Knowledge Centre

GENERAL

What is Helios Global & what does it offer?
Helios Global (BI) is a customer friendly online investment platform initiated by Helios Globals Corporate Advisory Services Ltd. (Helios Globals) which offers quick and easy services through web portal and mobile application to invest online in various financial instruments. Currently Helios Global (BI) is offering services related to investment in Mutual funds & Fixed Deposits. It will extend its services to other financial products soon.

Who are the promoters of Helios Global?
Helios Globals Corporate Advisory Services Ltd is the promoter of Helios Global.

What are the credentials of Helios Globals Corporate?
Helios Globals Corporate Advisory Services Ltd. (Helios Globals) started in 2000 as a mutual fund distributor, has expanded multi-fold in all aspects of wealth management in just 15 years. Currently it has its presence across 63 branches in 17 states. The group provides integrated wealth management solutions through Mutual funds, Equities, Commodity & Derivatives, Bonds, Insurance and Realty through various group companies and widespread branch network across India.Helios Globals is the winner of CNBC TV 18 Financial Advisor award for Five years in a row.

What are the tools and services offered by BI?
BI provides a wide range of investment tools like goal based investment planning, WRAP portfolio, trigger based investment, multiple transactions execution at one go, instant redemption for select schemes, etc. Currently BI is providing facility to invest online into Mutual Funds & Fixed Deposits. BI will extend its services to other financial products soon.

What are the modes of payment through which investors can transact on BI?

Currently BI is offering three modes of payment facility for investments :

1. Net Banking
2. Using your registered Bank mandate (NACH)
3. RTGS / NEFT

What steps are taken by BI to secure my data & investments?
BI ensures the highest level of security with a software named “Symantec”. BI maintains utmost confidentiality and security of your personal information & documents. Moreover, no personal data is shared with a third party vendor.

Is there any limit on the number of funds that can be selected?
BI allows you to select maximum 10 schemes at one go for lumpsum & SIP both.

Which mutual fund schemes can I invest in?
Currently through BI, you can invest into various schemes of 26 different Mutual Fund houses as listed below:

• Axis Mutual Fund
• Baroda Pioneer Mutual Fund
• Birla Sun Life Mutual Fund
• BNP Paribas Mutual Fund
• BOI AXA Investment Managers
• Canara Robeco Mutual Fund
• DSP BlackRock Mutual Fund
• Franklin Templeton Mutual Fund
• HDFC Mutual Fund
• ICICI Bharatinvestmentsial Mutual Fund
• IDBI Mutual Fund
• IDFC Mutual Fund
• Kotak Mahindra Mutual Fund
• L&T Mutual Fund
• LIC Nomura Mutual Fund
• Mahindra Mutual Fund
• Mirae Asset Global Investments
• Motilal Oswal Asset Management Services
• DHFL Pramerica Mutual Fund
• Principal PNB Asset Management Company
• Reliance Mutual Fund
• Religare Invesco Mutual Fund
• SBI Mutual Fund
• Sundaram Mutual Fund
• Tata Mutual Fund
• UTI Mutual Fund

Will BI help me to decide the funds to invest in & build my portfolio?
Yes. We would be glad to advise you, after considering your risk profile, for investing in various funds after we launch our Advisory Services section. However, we may charge a fee for such advisory services provided by us.

How can I, as an investor, make an investment through BI?
You should be a KYC verified investor to open your account in a purely paperless & hassle-free manner. After opening the account with us, you can login and start investing in 3 simple steps:
– Choose the scheme of your choice for Lump sum (one time investment) or SIP – Enter the amount you wish to invest – Make payment through secured Net Banking, NEFT/RTGS or registered Bank Mandate Also, please note that the account opening process has to be completed only once. After that, you can invest in any fund of your choice as often as you wish.

Can I visit any of the Helios Globals branches for any help or queries?
Yes, you can visit any of the Helios Globals branches for any help or queries. To get the details of our branch network & contact details, please refer the ‘Contact Us’ section on our website www.Bharatinvestments.com. You can also call on our toll free number 1800 419 5051 for assistance.

What is a SIP ? What are the advantages of a SIP ?
SIP, short for systematic investment plan, refers to an investment plan wherein a specific amount is invested on a specified date for a specified period at regular fixed intervals. A fixed amount is invested to buy units at the NAV prevailing on the date of investment.

Following are the advantages of SIP:

• Rupee cost averaging
• Power of compounding
• Disciplined investing
• Lighter on the wallet
• Convenience

With which banks has BI partnered for their banking transactions?
Click here to view the list of banks which provide both Net Banking & NACH facility. Click here to view the list of banks which provide only NACH facility.

TRANSACTIONS & EXECUTION

Am I required to pay any charges for the services offered by BI?
Transaction Charges: Currently BI doesn’t charge any fees for any execution service from their client but we may come up with Transaction & Execution charges in the future.
Advisory Service: Currently our advisory service department is at a development stage. However, after we start offering advisory services, clients who wish to avail this service can mail us on info@bharatinvestments.in. We shall revert with details of the fees for various services offered by us.

With which banks has BI partnered for their banking transactions?
Click here to view the list of banks which provide both Net Banking & NACH facility.
Click here to view the list of banks which provide only NACH facility.

