are Growth / Equity Oriented SchemeWhat are 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.
are 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
is 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.
are Money Market / Liquid Fund / income funds?
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
What is Equity Linked Saving Schemes (ELSS)?
Equity linked saving schemes (ELSS), these schemes are
open-ended growth schemes with a mandatory 3-year lock- in.
These schemes offer the benefit of section 80(C) of IT Act, up
to a maximum of Rs 100,000
The main features of ELSS are -
Repurchase: Repurchases are permitted after a period of 3 years.
Lock-in-period: The units under ELSS are prohibited from
trading, pledging and transfer during the lock in period of 3
What are 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.
are sectoral specific funds?
These are schemes whose objective is to invest only in the
equity of those companies existing in a specific sector, as laid
down in the fund’s offer document. For example, an FMCG
sectoral fund shall invest in companies like HLL, Cadbury’s,
Nestle etc., and not in a software company like Infosys.
Currently there exist approximately four broad classifications
of basic sectors namely – technology, media & telecom (TMT),
fast moving consumer goods (FMCG), basic industry (that invest
in core industries like petrochemicals, cement, steel, etc.) and