicates the price of the stock market price. The price of the company's shares is influenced by variables, including the demand-supply situation and the company's potential. As a result, the stock market price and book value are different. The market price of a unit does not exist for mutual funds. Units of mutual funds are purchased at book value. Thus, the book value of a unit equals the mutual fund's NAV. Misunderstanding about NAV  Needless to mention that quite a few investors fail to understand the working of NAV. Thus, there could be a high chance of making the wrong investment choices. Being an investor in a mutual fund, you need to properly understand how the NAV is connected to the fund's performance. Some of the common myths associated with NAV:  1. Schemes with low NAVs fall cheaper  Let's say you put the same amount of money into two mutual fund plans with the same portfolios. You will receive more mutual fund units from the plan with the lower NAV. However, this does not imply that it is less expensive.  So, when you want to get more units, it may not always get you the highest returns. Therefore, the net asset value is not the best measure to identify whether or not the funds are expensive or cheap.   2. Funds with higher NAVs are better investments  The example above demonstrates that whether the NAV is high or low doesn't matter. The returns of two mutual funds with the same portfolio will be the same.  The NAV on any particular day won't provide any information on a mutual fund's potential for growth. Instead, it would help if you researched the fund's NAV from recent times. You can predict how a fund will perform in the future by comparing these previous data points.  3. Book profits when the NAV rises  The NAV of a mutual fund should not be confused with the share price. When shares' prices increase, a stock trader sells them to make a profit. Mutual funds don't operate that way, though.  When the NAV rises, you can redeem fund units to leave an investment with promising long-term prospects. Additionally, you can keep hanging onto fund units whose NAVs are dropping or staying the same. Before redeeming any units, consider the fund's performance rather than just the NAV. It could be wise to keep investing in a fund if it performs well.  A mutual fund's book value is its NAV. When making a mutual fund investment, you should focus on the fund's performance rather than just its NAV. This may be accomplished by examining the fund's historical results.  FAQs How is NAV calculated with example?  Net Asset Value (NAV) of a mutual fund is calculated by dividing the total assets minus liabilities by the total outstanding units. For example, if a mutual fund's total assets are $10 million and it has 1 million outstanding units, the NAV would be $10 per unit ($10 million / 1 million units).  How is NAV per share calculated?   To calculate the Net Asset Value (NAV) per share of a mutual fund, divide the total net assets (assets minus liabilities) by the total number of outstanding shares or units of the mutual fund. The formula is: NAV per Share = (Total Net Assets) / (Total Outstanding Shares or Units)  What is the formula for calculating NAV?   The formula for calculating Net Asset Value (NAV) of a mutual fund is: NAV = (Total Assets - Total Liabilities) / Total Outstanding Units.  What is a good NAV for a mutual fund?  Suppose you are ready to invest in mutual funds and see that one has a NAV of 10 and another at 20. While you may want to opt for the former, it is good practice to consider factors like previous performance, AUM size, alpha, and beta.  How often is a NAV calculated?  After each trading day, an investment fund's NAV is determined using the closing market values of the securities in its portfolio. NAV for companies might be seen as being close to book value. Shares of a company or fund may trade in the market at prices that differ from its NAV.  Is low NAV better than high NAV?  NAV will only affect the number of units you will receive. High NAV may give you fewer units but the investment value remains unchanged. Therefore, a high or low NAV reveals nothing about your investment's future.  TALK TO AN EXPERT

Incorporated on December 10, 1999, HDFC Asset Management Company Ltd. is among India's most popular fund houses. HDFC Mutual Fund launched its first scheme in July 2000, and ever since it has been ambitious about offering a stable performance of funds across all the variants of schemes it offers. The HDFC Mutual Fund is managed by HDFC Asset Management Company (HDFC AMC) Limited.  Let us talk about the consumer product – HDFC Mid-Cap Opportunities Fund  https://www.youtube.com/watch?v=h0xun9aaj9s HDFC Mid-Cap Opportunities Fund  Investment Objective The primary objective is to provide long-term capital appreciation/income by investing predominantly in mid-cap companies.   Investment Process  To follow a stock-specific approach  Construct the portfolio on a bottom-up basis  Focus on good quality companies at acceptable valuations  Long-term orientation (resulting in low portfolio turnover)   Stick to the circle of competence  Portfolio Composition  The fund had invested 92.54% of its assets in equity & equity-related stocks, and significant sectoral exposure is to Finance, which accounts for roughly 11.89% of the portfolio. Note: Data as of June 30, 2023 Source: HDFC MF https://www.youtube.com/watch?v=UHYimOpW9Pw Top 5 Holdings  Name Weightage % Indian Hotels Company Ltd. 4.39 Cholamandalam Investment & Finance Co. Ltd. 3.66 Max Healthcare Institute Ltd. 3.65 Tata Communications Ltd. 3.58 Apollo Tyres Ltd.  3.30 Note: Data as of June 30, 2023. Source: HDFC MF  Performance    This Fund S&P BSE 150 MidCap TRI Equity: Mid Cap 1 Year 34.64% 24.82% 23.13% 3 Years 36.45% 33.34% 31.71% 5 Years 18.04% 16.83% 17.05% 10 Years 22.38% 20.17% 21.05% Note: Data as of June 30, 2023. Source: Value Research  Invest In Fund Fund Manager  Mr. Chirag Setalvad (Since June 28, 2014) has over 25 years of experience, of which 18 years in Fund Management and Equity Research and three years in Investment Banking. Before HDFC, he worked at New Vernon Advisory Services and started his career at ING Barings in India.   Who Should Invest in HDFC Mid-Cap Opportunities Fund?  Investors looking to generate higher returns by taking exposure to mid-cap equities can consider this fund. However, investors need to understand the aggressive risk exposure of this fund.  Why Invest in this Fund?  Opportunity to invest in a portfolio of predominantly mid-sized companies.  Aims to provide diversification to an investor’s overall equity mutual fund portfolio.  Experienced fund management and research teams with a track record of managing equity assets across market cycles.  Emphasis on risk management – portfolio diversification across stocks and sectors; focus on good quality businesses.  One of the largest funds in the mid-cap category with a track record of more than 15 years.  Time Horizon  One should look at investing for at least three years or even more.  Investment through Systematic Investment Plan (SIP) may help in tackling the volatility of the broader equity market.  Conclusion  The HDFC Mid-Cap Opportunities Fund has a proven track record of over 15 years, with an Asset Under Management of ₹42,731.64 Cr as on  June 30, 2023. The fund has consistently outperformed both the benchmarks and the category average also. Therefore, investors looking to generate wealth over the long term can consider this fund with an understanding of high risk.   DisclaimerThis is not recommendation advice. All information in this blog is for educational purposes only.