How can I make payment for my SIP transactions?
You can make payment for SIP transactions only through a NACH mandate. You need to send duly signed NACH mandate to us for registration. Once registered, the amount will be directly debited from your bank account on the business day prior to your SIP date.

What if the day prior to my SIP date is a holiday/non business day?
If the day prior to your SIP date is a holiday/non business day, then the debit will happen on the immediate next business day of the holiday. NAV allotment date will be the next business day which follows the SIP debit date.

Can I stop my SIP through Helios Global?
Only SIPs initiated on Helios Global can be stopped, paused or renewed through Helios Global. For SIPs which are registered offline and then shifted to Bharat Investment, they will be stopped by submitting a physical request only. The physical request needs to be submitted to the respective AMC/RTA.

In how many days will my SIP registered through Helios Global stop?
SIPs registered through Helios Global can be stopped on an immediate basis. However, any SIP installments falling within 7 days from the date of SIP stop request will be processed.

How long does it take to convert my offline folios to online?
Generally it takes approximately 15 days to convert your offline folios to online. However, if your folios are not converted within 15 days, you may contact us on our toll free number 1800 419 5051 or you can write to us at transactions@ Bharat Investment.com

I am holding an offline investment with Helios Globals. How can I convert my offline folio to online?
To convert your offline folios to online, you need to submit a folio conversion request from your Helios Global login : My account > Manage account > Change offline to online folio
Please note that offline to online conversion in folios is not possible where there is a mismatch in holding pattern or tax status or where mode of operation is ‘Joint’.
If in case you have an existing facility of SIP, STP or SWP then any changes like stoppage, discontinuance, etc will be executed through your offline signed instruction only.

Under what circumstances will my purchase be rejected?
Your purchase may be rejected in the following circumstances:

• The online payment for the purchase was unsuccessful
• The transaction has been initiated but not paid for more than 30 days
• The investment amount specified does not meet the minimum investment amount criteria of the selected scheme.

What is the cut- off time to invest & transact through Helios Global?
Cut-off time:

1. Purchase transaction : For liquid scheme transactions, cut-off time is 12.00 pm and for non-liquid scheme transaction cut-off time is 01.00 pm
2. Redemption and switch transaction : For all schemes the cut-off time is 02.00 pm
3. Transaction requests received after cut-off time mentioned above will be executed on the next business day.
4. In case the payment is made through a NACH mandate, the transaction will get executed within 2 working days from the date of debit in your bank account.

I submitted a purchase before 12 pm. However my bank account was debited after 12 pm. Which day’s NAV will my purchase be considered for ?
Since the transaction is very close to the Helios Global cut off time, there is a possibility that the purchase will be considered for the next business day’s NAV.

How can I view the valuation of my investments?
You can view the valuation of your investments by clicking on Reports > Portfolio valuation. This module will help to view your holdings either client wise or scheme wise.

Where can I view my historical transactions ?
You can view your historical transactions on Dashboard under Transaction information > Recent transaction.

Where can I view my pending transactions ?
You can view your pending transactions on Dashboard under Transaction information > Pending transaction.

Can I place a redemption order by selecting either units or amount ?
Yes. You can place a redemption order by selecting either units or amount.

How & when can I verify my investment status with BI?
You can verify the investment status in your BI login at any time.

How safe is my investment with BI?
All Mutual funds’ investments are in the name of the client. No funds are retained by us as we are here to facilitate transaction processing & fund transfer for making investments. Moreover, we do not allow any third party transactions. As such, your money and investments are completely safe with BI.

What is previous day NAV in liquid funds?
How can I get previous day NAV for liquid funds?
Previous day NAV means you get T-1 day NAV in liquid funds. If you invest in liquid funds before 12 pm today & if funds are utilized by the AMC before 2 pm today, you will get previous day NAV.

ACCOUNT OPENING

Who can open an account with BI?
Currently, only Resident Individuals, NRIs & HUF can open an account with BI.

While opening an account with BI, why do you require a cancelled cheque leaf image?
A cancelled cheque leaf means an original cheque leaf with ‘Cancelled’ written across it.
Mutual Fund third party rules require that an investment in your name has to be made from your bank account only. Hence, we require a cancelled cheque leaf image with your name printed on it as a valid proof while registering your bank account in BI.
If your name is not printed on the cheque leaf, then you have to upload anyone of the following documents (in addition to cancelled cheque leaf) :

• A self-attested copy of your bank statement (not older than 3 months).
• A self-attested copy of your bank passbook with some recent transaction entries (not older than 3 months). The copy of passbook must have your name printed on it. It is important for us to fulfill this formality in order to complete the financial transactions safely and securely.

Can I register with BI without submitting any physical documents?
Yes, a KYC compliant individual investor can open an account with us without submitting physical documents. However, for opening a HUF account, a few physical documents need to be submitted.

Which investor’s bank account will be used in case investment is done in the name of multiple holders?
Primary investor’s bank account will be used as default bank account in case of investment in the name of multiple holders.

How many investors can I add to my existing BI account for the purpose of investment?
BI offers the facility of adding multiple investors in your account. You can add minors, NRIs & HUF in your account.

