“Mutual fund investment is subjected
to market risk, Please read all the scheme related documents carefully” - You must
have heard or read this phase in every mutual fund advertisement whether the
advertisement is giving in a newspaper or on television. But one should not
ignore this phase of reading the offer document because the most important step
while investing your money in a mutual fund scheme. The offer document not only
provide you A-Z information about the scheme but will also help you to decide
whether an individual should invest in a particular scheme or not.
One must know that a mutual fund offer
document is made up of number of document such as Scheme Information Document(SID),
Statement of Additional Information(SAI), Key Information Memorandum(KIM).
Here are some of the important aspects
that an investor should go through while reading the offer document.
1)
Past Performance:
Going through the past performance of the scheme is one of the most important
aspect while reading a offer document. It is necessary that one should not only
see the past performance of the scheme but also compare it with similar funds
in the market as well as against the industry benchmark. However one should not
use the past performance of the fund to judge it future.
2)
Risk factor: The
offer document also specifies all the risk that the fund will be exposed to. It
is necessary that the investor should understand the amount risk that they will
be exposed to while they invest in the fund. The bearing capacity of each
individual is different and it is advisable that an individual should invest in
the scheme only if his feels that he/she would be able to face the risk.
3)
Investment objective:
While going through the investment objective of the fund investors
can get a fair idea of the strategies that the fund manager will use to achieve
the said objectives. Match these objectives with your own expectations about
income or long-term capital appreciation as well as your risk appetite.
4)
Fees, Loads and
Taxes: Read the ODs to learn about the minimum investments, charges applicable
and services available to you. Some of the common charges applicable are Entry
and Exit Loads, Transaction Charges, Security Transaction Tax (STT), various
charges for managing the fund - together called the Total Expense Ratio (TER).
It is important to know that all mutual funds do not have the same type of
charges and that all these charges are
regulated by the Securities and Exchange Board of India (SEBI).
Instead of going into a mess with Physical Documents and facing issues like incorrect data or signature change, switch to Online Investments with us, directly clubbed with NSE to avoid physical mess and ensure safety and security of Documents uploaded directly. Also, get your own log in account with us to get FREE Reports and Monthly Account Statements for faster Portfolio access.
For more details and in-depth research under Mutual Funds Services, Sign Up HERE and get FREE advisory for Investment details
No comments:
Post a Comment