UTI is one of the pioneers of the Indian Mutual Fund Industry. With an AUM of more than Rs 2.4 Lakh crore, the AMC is among the most trusted names in the mutual fund space. The UTI Mutual Fund offers products across asset classes. https://www.youtube.com/watch?v=tdwqQH0xkFw UTI Nifty50 Equal Weight Index Fund  Investment Objective The investment objective of the scheme is to provide returns that, before expenses, correspond to the total return of the securities as represented by the underlying index, which is Nifty50 Equal Weight TRI, subject to tracking error.  Investment Process   UTI Nifty50 Equal Weight Index Fund follows a passive style of investing; that is, it invests in all the companies forming part of the Nifty50 Equal Weight Index (the underlying index) in the same proportion of the underlying index to earn a return as much as the underlying index, before expenses.     Portfolio Composition  The scheme had invested 98.52% of its assets in equities, and the remaining were cash and cash equivalents as of June 30, 2023. The scheme had significant exposure to financial services, followed by Automobile and Auto Components and Information Technology.  Note: Data as of June 30, 2023. Source: UTIMF, Value Research  https://www.youtube.com/watch?v=mVTKhy6XJME Top 5 Holdings Name Sector Weightage % Sun Pharmaceuticals Industries Ltd. Healthcare 2.03% Infosys Ltd. Information Technology 2.02%  Bajaj Auto Ltd. Auto and Auto Components 2.02% Tata Motors Ltd. Auto and Auto Components 2.02% JSW Steel Ltd. Metals and Mining 2.02% Note: Data as of June 30, 2023. Source: UTIMF Performance Since Inception  If you had invested 10,000 at the fund's inception, it would now be valued at Rs. 10,242, whereas the benchmark (Nifty50 Equal Weight TRI) would have fetched Rs. 10,501. Since the fund was launched just a month ago, monitoring how the fund tracks the underlying index in the long term will be essential.  Note: Performance of the fund as on June 30, 2023, since launch; Inception Date – June 07, 2023. Source: utimf.com Invest in Fund Fund Manager Sharwan Goyal is Fund Manager and Head - Passive, Arbitrage, and Quant strategies at UTI AMC. He is a CFA Charter holder from CFA Institute, USA, and holds a post-graduate degree in Management (MMS) from Welingkar Institute of Management, Mumbai. He has over 16 years of experience in Risk Management, Equity Research, Portfolio Analysis, and Fund Management at UTI AMC.  Who Should Invest?  This product is suitable for investors who are seeking:  Capital Growth in tune with Index returns.  Passive investment in equity instruments comprised in Nifty50 Equal Weight TRI.  Why Invest?  The index offers exposure to the Top 50 large companies on the NSE with equal weight (~ 2% to each stock) with quarterly rebalancing.  The index aims to benefit from the growth opportunities across stocks/ sectors rather than just relying on the performance of a few heavy-weight stocks/sectors.  The index represents smart and intelligent investing through "Auto Quarterly Rebalancing" and thus enables "Auto Profit Booking."  Ideal Time Horizon  Ideal for investment with a time horizon of, preferably, five years or above   Investment through Systematic Investment Plan (SIP) may help in tackling the volatility of the broader equity market.  Conclusion  Investing by replicating Nifty50 Equal Weight TRI is a better approach to investing in large-cap companies. Historical data shows that the Nifty50 Equal Weight TRI has generated better returns than the Nifty 50 with lesser volatility. Therefore, this scheme suits investors looking for a simple yet smart way of investing in the Top 50 companies. However, monitoring how efficiently the fund tracks the underlying index over the long term will be crucial. DisclaimerThis is not recommendation advice. All information in this blog is for educational purposes only. 