For a joint investor account, is it necessary to complete registration & activate account for all investors?
Yes in order to invest through BI’s joint account, all willing investors need to complete their online registration process & activate their account.

How can I change my bank with BI?
To change your bank, you need to click on My AccountàManage AccountàChange Bank in your Helios Global login. I was making investment online and while making payment through net banking, my transaction was not successful, but amount got debited from my bank account. What should I do now?
In rare circumstances, if such an incident happens, your money will be refunded to your account within 3 working days. Kindly contact us if the amount is not refunded within 3 working days.

How can I use net banking facility to make payment through BI?
While submitting a purchase, the Net banking option should be selected to make payment through your bank account. Helios Global’s payment page will redirect you to your bank’s website. You may then enter the required details and authorize the payment for the purchase.

How can I change my password?
If you want to change your password, kindly login to your BI account, go to “My Account” and click on “Change Password”.

How can I recover my password?
If you want to recover your password, please click on “Recover it now” option available on the login page at https://heliosglobal.in/signin

After how many trials my BI account will be locked? How can I unlock the same?
Your account will be locked if you enter a wrong password 3 consecutive times. It can be unlocked by clicking on “Recover it now” option available on your sign in page.

What are the requirements to open a Helios Global account?
Your KYC should be registered and you need to provide your bank account proof to open a Helios Global account. You also need an email id to be kept as a login id.

How soon will my account be activated after completion of all formalities?
Your account will be activated within 2-4 working days.

How will I know the status of my account opening ?
On completion of the online account opening process, our team will verify your KYC documents and bank proof. After due verification, you will receive an account activation mail on your registered mail id. How can I add investor in my account with Bharat Investment ?
Once your first account has been activated with Helios Global, you can add investor by following the below given steps :

• Go to My account > Add new client
• On the account opening page, enter details of the investor you wish to add i.e. name, PAN, date of birth/incorporation etc. and verify mobile number through OTP.
• Our team will verify the details and an email will be sent to your registered mail id once account has been activated.

How can I open an account with BI?
Opening an account with BI is quick, simple and free. An investor would just have to do the following:

• Client has to provide basic details like Name, Mobile No. Email Id, Date of Birth, PAN etc.
• BI will fetch your KYC details from KRA
• Once your KYC status is verified by BI, you just need to upload cancelled cheque copy of your bank which you want to register.
• We will verify your documents, and your account will be get activated within 2 business days.

With which banks has BI partnered for their banking transactions ?
Click here to view the list of banks which provide both Net Banking & NACH facility.
Click here to view the list of banks which provide only NACH facility

PAYMENT & REDEMPTION

What payment options are available for purchases in Helios Global ?
While submitting purchase you have the option of Net banking or NACH mandate to get the purchase funds debited from your bank account.

How can I make an investment if my bank is not registered in the list of banks available for Net banking ?
If your bank is not registered in the list of banks available for Net banking, you can make an investment through NACH mandate in Helios Global. All you need to do is submit your NACH mandate to us and we will send it to your bank for registration. Once your mandate is activated, you can start investing in Helios Global through NACH mandate.

What is the difference between submitting a purchase via Net banking and via NACH mandate ?
While submitting purchase via Net banking, your bank account will be debited immediately whereas via NACH mandate, your bank account will be debited in the next 1-2 days.

Where will the funds for my redemption get credited?
Redemption proceeds will be credited to the bank account registered with Bharat Investment.

When will the redemption amount be credited to my bank account ?
The redemption amount will be credited to your bank account as per the defined scheme specific guidelines laid down by the mutual fund regulatory authority. Normally, the TAT is T+1 for liquid/debt schemes and T+3 for equity schemes.

BANK MANDATE

Will this facility be available for all mutual funds?
Yes it is available for all mutual funds mentioned for investments with BI.

What is One Time Mandate (OTM)?
OTM stands for One Time Mandate. It is a onetime registration process that enables the investor to transact seamlessly on the BI platform.

What are the advantages of OTM?
Using the OTM feature, the investor instructs his bank to debit a certain amount at specified interval/frequency set by him. With this instruction the investor can proceed to carry out SIP and lump sum transactions in his BI account thereby eliminating the dependency on any particular mode of payment.

How do I register for an OTM with BI?
You will receive NACH Mandate on your registered address from BI after the account opening process is completed. You need to sign & send the NACH mandate back to us for registering the NACH Mandate in your bank.

How long will it take for my OTM to be registered?
It will take approximately 15 working days to get your OTM registered with your bank.

Is there any limit on the number of funds that can be selected?
BI has allowed maximum 10 schemes can be selected for Lumpsum & SIP both.

When can I start investing through OTM?
You need to send OTM duly signed to us which will be further submitted to our payment gateway to be registered with your bank. Once your bank accepts & approves it you can start with your investments.

Who will debit the amount from my bank account?
Amount will be debited by our payment gateway named “Tech Process”.

Are there any charges for rejection of transaction due to insufficient funds?
BI does not levy any charges for such rejections. Your rejected transaction will not be processed further. However, your bank may levy charges for the same. Kindly contact your bank to know the charges.

