Diving deep into the Market with FIKAA
The new "Explore" feature for Mutual Funds is now active on the FIKAA app! You can now browse through ALL Mutual Funds in the market and select the ones you want to invest in. To streamline selection and enhance efficiency, we've introduced 6 categories based on capitalization, returns, or tax advantages to assist in this process.
Last week we learnt about categorising of Mutual Funds by capitalisation – Large Cap, Mid Cap and Small Cap. The other categories shown on FIKAA are High Returns Funds, Tax Saving Funds and Debt Funds. Let us learn some more about these funds and how they would benefit you as an investor.
High Returns
Of course as the name suggests this category of funds focuses on higher than average market returns. And this is proven by their previous years’ records – at least 3 consecutive years of great performance. The High Return funds are run by expert fund managers who have the capability to identify and diversify the portfolio. They should also be able to make alterations, as required, according to the market volatility. As is obvious, high returns are always linked with higher risk. Hence this type of mutual fund is good for people with some amount of risk tolerance. If you are looking at an aggressive growth in your portfolio this is for you provided you research the fund and the fund manager.
Tax – saving Funds
ELSS or Equity Linked Saving Scheme are equity mutual fund schemes which are aimed to save tax for the investor. Investments of upto Rs.1.5 lakhs is tax deductible under section 80C of the Income Tax Act. There are other schemes which give similar exemption like PPF or NSC, but their lock-in periods are longer and they earn a lower rate of return than ELSS. Lock in period of 3 years with an average return of 13% to16% given by ELSS seems a much better option. This is an excellent option for salaried persons looking for long term investment opportunities; since a fixed portion is tax deductible it is a structured and constant way to save.
A Debt Mutual Fund is sometimes also known as Fixed Income Fund because they invest mostly in Bonds and Government securities. These Funds give the option of participating in Debt Instruments to the retail investor which ordinarily have higher limits of entry to invest. Debt Funds have a lower level of risk and moderate returns on your investments. As debt funds are less risky in nature as compared to equity funds, they are a great way to diversify your portfolio. There are a variety of types of debt funds based on their liquidity or duration. One should study their own requirements and invest in them accordingly, for a regular passive income.
So what are we waiting for now? Go to the Explore option on your FIKAA app and figure out which Mutual Funds are best suited to build your portfolio. Armed with all the information you have now, it should not be too difficult to reach your financial goals. And in-case you still have doubts, feel free to contact us at FIKAA!
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Disclaimer: Mutual fund investments are subject to market risks, read all scheme related documents carefully before investing. Investment in securities market are subject to market risks, read all the related documents carefully before investing.