Small-cap funds are flooded with funds. Investors are heavily pumping money into small-cap equities in the hope of high returns. Investors have put in more than Rs. 33,040 crores in small-cap funds from April-2022 till June-23. Net inflows in mutual funds It can be inferred from the data released by AMFI that the investors are taking aggressive bets by flocking into high-risk funds such as small-cap, mid-cap, and thematic funds. The reason behind such a huge increase in small-cap investments is the returns given by small companies in the recent past. Nifty 250 TRI Rolling Returns The average returns delivered by small-cap funds in the last 1 year is 30.92% compared to the average return of 20.96% of the large-cap funds. Clearly, the returns delivered by small caps are way higher than the large caps. But, what about the risk? Aren’t the small cap equities too risky compared to the large caps? Let us see what the data says.  Volatility in price As can be inferred from the above graphs, the returns delivered by small caps are well above the large caps and contrary to the general perception, the volatility in the prices is not significantly higher than the large caps. After looking at this, now the question arises whether investors should continue to invest in the small-cap funds, or should they hit a pause on investing in the small-caps and book some profits. Let us try to find out.  Valuations: The first parameter the investors look at is the valuation. Are the small-cap companies overvalued? Let us look at the P/E ratio.  Nifty small cap 250 PE Although P/E alone cannot be used to conclude whether the companies are overvalued or not, it can be used to get a quick idea about the relative valuations of the companies. And as can be seen in the above chart, the current state of P/E does not suggest that small-cap companies are extremely overvalued.  Small Cap Premium: In a paper titled “The Relationship Between Return and Market Value of Common Stocks,” Rolf W. Banz concluded that the common stocks of smaller firms outperformed the common stocks of larger firms on a risk-adjusted basis. Many have argued that the inference drawn in the said paper does not hold good in today’s world. However, this has always been the case for developing economies like India where smaller companies have outperformed the large caps by a significant margin.  India’s Growth Story: India is a developing nation, and we are growing at the fastest rate. Small-cap companies are expected to benefit disproportionately higher than large-cap companies from such high growth. The primary reason behind this is the smaller base of the small companies which translates into higher growth in relative numbers. And secondly, it becomes difficult for large companies to grow faster due to their large size.   Volatility: As seen earlier, the volatility of small-cap companies reduces significantly over a longer period. Hence, small-cap companies are not as volatile in the long run as we generally perceive.  Conclusion  Small-cap equities offer tremendous growth potential over the long term, especially in a growing economy like India. However, it is possible that investors might not see extremely high returns in the short term. But stopping investments based on this rationale implies nothing but trying to time the market and doing so may prove to be harmful if the markets do not correct. Hence it is advisable to continue to invest for the long term keeping in mind the said factors

Investing in the financial markets can be a daunting task, especially for those seeking stability and security in their investment choices. One popular investment option that often garners attention is the Systematic Investment Plan (SIP). SIPs allow investors to invest a fixed amount of money at regular intervals in various avenues such as mutual funds, trading accounts, or retirement accounts.  While SIPs offer numerous advantages, it is crucial to delve into their safety aspect to gain a comprehensive understanding. In this article, we will explore the safety of SIPs, analyzing the potential risks and benefits they entail. This will enable you to make well-informed investment decisions with a thorough understanding of the factors at play. https://www.youtube.com/watch?v=wEA3dKj7q5U Understanding SIPs and Dollar-Cost Averaging SIPs are a form of passive investment strategy that utilizes the concept of dollar-cost averaging (DCA). DCA is a technique where investors make periodic equal transfers of funds, ensuring they accumulate assets over time. By investing a fixed amount regularly, regardless of market conditions, investors benefit from averaging the purchase cost of units, thereby reducing the impact of market volatility. This approach is particularly advantageous for long-term investments as it allows investors to ride out short-term market fluctuations and make consistent investments without being influenced by market timing. Invest in Mutual Funds Market Risks and Returns While SIPs provide a disciplined approach to investing, it is important to recognize that they are not immune to market risks. Mutual funds, which are commonly associated with SIPs, are subject to market conditions, and their value can fluctuate. Therefore, the returns on SIP investments are not guaranteed. The value of mutual funds can go up or down depending on the market conditions, and investors may lose money if they redeem their units at a lower price than the purchase price. It is crucial for investors to be aware of the inherent risks associated with the market and approach SIPs with a long-term investment horizon to potentially mitigate the impact of short-term market fluctuations. Calculate SIP Returns Long-Term Perspective and Compounding Benefits SIPs are best suited for individuals with a long-term investment horizon. The power of compounding works in favor of those who stay invested for an extended period. Compounding refers to the ability of an investment to generate earnings on both the principal amount and accumulated returns. By staying invested for at least 5-7 years, investors can harness the full potential of compounding, allowing their investments to grow significantly over time. This long-term perspective helps investors overcome short-term market volatility and allows them to reap the benefits of gradual wealth accumulation through the compounding effect. https://www.youtube.com/watch?v=BIRf2Dm1wB8 Wealth Accumulation and Reconsidering Investment Plans As investors accumulate wealth through their SIPs, it becomes essential to periodically assess their investment plans. Reaching certain milestones or nearing retirement may prompt a reevaluation of investment strategies. While SIPs offer a passive approach, some investors might consider transitioning to actively managed investments at a certain point. Active management involves a more hands-on approach by investment professionals who aim to generate higher returns by actively adjusting investment allocations based on market conditions and opportunities. This transition can provide investors with the potential to further grow their wealth and achieve their financial goals. Conclusion SIPs serve as an excellent investment option for those seeking a disciplined approach to wealth accumulation. However, it is crucial to understand that SIPs are not entirely risk-free. The potential market risks and fluctuating returns make it essential for investors to adopt a long-term perspective and remain invested for extended periods to reap the benefits of compounding.  Monitoring the wealth accumulated through SIPs and periodically reevaluating investment plans can help investors make informed decisions to maximize their returns. By combining a comprehensive understanding of SIPs with diligent research and risk management, investors can navigate the financial markets more confidently and potentially achieve their financial goals. Remember, investing always carries inherent risks, and consulting with a financial advisor or professional is advised before making any investment decisions. Talk To An Expert