NRI

Which bank account can a NRI use for investing in mutual funds ?
NRI can invest from NRE and NRO bank account only.

How many bank accounts can a NRI register for investing in mutual funds?
NRI can register two bank accounts for investing in mutual funds: one NRE and one NRO bank account.

Do NRIs get access to all mutual funds?
Non Resident Indians (NRIs) can invest in all the mutual fund schemes offered by all asset management companies (AMCs). However, most AMCs do not allow NRIs who are US/Canada residents to invest through the online mode due to regulatory restrictions. Such investors can invest online in the schemes of L&T Mutual Fund and Sundaram Mutual Fund for now. Any revisions, as and when happening, will be updated in Bharat Investment.

Can a NRI invest jointly with one or more holders ?
Yes, NRI can invest jointly with other holders. To invest jointly, NRI has to add one or more investors in his account. However, on Helios Global, the mode of holding will always remain Anyone or Survivor

MINOR

How can I open a minor’s account with Helios Global ?
Minor’s account can be added through guardian only. To open a minor’s account, the guardian should primarily hold a Helios Global account. You need to upload proof of relationship of the minor with guardian. Also, minor’s bank account proof is mandatory to be submitted. The guardian in minor’s bank account and Helios Global should be the same.

Can I make investment from guardian’s bank account on behalf of minor ?
Yes. Investment can be made from guardian’s registered bank account on behalf of minor. However, redemption amount will be credited in minor’s bank account only.

I am registered as a guardian in Helios Global. Can I make an investment in my name from my minor’s bank account ?
No. It is not allowed as per mutual fund regulatory guidelines.

HUF

I am an existing account holder with Helios Global. Can I add HUF account in my existing account ?
Yes. You can add a HUF account in your family account or you can also open a HUF account separately. Please note that HUF account can be added in the family account, only if the Karta is already registered with Helios Global.

Can I open a HUF account without submitting any physical documents ?
No. HUF registration process is not paperless. Once you complete the registration process, we will send you a welcome kit along with account opening form, FATCA form and NACH mandate. You need to sign and stamp FATCA form and NACH mandate and send it back to us. We will verify your documents and will send you an account activation mail on your registered email id once your account gets activated.

Can HUF make investment jointly with one or more holders?
No. HUF can invest in mutual funds as a single holder only.

INSTAFUNDS

What is InstaFunds ?
InstaFunds is a facility provided in Helios Global wherein, upon request, you can receive the proceeds of your redemption request instantly in your bank account. This facility is currently mapped to select liquid schemes of select AMCs.

Will I get redemption amount instantly in my bank account if I make redemption through InstaFunds ?
If your bank is IMPS enabled and your folio contains IFSC code then you will get redemption amount within a maximum time of 30 minutes in your bank account, if redemption is made through InstaFunds.

Is InstaFunds facility open to all investors ?
No. InstaFunds facility is open to resident individuals only.

My bank is not IMPS enabled. Will I be able to redeem via InstaFunds ?
No. You will need to redeem through the normal ‘redemption’ tab available in Bharat Investment.

Can I place a redemption request for any amount through InstaFunds ?
No. You can redeem upto 90% of the current value of your investment, subject to a maximum limit of Rs. 50000.00 per day including multiple transactions

Which schemes are available for redemption through InstaFunds ?
At present, only Reliance Liquid Fund – Treasury Plan and DSP BlackRock Liquidity Fund are available for redemption via InstaFunds.

OTHERS

What are coupon payments?
Coupon payments are associated with bonds. The coupon rate or the interest rate is the interest that is paid by the bond issuer to the bondholder over time/periodically either annually or semi-annually. These coupon rates are paid on the face value of the bond. This interest payment is made regularly until the bond matures. Upon maturity, the bond issuer gives the principal amount as well. The issuer here can be government, banks and corporates. They issue these debt instruments known as bonds to finance big projects or operations and in turn pay coupon payments for borrowing the money from bondholders.

What are credit risk?
“Credit risk is associated with borrowers defaulting on interest/principal payments on fixed-income securities. Payment generally involves two parties, where one party owes money to the other party. When this payment is to happen in the future, the two parties enter into a contractual agreement. As the borrower is obliged to make future payments, the lender faces a risk that the borrower may not be in a financial position to return its money or pay the periodic future interest payments. In case of such default as the mutual scheme may not receive the full amount, NAV of such scheme will reduce or fall to the extent of such default by the borrower.

What are the risks associated with mutual fund schemes ?
There are certain types of risk that are associated with mutual fund schemes which are as follows:

• Credit Risks
• Business Risks
• Market Risks
• Price Risk
• Liquidity Risk

What are mutual fund units?
Units are representative of an investor’s extent of ownership, investment, or holding in a mutual fund scheme. The number of units allotted to an investor depends on the money invested by the investor and the applicable Net Asset Value. These units are issued by fund companies according to the amount of money invested by investors. Mutual fund units can be seen in a way like shares of a company that trades in the market.

