Mutual Fund FAQs

Product Related

How is a mutual fund set up?


A mutual fund is set up in the form of a trust, which has sponsor, trustees, Asset Management Company (AMC) and custodian. The trust is established by a sponsor or more than one sponsors who is like promoter of a company. The trustee of the mutual fund holds its property for the benefit of the unit holders. AMC approved by SEBI manages the funds by making investments in various types of securities. Custodian, who is registered with SEBI, holds the securities of various schemes of the fund in its custody. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI Regulations by the mutual fund.

What is open-ended Scheme?


An open-ended fund or scheme 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) which is declared on a daily basis. The key feature of open-end schemes is liquidity.

What is close-ended Scheme?


A close-ended fund or scheme has a stipulated maturity period e.g.1, 3 or 5 years. The fund is open for subscription during a specified period (referred to as NFOs). Investors can invest in the scheme during the NFO. Thereafter they can buy or sell the units of the scheme on the stock exchanges where the units are listed.

What is Net Asset Value (NAV) of a scheme?


The performance of a particular scheme of a mutual fund is denoted by Net Asset Value (NAV).


Mutual funds invest the money collected from the investors in securities markets. In simple words, NAV is the market value of the securities held by the scheme. Since market value of securities changes every day, NAV of a scheme also varies on day-to-day basis.

How does NAV get calculated?


The value of all the securities in mutual funds portfolio is calculated daily. From this, all expenses are deducted and the resultant value divided by the number of units in the fund is the fund’s NAV.

What are Tax Saving Schemes?


These schemes offer tax rebates to the investors under Sec 80 C of the Income Tax Act, 1961 as the Government offers tax incentives for investment in specified avenues.

What are NFOs?


NFOs (New Fund Offerings) are new schemes launched by AMCs companies from time to time to meet diversified investment objectives. Units are allotted at a face value of Rs. 10.

Who all can invest in mutual funds?


Resident individual, corporate body, NRI (Non Resident Individual) Private Ltd. company, Partnership firm, Trust, charity, NGOs, HUF (Hindu Undivided Family), Bank, FI (Foreign investors), FII (Foreign Institutional Investors), Bank, Government body, Defence establishment, Society can invest in Mutual funds.

How do I choose the right fund?


You may choose the right mutual fund on the basis of:

  • Age
  • Time horizon: The amount of time you plan to remain invested
  • Risk profile: The amount of risk you are comfortable taking with your investments
  • Asset allocation: Diversifying your investments to bring down the inherent risk in each asset class for instance equities, debt, bonds to name a few
  • Background of the mutual fund company
  • The track record of Mutual fund Schemes

What is a Scheme Information Document (SID) / Key Information Memorandum (KIM) ?


SID / KIM contains complete details of the scheme, risk factor, recurring expenses, exit loads, sponsors track record, details of fund managers. Prospective investors should read the SID / KIM of mutual fund schemes before making any investment decision

What are the risks while investing in Mutual Funds?


Mutual Funds do not provide assured / guaranteed returns. It is linked to with market performance as they invest in shares, debentures and deposits. All Mutual Fund investments involve an element of risk. . Mutual Fund investments are subject to market risk. Customer should read offer documents carefully before making investments.

What is Exit Load?


The non-refundable fee paid to the Asset Management Company at the time of redemption / transfer of units between schemes of mutual funds is termed as exit load. It is deducted from the NAV (selling price) at the time of such redemption / transfer.

What is redemption price?


Redemption price is the price received on selling units of open-ended scheme. If the fund does not levy an exit load, the redemption price will be same as the NAV. The redemption price will be lower than the NAV, in case the fund levies an exit load.

What is Growth and Dividend Plan?


A growth plan in a scheme realises capital appreciation on his investments at the time of redemption.


Under dividend plans, fund houses have an option to distribute income periodically, subject to availability of surplus.

Service Related

What is a Switch?


Mutual Funds provide the investor with an option to switch investment from one scheme to another within the fund.

When will the investor statement of account after investing in a mutual fund?


For open ended schemes, a statement of account is sent within one week from the date of investment by AMC. For closed ended schemes with 15 days from the date of the closure of the scheme by AMC.

Can an investor appoint a nominee for his investment in units of a mutual fund?


Yes. The nomination can be made by individuals applying for / holding units on their own behalf singly or jointly. Non-individuals including society, trust, body corporate, partnership firm, Karta of Hindu Undivided Family, holder of Power of Attorney cannot nominate.

What are the Investment Options available?


Investor can choose to invest through physical form by visiting our nearest branch.

AMFI registered branch link


You can also invest online in Mutual funds (Through invest@ease portal).

Who is eligible to invest in mutual fund?


Investors who are MF KYC compliant can invest in mutual fund. (KYC link)