MF scheme, Dividend , Growth or Bonus

[TraderRavi]

The Mutual funds NAV's balooned in the last 6 months otherwise net returns in the last few years , say 2010 - 2013 are flat . for example NAV of HDFC prudence Fund G was hovering around 220 in the above period but now jumped to 360 , in the process lifting last years returns too.

 

[anitarani1508]

I have a few questions related to mutual funds:

1. can someone explain me the expenses in the mutual funds?
2. Plus I don't know the difference between investing completely into ETF mutual funds and equities?
3. How mutual funds are more profitable? Open end and close end MFs ?
4. Why shouldn't I take up a fixed deposit? How is mutual funds better than FDs?

genuine replies required.

 

[sachu21]

Mutual funds can give returns only on very long run only

 

[shk161]

I have a few questions related to mutual funds:

1. can someone explain me the expenses in the mutual funds?
2. Plus I don't know the difference between investing completely into ETF mutual funds and equities?
3. How mutual funds are more profitable? Open end and close end MFs ?
4. Why shouldn't I take up a fixed deposit? How is mutual funds better than FDs?

genuine replies required.

I will try to answer you

1. If you take DIRECT scheme then you have to do the paperwork or if you do through AMC/Broker than they will take some small charges.the Scheme would be REGULAR scheme.They will take care of paper work.Apart from that there is minimum time for which you should stay invested that you can find on money control or other sites.And there is a exit load if you want to sell mutual fund before that time. so look for EXIT LOAD.

2.Equities will be totally on equity and ETF are exchange-traded fund which is based on index trading.

3.Depending on your requirement you can pick.See the basic difference between open ended and clsoe ended both are popular for there own features.The definition is basic and easy to understand.

Open-end mutual fund shares are bought and sold on demand at their net asset value, or NAV, which is based on the value of the fund's underlying securities and is generally calculated at the close of every trading day. Investors buy shares directly from a fund.

Closed-end funds have a fixed number of shares and are traded among investors on an exchange. Like stocks, their share prices are determined according to supply and demand, and they often trade at a wide discount or premium to their net asset value.

4.It is said that MF beats inflation.The average return in MF you should get around 12-15 % and inflation is around 7% .So FD rates are close to 8% only so it does not beat inflation.Inflation in simple terms in purchasing power.If you take FD for 1 year 8% interest rate and suppose you were planning to something which costs 1 lakh in 2016.Now you put that money in FD and plans to buy it next year as inflation is high the rate of that item would in 2017 would be 1lakh+8% approx(inflation) So basically if you submit in FD you are not getting any profit because the purchasing power of your capital stays at the same place


Hope you understand this basic explanation .Seniors can correct me if needed.

Thanks