What is sale and repurchase/redemption price?
Sales Price- Sales price is the price that an investor pays per unit also known as Net Asset Value to purchase units (subscription) or to switch in from other mutual fund schemes. When an investor buys a mutual fund from a mutual fund company, he has to pay a price based on the Net Asset Value per share of that fund. This NAV is called the sales price of the mutual fund. The price that an investor pays for the mutual fund includes per share Net Asset Value plus any fee charged at the time of purchase such as sales loads. Repurchase/redemption price- In case an investor wants to redeem its units or switch out to other schemes of the mutual fund, the mutual fund will repurchase the units from the investor at a price per unit. This price at which the mutual fund repurchases the units from investors is known as repurchase/redemption price.

What is an Systematic Investment Plan ?
Instead of paying a lump-sum amount, mutual funds offer an investment route wherein an investor can invest a fixed amount in the scheme of a mutual fund of his choice at regular intervals- it can be quarterly or monthly. The investment amount can be as little as 500 per month. It can be said to be a way of investing in mutual funds through which an investor can invest a fixed amount in a mutual fund scheme.

Can non-resident Indians (NRIs) invest in mutual funds?
Yes, NRIs can invest in mutual funds in India as long as they comply with the Foreign Exchange Management Act (FEMA). The offer documents of the schemes contain detailed information in this regard.

Is there any difference between investing in a mutual fund and in an initial public offering (IPO) of a company?
Yes, there is a difference. Initial Public Offering is made by a single company to raise money as per its stated objective. Whereas in case of mutual funds, the money that is collected is used for investing in money market instruments, gold, debt and equity instruments of variety of companies, etc.

What are sector specific funds/schemes?
These are the schemes that invest in the securities of only those sectors which are specified in the offer documents. The return of these schemes depends on the performance of these sectors. The sectors may involve banking, information technology, software, etc.

What are Tax Saving Schemes ?
Equity Linked Savings Scheme is one such mutual fund that allows investors for tax deductions. The majority of the scheme’s corpus is invested in equity or equity-related instruments. ELSS are known to be tax savings schemes as they provide the benefit of deduction or tax rebate from the total income of up to 1.5 lakhs, under section 80C of the Income Tax Act, 1961. Even pension schemes offered by mutual funds offer tax benefits. These tax saving schemes invest in equities and hence their risks and growth are like equity-oriented schemes.

What is a capital protection-oriented scheme?
The capital protection-oriented scheme is a scheme oriented towards the protection of capital but with no guaranteed returns. This hybrid scheme is structured in such a way that a larger portion of its corpus is invested in fixed-income securities to protect the capital at maturity whereas a small portion of it is invested in the equity market to capture the returns. These can be categorized as close-ended schemes as investments can only be made during a specific time and then locked in for two, three, five years, etc.

What is a Load or no-load Fund ?
A load fund charges for entry and exists as a percentage of NAV whereas a no-load fund does not charge for entry or exit. As per SEBI mandate no entry load for any mutual fund scheme in India whereas mutual fund schemes can charge for exit load and the same is to be credited to the scheme.

How to know the performance of a mutual fund scheme?
The performance of a mutual fund scheme can be defined by its NAV or Net Asset Value, which is disclosed daily on the websites of the mutual funds and also on the Association of Mutual Funds in India’s (AMFI) website so that the investors can get the access to NAVs of mutual funds at one place. Mutual funds are also required to maintain a dashboard on their sites with respective schemes’ performance and disclosures. They are also required to publish half-yearly results consisting of returns, expenses, and other useful information in the half-yearly report. Along with half-yearly reports, mutual funds are also required to send annual reports to the unitholders/investors at the end of the year.

Who are unit holders ?
Investors of mutual funds that are investors who invest money in mutual funds are known as unitholders.

What is an Investment Objective ?
The investment objective of a mutual fund scheme outlines the financial objective the scheme tends to achieve and the level of risk it is likely to assume while trying to achieve its objective. A mutual fund’s investment objective helps investors decide whether the scheme is suitable for their financial goal, the level of risk to be comfortable with, and the time horizon for which they have to stay invested in the scheme. The scheme’s investment objective determines the kind of securities to be included in the scheme’s portfolio. Also, a mutual fund cannot change the scheme’s investment objective without approval from the trustees and informing the existing investors about the changes.

What is NFO (New Fund Offer) ?
New Fund Offer is the first-time subscription offer for a new scheme that is launched by an Asset Management Company. It is an invitation by an AMC to the public to subscribe to its newly launched fund. As per SEBI, the NFO should be open for 15 days in both open-ended and close-ended schemes. During a New Fund Offer, the investors or the public can purchase the mutual fund units at the subscription price. After the NFO period, investors can only take exposure in these funds at the prevailing Net Asset Value.

What is dividend reinvest option?
DRIP allows you to re-invest the money you earn through dividends instead of paying out the dividends to the investors. This plan increases the number of units held by investors as it automatically purchases units of the mutual fund with the dividend amount and allocates it to the investors. Through this, investors can accumulate more units over time, benefiting from compounding over time.

What is Switching Mutual Funds?
The process of shifting investments from one mutual fund scheme to another within the same mutual fund is known as switching. To switch investments, the investor needs to fill out a switch form specifying the amount/number of units to be switched from the source scheme and the name of the destination scheme. Switching is considered a sale for the source scheme whereas it is considered a purchase for the destination scheme. There may be exit load and capital gains tax since, for the source scheme, switching is considered a sales transaction.