What is a mutual fund?  A mutual fund is an investment program that is expertly managed by Asset Management Companies (AMC), which act as middlemen for ordinary investors. The AMC collects funds from numerous individuals and invests them in bonds, money market instruments, equity shares, and other securities. According to the amount invested in the fund, a certain number of units are allocated to each investor in turn. In proportion to his investment in the fund, the investor shares the fund's gains, losses, income, and expenses.   The money of the investor will be managed by the fund manager in accordance with the scheme's stated investment goals. Capital growth is his objective. The fund manager's mission is to meet the investment objectives of the mutual fund scheme by the wise selection of financial instruments, which can result in capital growth or dependable income.   For instance, an equity mutual fund will invest in equities so that investors can benefit from long-term capital growth. The debt fund will invest in government assets to earn a larger return based on changes in interest rates as well as fixed-income securities to provide investors with a steady income. To provide a higher return on investment and safeguard the portfolio during a downturn in the stock market, the balanced fund will invest in a combination of equity and bonds/fixed income. What is a mutual fund calculator?  You may determine the returns from mutual fund investments using the mutual fund calculator, which is a simulation. If you make an investment in a lump sum or even via a SIP, you can figure out its maturity value.   Even before you invest the money, a mutual fund calculator is a simple-to-use tool that enables you to obtain a sense of the maturity value of the mutual fund investment. Given that you already know how much money you will receive upon maturity, it enables you to plan your spending and meet your financial objectives. To calculate the maturity amount for an estimated rate of return, input the SIP amount, duration, and frequency. How to calculate mutual fund returns? For instance, you made a one-time investment of 1 lakh rupees in a mutual fund program for 10 years. The rate of return on the investment, according to your calculation, will be 8% annually. The following formula can be used to determine the investment's future value:  Future Value = Present Value (1 + r/100)^n  Present Value (PV) = Rs 1,00,000  r = Estimated rate of return of 8% = 8/100 = 0.08  n = Duration of the investment which is 10 years.  At maturity or after 10 years, you must determine the Future Value (FV) of the mutual fund investment.  FV = 1,00,000 (1+8/100)^10  FV = Rs 2,15,892.5.  Hence, at an estimated return of 8%, the future value of the mutual fund investment after 10 years is Rs 2,15,892.5.  Source: Pexels The mutual fund calculator can also be used to determine the maturity value of SIP investment.  Use the formula:  FV = P [(1+i)^n-1]*(1+i)/i  FV = Future value or the amount you get at maturity.  P = Amount you invest through SIP  i = Compounded rate of return  n= Investment duration in months  r = Expected rate of return  For instance, you might use a SIP to invest Rs 1,000 each month in a mutual fund scheme. The investment has a 10-year term and an expected annual return rate of 8%.   You have I = r/100/12 = 8/100/12 = 0.006667. (You must multiply the rate of return by 12 to get the monthly amount.) Additionally, you have n = 120 months or 10 years.  FV = 1,000 [(1+0.006667)^120 – 1] * (1+ 0.006667)/0.006667  FV = Rs 1,84,170.  So, at an estimated rate of return of 8%, the future value of a SIP investment of Rs 1,000 each month for 10 years is Rs 1,84,170.  How to compare two mutual funds? Read More Nature of investment (SIP/Lumpsum)  Money can be invested in mutual funds in two different ways. You have the option of making a lump-sum investment or a SIP.  1. Lump-sum investment You are allowed to invest a substantial amount of your available funds in the mutual fund plan of your choice. The profit from the sale of an asset or an inheritance can also be invested. The risk is increased when investing a lump sum, though. It is therefore always advised to use the SIP method.  2. Systematic investment plan (SIP)   In a Systematic Investment Plan, you tell the bank to take a set amount each month out of your savings account and invest it in a mutual fund plan. You won't have to worry about waiting until the ideal moment to enter the market because you can buy units continuously with this method. Additionally, you can profit from rupee cost averaging and take advantage of compounding. FAQs What is the formula for ROI calculation?   The formula for ROI (Return on Investment) calculation is:  ROI = (Net Profit / Cost of Investment) x 100.  How to make 5 crore in 5 years?  Making 5 crores in 5 years is a challenging financial goal that typically requires significant investment, entrepreneurship, or successful business ventures. It may involve high-risk investments, real estate development, or starting a profitable business. Success is not guaranteed, and careful planning and risk assessment are crucial. Consult with financial experts for personalized advice.  How do you calculate 100% ROI?  To calculate a 100% ROI, you need to double your initial investment. The formula for ROI is:  ROI = (Net Profit / Cost of Investment) x 100  If the ROI is 100%, it means that the net profit is equal to the cost of investment. In other words, you have earned back the entire amount of your initial investment, resulting in a 100% return on your investment.  TALK TO AN EXPERT

ICICI Prudential Mutual Fund is the second-largest asset management company in India. With over Rs 5 lakh crore, the AMC is among the most trusted names in the mutual fund space. It offers products across asset classes. Let us talk about the flagship product – ICICI Prudential Midcap Fund.  https://www.youtube.com/watch?v=iK748JVOU08 ICICI Prudential Midcap Fund   Investment Objective The scheme's primary objective is to seek to generate capital appreciation by actively investing in diversified mid-cap stocks.  Investment Process   Diversification: The scheme aims at maintaining a well-diversified portfolio with the flexibility to invest across sectors.  Opportunistic Investment: The scheme shall follow a bottom-up approach in identifying midcap companies with proven products or services and above-average earnings growth. Midcap companies can deliver capital appreciation due to faster earnings growth.  Portfolio Composition  As per its investment objective, the equity exposure is majorly in mid-cap stocks at around 81%, and large and small cap had exposure of roughly 15% and 4%, respectively. The fund is well diversified across various sectors such as Auto Components, Cement & Cement Products, Industrial Products, Ferrous Metals, Realty, etc. The top 5 sectors hold nearly 44% of the portfolio. Note: Data as of 30th June 2023.Source: ICICI Pru AMC Top 5 Holdings for ICICI Prudential Midcap Fund   Name Sector Weightage % Hindustan Petroleum Corporation Ltd. Petroleum Products 4.52 Balkrishna Industries Ltd. Auto Components 4.00 Jindal Steel & Power Ltd. Ferrous Metals 3.26 Lupin Ltd. Pharma and Biotech 3.01 Minda Industries Ltd. Auto Components 3.00 Note: Data as of 30th June 2023. Source: ICICI Pru AMC Performance Since Inception  If you had invested 10,000 at the fund's inception, it would now be valued at Rs 181,040.  Note: Fund performance since launch; InceptionDate – 28th October 2004. Source: icicipruamc.com Since its inception, the fund has given consistent returns by generating a CAGR (Compounded Annual Growth Rate) of 16.65%.  Invest In Fund Fund Manager  The fund is ably managed by Mr. Lalit Kumar, who has 14 years of experience and manages seven funds.  Who Should Invest?  The scheme is suitable for investors who wish to invest in companies in the midcap space that are likely to transform into tomorrow's market leaders over a long period of time.  Why Invest?  The scheme offers diversification to investors looking to invest across various sectors.   The scheme provides access to well-researched mid-cap companies with a higher return potential and could grow to become tomorrow's market leaders in their respective segments.   Ideal Time Horizon  One should look at investing for a minimum of five years or more.  Investment through Systematic Investment Plan (SIP) may help tackle broader equity market volatility.  Conclusion  The scheme provides access to well-researched mid-cap companies with a higher return potential and could grow to become tomorrow's market leaders in their respective segments. However, the fund has underperformed its benchmark. Hence, investors need to remain invested long-term to witness alpha generation. 

Previously we discussed the Top 10 large-cap mutual funds and mid-cap mutual funds in this article, we will discuss the top 10 small cap mutual funds in India. A small-cap mutual fund is a fund that invests majorly in small-cap companies as per market capitalization. As per SEBI regulations, a small-cap fund is required to invest a minimum of 65% of its assets in small-cap companies through equity. https://www.youtube.com/watch?v=DE-WJ24C1R8 Advantages: Attractive Valuation: Small-cap funds invest in small-cap companies majorly, so there are various companies that are available at cheaper and attractive valuations. Very High Growth Potential: Companies in these funds have very high growth potential because of their size and flexibility to change. The companies have the potential to become mid & large-cap companies in the future. Top 10 small-cap mutual funds S.No.Fund Name3-Yr Annualized Performance1Quant Small Cap Fund Direct Plan-Growth40.21 %2Bank of India Small Cap Fund Direct-Growth34.65 %3Canara Robeco Small Cap Fund Direct-Growth34.26 %4Kotak Small Cap Fund Direct-Growth31.30 %5Edelweiss Small Cap Fund Direct-Growth29.93 %6Nippon India Small Cap Fund Direct Plan Growth Plan29.19 %7Union Small Cap Fund Direct-Growth29.14 %8Tata Small Cap Fund Direct-Growth28.25 %9ICICI Prudential Small Cap Fund Direct Plan-Growth27.38 %10Axis Small Cap Fund Direct-Growth27.28 %Note: Data as of July 16, 2022Source: Morningstar https://www.youtube.com/watch?v=TIFEdoSEzC8 1. Quant Small Cap Fund Direct Plan-Growth - Small cap mutual funds Fund analysis: The fund has delivered an exceptionally good performance. The fund is investing predominantly in small-cap companies. The fund is rated 5-star by Morningstar. The risk grade is high, and the returns grade is high. The fund follows a blended style of investing. The risk is spread across companies with the top 10 holdings consisting of 38.96%. The fund has a high risk (measured by standard deviation) than the category average. ProsConsA top performer in its category. The fund captured the market well when it was rising.Volatility is very high. 2. Bank of India Small Cap Fund Direct-Growth - Small cap mutual funds Fund analysis: The fund is rated 5-star by Morningstar. The risk grade is below average, and the returns grade is high. The fund has a beta of 0.84 indicating that the movement of the fund is less relative to the market movement. The fund follows a growth style of investing. The fund has a low risk (measured by standard deviation) than the category average. ProsConsRisk Grade is below average. Well-diversified portfolio.The fund has a high expense ratio. 3. Canara Robeco Small Cap Fund Direct-Growth - Small cap mutual funds Fund analysis: The fund has outperformed the benchmark over different horizons. The risk grade is average and the returns grade is high. The fund has a well-diversified portfolio invested across market capitalization. The top 10 holdings consist of a total of 22.88%. The fund is rated 5-star by Morningstar. The fund holds a good risk-to-reward ratio. The fund has low risk (measured in standard deviation) than the category average. ProsConsThe fund captured the market well when it was rising. Fund captured the market well when it was falling.Less exposure to small-cap stocks. 4. Kotak Small Cap Fund Direct-Growth - Small cap mutual funds Fund analysis: The fund has outperformed the category average in terms of trailing returns over different horizons. The risk grade is above average and the returns grade is above average. The fund has a beta of 0.95 indicating that the movement of the fund is quite closely relative to the movement of the market. The fund has a well-diversified portfolio of growth stocks consisting of 72 companies spread over different sectors and market-cap companies. The fund has a high risk (measured in standard deviation) than the category average. ProsConsThe fund has a favorable expense ratio. Fund captured the market well when it was falling.Too much diversification may hamper the returns. 5. Edelweiss Small Cap Fund Direct-Growth - Small cap mutual funds Fund analysis: The fund has outperformed the category and the benchmark with good margins. The risk grade is below average and the returns grade is above average. The fund has delivered consistent returns over different horizons and has a well-diversified portfolio of 75 growth stocks, investing across market capitalization. The fund has low risk (measured in standard deviation) than the category average. ProsConsThe fund captured the market well when it was falling. Relatively less downside risk.Returns are above average. 6. Nippon India Small Cap Fund Direct Plan Growth Plan - Small cap mutual funds Fund analysis: The primary objective of the scheme is to generate long-term capital appreciation by investing predominantly in small-cap companies and the secondary objective is to generate consistent returns by investing in debt and money market securities. The risk grade is above average and the returns grade is above average. The fund has a well-diversified portfolio across market capitalization and sectors. The fund has a high risk (measured in standard deviation) than the category average. ProsConsConsistent compounder. The fund captured the market well when it rose.The fund has a high expense ratio. Source: pixabay 7. Union Small Cap Fund Direct-Growth - Small cap mutual funds Fund analysis: The fund is rated 3-star by Morningstar. The risk grade is below average and the returns grade is above average. The fund has a well-diversified portfolio across market capitalization and sectors. The top 10 holdings of the fund consist of 29.08% only and the fund holds a total of 54 stocks in the portfolio. The fund has low risk (measured in standard deviation) than the category average. ProsConsFund captured the market well when it was rising. The fund captured the market well when it was falling.The fund has a high expense ratio. 