Can non-resident Indians (NRIs) invest in mutual funds?
Non-resident Indians can also invest in mutual funds and the necessary details in this respect are given in the offer documents of the schemes

Who is a sponsor?
The Sponsor is the main body that establishes the Mutual fund. A sponsor is any person who either acts individually or jointly with another body corporate to establish a mutual fund. According to the provision of Regulation 7(C) of SEBI (MF) Regulations, any individual who holds 40% or more than that of the net worth of an asset management company(AMC) shall be regarded as a sponsor.

What are mutual funds?
A mutual fund is a pool or collection of money from numerous investors sharing a common investment objective and investing the amount in equities, bonds, money market instruments, or other securities. A professional Fund Manager manages it. It is a process of collecting money by issuing units to retail investors and investing the funds pooled in securities according to the objectives mentioned in the offer document.

What is Net Asset Value (NAV) of a scheme ?
NAV (Net Asset Value) determines the performance of a particular mutual fund scheme. It denotes the market value of the underlying securities of the Mutual fund scheme. The NAV per unit = Market value of securities / Total no of units of the scheme on a particular date.

What is Total Expense Ratio ?
Mutual funds can impose some fees or certain operating expenses to manage a mutual scheme as a percentage of fund’s daily NAV, as specified under SEBI (Mutual Funds) Regulations 1996. These operating expenses are collectively called Total Expense Ratio (TER). It is the percentage of the mutual fund scheme’s average NAV. The daily NAV of a mutual fund is calculated after subtracting these expenses. The expenses included in the calculation of TER are administrative expenses, custodian fees, sales & marketing or advertising expenses, registrar fees, transaction costs, investment management fees, registrar fees and audit fees. The expense ratio is changeable in India. If the TER is within the prescribed limits (specified under Reg. 52 of SEBI (Mutual Fund) Regulations), there is no limit on any expense that is allowed.

Who is a Fund Manager ?
Fund managers are professionals in investments. They manage funds on behalf of investors and provide portfolio-management services. Fund managers make investment decisions and accomplish the fund’s investment objectives by optimizing risk and rewards in the fund according to the fund’s mandate. Following are the responsibilities of a Fund Manager – – Selection of securities – Risk management – Track performance – Ensure compliance

What is AUM (Asset Under Management) ?
AUM (Assets Under Management) is the cumulative sum of the market value of the total underlying securities of a mutual fund scheme. It is an indicator of the performance and size of a particular fund. AUM of a mutual fund scheme is proportional to the stock market fluctuations i.e., the movement in stocks’ or securities’ prices impact the value of the underlying securities of the scheme’s portfolio. AUM determines the size of the fund and used as a measure of success of the fund to attract and retain investors. It is also used to calculate the expense ratio charged by mutual funds. The higher the value of AUM, the higher is the revenue generated by AMC from its funds.

What is an Asset Management Company ?
Asset Management Company is responsible of investing the pool of money from individual investors in the marketable securities with the objective of optimal return on behalf of investors and charge a certain amount of fees for that. It is a firm that maintains the portfolio diversity by investing the pool of money in both high-risk and low-risk securities including stock, bonds, shares, real-estate, debt, pension funds etc. The factors to be considered while selecting the securities include political risk, return risk, market risk, industry risk to achieve the optimum returns on certain investment targets. For e.g., to maintain minimum risk, an investor can invest in debt fund (investing in bonds and risk-free Government bonds), or to achieve high risk and high returns, an investor can invest in an equity-oriented fund (investing in shares and stocks).

How are the funds managed by an AMC ?
AMC is a firm responsible for maintaining the portfolio on behalf of the investors, ensuring the financial objective is achieved. It can do so in following ways –

1. Market Research and Analysis
   Asset manager within an AMC is responsible for building a portfolio for the investor by selecting appropriate securities based on the market trends, macro, micro economic and political factors analysis to surpass the return expectations of the investors.
2. Asset Allocation
   Asset manager needs to allocate the funds into different asset classes according to the market research and investor’s financial objectives.
3. Portfolio Creation
   Portfolio is created based on the market research analysis, asset manager’s expertise and investment goals. The decision making regarding the selling, buying or holding the assets for a specific tine period is done by asset manager.
4. Performance Review
   Since investors’ funds are at stake, thus regular performance review of the portfolio is necessary. The asset manager needs to justify the decision of buying, selling or holding the securities to the investors everytime. The investors need to be provided with regular updates regarding sales,NAV, returns, risks, purchase, repurchase, factors affecting the portfolio or any portfolio changes.

How do Asset Management Company functions ?
AMC is a firm responsible to collect the funds from different investors with different financial objectives. The pool of funds are invested in diversified portfolio benefitting with economies of scale and discounts on purchases. The portfolio returns earned are distributed among all the investors. The AMC services are charged either on a fixed basis (monthly or quarterly) or on commission basis to maintain the fund.

What Points to consider before you choose an AMC ?
The AMC needs to consider the investment objective, track record and performance history (i.e., performance in market ups and downs) of the investment scheme before investing. Also, there is a need to check on various parameters before selecting an AMC.