8. Tata Small Cap Fund Direct-Growth - Small cap mutual funds Fund analysis: The fund has outperformed the category average marginally. The risk grade is low and the returns grade is above average. The fund has a beta of 0.86 indicating that the fund’s movement is less relative to the market movement. The fund has low risk (measured in standard deviation) than the category average. ProsConsWell-diversified portfolio.Relatively low risk.Fund was not able to capture the market well when it was rising. 9. ICICI Prudential Small Cap Fund Direct Plan-Growth - Small cap mutual funds Fund analysis: The fund’s objective is to seek to generate capital appreciation by predominantly investing in small-cap stocks. The risk grade is above average and the returns grade is average. The fund is rated 3-star by Morningstar. The fund has a balanced approach towards investing by investing in aggressive stocks along with maintaining less downside. The fund has a high risk (measured in standard deviation) than the category average. ProsConsThe fund has high exposure to small-cap companies. Stable returns.Exit Load of 1% before 1-Yr. 10. Axis Small Cap Fund Direct Plan-Growth - Small cap mutual funds Fund analysis: The fund is giving consistent returns over the long term with an attractive risk-to-reward ratio. The fund is 5-star rated by Morningstar. The risk grade is below average and the returns grade is above average. The fund has a beta of 0.80 indicating that the movement of the portfolio has very less relation to the market movement. The fund has outperformed the category and the benchmark. The fund has low risk (measured in standard deviation) than the category average. ProsConsAttractive risk-to-reward ratio.Consistent performer.Fund was not able to capture the market well when it was rising. 3 ETFs in Small Cap Category Read More Features of Small Cap Mutual Funds Here are the features of small-cap mutual funds:   Invest in small-cap companies: Small-cap mutual funds invest primarily in small-cap companies. This is the most important feature of this type of mutual fund. These companies are new players with high potential, high risk, and high returns. The growth horizon of these funds is higher than those of mid-cap or large-cap mutual funds.  High Risk: A big feature of small-cap mutual funds are risky funds when compared to large and mid-cap funds. This is because these companies are new and   High Returns: Small-cap mutual funds can yield high returns. This is because small-cap funds invest in small-cap stocks that have the potential to beat the market and inflation. These funds experience high returns during a bull market and have the potential for extreme lows during a market fall.  Investment Horizon: The time period of investing in small-cap mutual funds is long-term. The minimum holding period is 7 years so that you can divide your risks and manage the market volatility that comes with small-cap mutual funds.   Volatile: Small-cap mutual funds are volatile in nature. They have the potential to provide high returns at high risk. They can be more sensitive to market upheavals than mid-cap or large-cap mutual funds.   Benefits of investing in top small-cap mutual funds  High growth: The biggest benefit of investing in small-cap mutual funds is the high growth. Small-cap companies are new players and are in the early stages of growth. They have a higher growth potential than others and can be beneficial for new investors.   Low pricing: Small-cap mutual funds have stocks that are priced well and have the potential of giving high returns. These stocks are new to the market and not actively followed, hence they are priced well and investors have the benefit of taking them on early.   Add diversity: Investing in small-cap mutual funds adds diversification to one’s portfolio. They are volatile, have high potential growth, and help with boosting one’s overall growth.   High returns: The greatest benefit of investing in small-cap mutual funds is the potential of maximizing high returns. Long-term investing: Small-cap mutual funds are seen as long-term funds. Investors are advised to take invested for 7 years minimum to balance out the risks taken during market falls.   SIP and lumpsum option: Another benefit is the flexibility of investing. You can invest in a lumpsum manner or as a SIP investor every month. This means whether you are a small or big investor, risk-averse or not, you can reap the benefits of investing in small-cap mutual funds.  Tax benefits: By investing in small-cap mutual funds for more than one year, your capital gains are under Long Term Capital Gain. Thus, LTCG of up to Rs. 1 lakh is not taxed and any gains above this amount are taxed at 10% without indexation!    Taxability of Small cap mutual funds   The taxability of small-cap mutual funds depends on the exposure and time horizon. An equity mutual fund has an equity exposure of greater than 65%. For equity mutual funds, if the gains have been realized within 12 months of holding, then the applicable tax rate is flat at 15% on the gains (irrespective of your income tax bracket).    When the holding period exceeds 12 months, the capital gains of Rs. 1,00,000 are exempt from taxes. Any amount upwards of Rs. 1,00,000 is taxable at 10%, along with the provision of indexation benefits.   For debt mutual funds (funds with greater than 65% exposure to debt instruments) – the holding period is considered short-term if it is less than 36 months; anything more than that is long-term.   For the short term, the tax rate is in accordance with your income tax slab. On the other hand, for debt funds held for more than 36 months, the gains are taxable at a flat rate of 20% post-indexation (plus, some cess and surcharge are added).   A possible third case is hybrid funds (funds with a mix of debt and equity) it is simple, their tax treatment is supposed to be on the basis of the fund’s exposure to debt and equity.   If the hybrid fund is equity-focused: LTCG is charged at 10% on capital gains exceeding Rs. 1 lakh (without indexation), and STCG is charged at 10%. If the hybrid fund is debt focused: LTCG is charged at 20% with indexation benefits, and STCG is charged per income tax slab.   Conclusion: For any investor who wants to create wealth over a long-term horizon by taking high risks, investing in fast-growing new-age companies. Investors investing in these funds should be cautious of high volatility during the investment journey FAQs Which mutual fund is best in the small-cap? Here are some of the best mutual funds in small cap category: Quant Small Cap Fund Direct Plan-Growth - Small cap mutual funds Bank of India Small Cap Fund Direct-Growth - Small cap mutual funds Canara Robeco Small Cap Fund Direct-Growth - Small cap mutual funds Kotak Small Cap Fund Direct-Growth - Small cap mutual funds Edelweiss Small Cap Fund Direct-Growth - Small cap mutual funds What are small-cap mutual funds? A small-cap mutual fund is a fund that invests majorly in small-cap companies as per market capitalization. As per SEBI regulations, a small-cap fund is required to invest a minimum of 65% of its assets in small-cap companies through equity. Is small-cap mutual fund safe? Small-cap mutual funds are risky investments. They have the potential of yielding high gains and high losses due to their sensitivity to market changes. Is a small cap good for SIP? Yes, you can invest in small-cap mutual funds via SIP. It is the best way to balance risk and stay invested for the long term. Which small-cap fund gives the highest returns? Quant Small Cap Fund Direct Plan-Growth - Small cap mutual funds What are the advantages of investing in small cap funds? Here are two main advantages of investing in small cap funds: Attractive Valuation: Small-cap funds invest in small-cap companies majorly, so there are various companies that are available at cheaper and attractive valuations. Very High Growth Potential: Companies in these funds have very high growth potential because of their size and flexibility to change. The companies have the potential to become mid & large-cap companies in the future. What are the taxability of small-cap mutual funds? The taxability of small-cap mutual funds depends on the exposure and time horizon. An equity mutual fund has an equity exposure of greater than 65%. For equity mutual funds, if the gains have been realized within 12 months of holding, then the applicable tax rate is flat at 15% on the gains (irrespective of your income tax bracket). TALK TO AN EXPERT Disclaimer:This is not recommendation advice, use it for educational purposes only. Mutual Fund investments are subject to market risks, read all scheme-related documents carefully. The NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market including fluctuations in the interest rates. The past performance of the mutual funds is not necessarily indicative of the future performance of the schemes.

Incorporated on December 10, 1999, HDFC Asset Management Company Ltd. is among India's most popular fund houses. HDFC Mutual Fund launched its first scheme in July 2000, and ever since it has been ambitious about offering a stable performance of funds across all the variants of schemes it offers. The HDFC Mutual Fund is managed by HDFC Asset Management Company (HDFC AMC) Limited.  Let us talk about the consumer product – HDFC Flexi Cap Fund  HDFC Flexi Cap Fund  Investment Objective The primary objective is to generate capital appreciation/income from a portfolio, predominantly invested in equity & equity-related instruments.   Investment Process  The fund follows the following approach to investing.  Focus on fundamentally strong companies with growth drivers in the medium to long term.  Focus on competitive position, corporate governance, and industry outlook.  Emphasis on valuation to assess risk-reward and provide a reasonable margin of safety.  A holistic approach to valuations without relying solely on traditional parameters like P/E or P/B.  Portfolio Composition  The fund had invested 90.85% of its assets in equity & equity-related stocks, 3.21% in real estate, and 5.94% in cash and cash equivalents. The significant sectoral exposure is to Banks, which account for roughly one-fourth of the portfolio. Note: Data as of June 30, 2023. Source: HDFC MF Top 5 Holdings  Name Weightage % ICICI Bank Ltd. 9.13 HDFC Bank Ltd. 5.62 State Bank of India Ltd. 5.28 Bharti Airtel Ltd. 4.71 Hindustan Aeronautics Ltd.  4.63 Note: Data as of June 30, 2023. Source: HDFC MF  Performance    This Fund S&P BSE 500 TRI Equity: Flexi Cap 1 Year 27.01% 18.66% 19.43% 3 Years 32.43% 24.46% 23.48% 5 Years 16.91% 13.71% 13.63% 10 Years 17.92% 15.33% 16.50% Note: Data as of June 30, 2023. Source: Value Research  Fund Manager  Ms. Roshi Jain (Since July 29, 2022) has over 17 years of experience in research and fund management. Before joining HDFC Asset Management Co Ltd in December 2021, she worked with Franklin Templeton India AMC Ltd. as a Vice President & Portfolio Manager. Ms Jain earned her Post Graduate Diploma in Management from the Indian Institute of Management, Ahmedabad, in 2002. She earned her Chartered Accountancy from the Institute of Chartered Accountants of India in 1998 with an All-India Rank 2. She is also a Chartered Financial Analyst (CFA) charter holder.   Who Should Invest in HDFC Flexi Cap Fund?  The fund is suitable for investors willing to invest across market cap. However, investors need to understand the aggressive risk exposure of this fund.  Why Invest in this Fund?  The fund provides an opportunity to invest in companies of various market caps.  Aims to provide diversification to an investor’s overall equity mutual fund portfolio.  Experienced fund management and research teams with a track record of managing equity assets across market cycles.  Emphasis on risk management – portfolio diversification across stocks and sectors; focus on good quality businesses.  One of the largest funds in the flexi-cap category.  Ideal Time Horizon  One should look at investing for at least three years or even more.  Investment through Systematic Investment Plan (SIP) may help in tackling the volatility of the broader equity market.  Conclusion  The HDFC Flexi Cap Fund has a proven track record of over 25 years, with an Asset Under Management of ₹36,345.36 Cr as on June 30, 2023. The fund has consistently outperformed both the benchmarks and the category average also. Therefore, investors looking to generate wealth over the long term can consider this fund with an understanding of high risk. 