1. AMC reputation-
   The investors need to go through the performance consistency and analysis of AMC over a period of time. The performance analysis of the AMC can be done in the following ways –
   • Analyzing the annual reports of the mutual fund schemes
   • Analyzing the reviews of AMC prevelant in the market.
   • Analyzing the compliance report to SEBI, AMFI, and RBI.
2. Credibility of the Fund Manager- AMC functions in parallel to its fund manager. The performance of the fund manager is synonymous to the performance of AMC. Hence, an investor check the past performance of the fund manager.
3. Price and Value- While selecting any fund, investor must consider price of the fund, value created by the fund and return that the fund is offering.
4. Fees and commission- The investor needs to determine the charging pattern of AMCs i.e., whether the AMCs charge fixed fees for their services or commission on the returns earned. Also, fixed fees is preferred over commission because an investor will always know the outflow amount beforehand.

Bodies Governing AMC’s Operations ?
Asset Management Companies are governed by SEBI and AMFI and operates under supervision of board of trustees The statutory body responsible for regulating the mutual funds in India is AMFI ( Association of Mutual Funds in India ). It is the nodal association of mutual fund companies in the country. SEBI (Securities Exchange Board of India) is government body responsible for marketable securities and commodities.

Guidelines laid by SEBI, AMFI, and RBI for an AMC ?
SEBI, AMFI and RBI have laid down the mandatory guidelines for mutual funds companies as follows –

• The position of Chairman of an AMC cannot be held by the Trustee of the mutual fund.
• No key personnel of AMC should be indulged or convicted in any offensive or fraudulent acts.
• Asset Management Company should not be a trustee of the mutual fund.
• The AMC’s net worth should not be less than Rs. 10 crores.
• The intention of investment in any offer document or scheme should be disclosed before making the investment.
• Compliance of regulationd and quarterly report on all activities must be submitted to the trustees

Reliability of AMC compared to Banks ?
There is a notion in society that mutual funds are not as reliable as banks and mutual fund schemes are not as secured as fixed deposits. But AMC’s are governed by SEBI and AMFI and functions under Ministry of Finance, ensuring transparency, accountability, and objectivity, so it is safe to invest in mutual fund. AMC is appointed by the trustee or sponsor. Mutual fund is a way to optimize the wealth and save taxes.

What are different types of mutual fund schemes based on maturity period ?
Types of mutual fund schemes based on the maturity period are as follows-

1. Open Ended Funds
   Open ended schemes do not have a fixed maturity date and the investor can buy or sell the mutual fund units at any point in time. Investor can deal for investment or redemption directly with the mutual fund.
   Open ended schemes are liquid and can be bought or sold at NAV prices.
2. Close Ended Funds
   Close ended schemes have a maturity period. It allows investor to do the investment only during the NFO (New Fund Offer) i.e., initial launch period. After the offer is closed, no new investments are allowed.
   Schemes NAV and market price at stock exchange may vary due to factors involving demand and supply, expectations of units holders and other market factors.
   Repurchase of units is allowed periodically at NAV related prices to sell the units directly to the mutual fund by some close ended schemes.
   SEBI regulations ensures the provision of one of the two exit routes to the investor.
3. Interval funds

What are different types of mutual fund schemes based on principal investments ?
Mutual fund schemes differs on the basis of strategy and asset allocation. It can be classified into following categories

• Equity Schemes
• Debt Schemes
• Hybrid Schemes
• Solution Oriented Schemes
• Other Scheme

Types of Equity Mutual Fund Schemes ?
Equity funds are classified based on different categorization –

1. By market capitalization
   • Large Cap (Invest in companies ranking between 1-100 in terms of market capitalization)
   • Mid Cap (Invest in companies ranking between 101-250 in terms of market capitalization)
   • Small cap (Invest in companies ranking above 250 in terms of market capitalization)
   • Large & Midcap (Mutual fund schemes where equity allocation between mid & large cap funds is equal (35% each))
   • Large Cap Index (Investment to replicate the large cap indices)
   • Mid-cap Index (Investment to replicate the mid-cap indices)
   • Small Cap Index (Investment to replicate the small cap indices)
2. By Diversification
   • Multi Cap (Investment across all market caps, requiring a minimum of 75% in equities and 25% in large, mid, and small-cap)
   • Flexi cap (Investment across all market caps, requiring a minimum 65% in equities and no mandate to invest in large, mid, and small-cap)
   • Focused (Funds are focused on limited sectors variation)
   • Equity FoF (Mutual fund investing in units of another mutual fund)
   • Value-oriented (Invest in stocks trading at a price below their intrinsic value)
   • Contra (invest in equity stocks that are not performing well, i.e., invest against the prevailing market trend)
3. Bt Sector & Themes
   • Thematic-Dividend Yield (Thematic dividend yield funds invest in funds that are known to high payout dividends)
   • Sectoral Banking (at least 80% of the fund is invested in banking sector stocks)
   • Sectoral Technology (Invest in technology sector stocks)
   • Sectoral Infrastructure (Invest in infrastructure sector stocks)
   • Thematic consumption
   • Thematic energy
   • Sectoral Pharma
   • Thematic PSU
   • Thematic MNC
   • Thematic (Thematic funds are funds focused on specific themes or trends)
   • Thematic ESG
   • International Index (An index fund invests in securities tracked by an index. Internationa index fund tracks the performance of an international market index and tries to replicate it)
   • Other Equity Index

What is a Benchmark ?
The performance of the mutual fund is evaluated against a standard called a benchmark. It is selected based on the investment objective of the fund and at the time of fund launch. It comprises of stocks, money market instruments, debentures, bonds, or other securities. A mutual fund is expected to perform better than its benchmark over a period of time.