In the previous article, we discussed CAGR in mutual funds. In this article, we will discuss what are index funds. If you are looking to benefit from the upward market movement, index funds are a great way to achieve that. Index funds are passive funds that follow specific market indices like the Bombay Stock Exchange or the National Stock Exchange of India. For instance, if an index fund is benchmarked against the BSE, its portfolio composition will mirror the holdings of the BSE. This implies that it invests in companies similar to BSE. This enables the index fund to move up and down as BSE does.   You must note that these funds are managed passively, and the fund manager simply replicates the movement and changing composition of the benchmark. No new research or analysis is brought in to evaluate whether investing in a certain company will help the fund in the long term.   Index funds are formulated and popularised on the basic premise that in the long run, stock markets will rise, and hence the index fund that closely mimics the original benchmark will also rise and bring growth to the investor portfolio. There are index funds that are benchmarked against different stock market indices and against different sectors. These give you the option to choose the segment of your interest. What makes index funds different?  According to Warren Buffet, index funds are a great place to park your money if you are looking at safe yet growth-oriented stock market options. This advice is based on a couple of facts that make index funds attractive to investors who do not want to shift their funds around very aggressively:  Index funds are passively managed  Index funds have a low expense ratio  Index funds match the profits and losses of the markets at large. And usually tend to perform equivalent or slightly lower than the benchmark  Index funds are invested on the premise that the market will always outperform any single stock  Investments in index funds will over a period of time keep your investments safe and growing at a steady pace as the economy and the market grows. Hence, these are recommended for investors close to retirement as good long-term investment options. What is the Russell 2000 Index? Read More How to invest in an index fund in India?  Investing in an index fund is similar to investing in any other mutual fund. It is important for you to understand what you are investing in, and not just put your money into some random investments.   As index funds are usually long-term investments and passively managed, it is important for you to be sure that the fund you select mirrors the stated index well.   Research: Research and analyze the index fund’s performance over the past few years against the benchmark index.   Check up on future opportunities: Look at how the market/industry you are planning to invest in is expected to grow in the future. You must understand the opportunity for the segment that your index fund will be investing in.   Map your investment goals: Check whether the overall portfolio composition of the fund matches your own investment expectations: high growth, safety, assured returns, and so on. Pick the one that is closest to your investment and returns expectations.   Check on fund expenses: Fund expenses must be studied and understood carefully especially if you are looking to shift large funds. High fund expenses could increase your trading costs unnecessarily over time. Simplified Guide to Index Funds Read More Risks and costs associated with index funds  Index funds move as the market moves, so it hardly ever outperforms the market.  It has little flexibility in cases of market crashes, the fund manager is not typically permitted to trade as a reaction to falling markets.   If the index fund does not truly mirror the benchmark index, it could affect your returns in the long run. This makes prior research very important.   It is worth noting that index funds with the lowest expense ratios track the benchmark index more accurately than others in the market. Word of caution Balance your portfolio with a combination of index funds and actively managed funds. This will help even out any major downsides that come with falling markets and bring more stability to your returns.   Be prepared to remain invested for up to a minimum of 7 years in the index fund if you wish to see some decent returns.  A few examples of popular index funds in India are:   IDBI Nifty Junior Index Fund Growth   ICICI Prudential Nifty 50 Index Plan Direct-Growth   UTI Nifty Next 50 Index Fund Direct-Growth  Index funds are a great tool to build your child’s education corpus fund. With the Indian economy growing, these funds will give you the growth that comes with the expanding markets. Start today, but make sure you do your due diligence before you part with your money.   FAQs What is an index fund and how does it work?  An index fund is a type of investment fund that aims to replicate the performance of a specific market index, such as the S&P 500. It works by holding a diversified portfolio of assets, mirroring the index's composition.  Is Nifty 50 an index fund?   No, Nifty 50 is not an index fund. Nifty 50 is a stock market index in India, comprising the 50 largest and most actively traded stocks on the National Stock Exchange (NSE). An index fund would be an investment fund that aims to replicate the performance of the Nifty 50 index.  What is an index fund in simple terms?   An index fund is like a basket of investments designed to follow the performance of a particular market index, such as the S&P 500. Instead of trying to beat the market, it aims to match its returns by holding a mix of assets like those in the chosen index.  Are index funds a good way to invest?   Ans. Yes, index funds are generally considered a good way to invest due to low costs, diversification, and potential for long-term growth.   Are index funds tax-free?   Ans. Index funds are not inherently tax-free. Investors may still incur taxes on capital gains and dividends when selling or receiving distributions from the fund, depending on their country's tax laws and individual circumstances.    What is a SIP in an index fund?   Ans. A SIP in an index fund involves regularly investing a fixed amount at predetermined intervals, promoting disciplined and gradual investment over time.    TALK TO AN EXPERT