What is Dividend Reinvestment option ?
In the Dividend Reinvestment option, the dividend made by the scheme is reinvested back into the scheme by buying more fund units.

What is Divided payout option ?
The dividend declared by the companies within the portfolio of the scheme is received by the investor. Although, the regular dividend payment is not guaranteed. The NAV for the dividend scheme is declared on the next business day after the dividend is declared i.e., ex-dividend date.

What are the tax benefits in mutual funds in India ?
Tax on Equity Mutual Funds Long term capital gains (with minimum holding period of 1year) is taxed at the rate of 10% plus 4% cess, provisioning that the gain in a financial year is over 1 lakh i.e., long term capital gains upto 1 lakh is tax free. Short term capital gains (units sold before completing 1 year) is taxed at the rate of 15% plus 4% cess. Dividends paid by the equity mutual funds are tax free for investor and AMC pays DDT (Dividend distribution tax) at the rate of 11.648% (including surcharge and cess)(before distribution of dividend to investors). Tax on Debt Mutual Funds Short term capital gains (with minimum holding period of 3years) is taxed at the rate of 30% plus 4% cess. Long term capital gains are taxed at 20% with indexation. Dividends paid are tax-free for investors, while AMCs pays DDT (Dividend distribution tax) at the rate of 29.120% (before the distribution of dividend to investors).

What is Section 80C of Income Tax Act, 1961 ?
In order to encourage investments and savings amongst the taxpayers, the Income tax department has provisioned various deductions from the taxable income under Chapter VI-A of Section 80. Under Section 80C of the Income tax law, the investors are allowed to reduce their taxable income by investing in tax-saving schemes. It has provisioned a maximum deduction of Rs. 1.5 lakhs each year from tax payer’s total income. Individuals and HUFs can benefit from the laws of the section, While, companies, partnership firms, and LLPs are not availed of those benefits. Section 80C includes sub-sections such as 80CCC, 80CCD (1), 80CCD (1b), and 80CCD (2).
Eligible investments for tax deductions

1. Fixed income products (EPF, PPF, FD, SCSS, NHB, POTD, SSY)
2. Market-linked products (Life insurance premium, ELSS, Pension plans, ULIP)
3. Spending activities (Home loans, stamp duty & registration cost of house, tution fee of children(upto 2).

What are ELSS funds ?
Equity Linked Savings Schemes (ELSS) are mutual funds investing at least 80% of their investible corpus into equity-oriented or equity instruments. ELSS is a tax saving scheme offering tax exemptions of up to Rs. 1,50,000 from investors’ annual taxable income specified under Section 80C of the Income Tax Act 1961. It has a lock-in period of 3 years mandatorily. The earnings of the scheme can be considered as LTCG(Long term capital gain) taxed at the rate of 10% (if the income is more than Rs 1 lakh annually without indexation). Investors can start an investment with a minimum amount of Rs 500. Also, it provides options to the investor to invest a lumpsum amount or in monthly SIP.

What is ULIP ?
ULIP (Unit Linked Insurance Plan) is an investment instrument providing a combination of investment benefits in equity, debt, bonds, and insurance coverage. In India, UTI (Unit Trust of India) started ULIP for the first time in 1971, and LIC (Life Insurance Corporation) in 1989. It involves regular premium payments by the policyholders or investors, covering both investment and insurance coverage. The payments can be in lumpsum initially followed by monthly, semi-annually, or annual premium payments. Also, some ULIP schemes have the option of topping up the initial principal amount. ULIP insurance scheme has a lock-in period of 5 years and a combination of insurance plans and mutual funds including long-term investments which need to be held for 15 years. There are some charges associated with ULIP including premium allocation charges, fund management charges, mortality charges, Policy Administration Charges, Switching Charges, and Surrender Charges. It also has a provision of the tax deduction for investments under Section 80C for earning within the limit of 1.5 lakhs. While, returns on maturity from an insurance policy are exempted from taxation, as specified under Section 10(10D).

Types of ULIPS ?
There are several types of ULIPS depending on the nature of financial goals, payable premiums, and fund options –

1. Single Premium ULIPs (premium is paid in lumpsum at one time)
2. Regular Premium ULIPs (premium is paid over a period of time at regular intervals(monthly, semi-annually, or annually).
3. Equity fund-based ULIPS
4. Debt fund-based ULIPS

What are Hedge funds ?
Hedge funds are financial instruments that pool money from the high net worth or institutional investors and invest in varied securities including derivatives, publicly traded securities, and foreign exchange. It is a private portfolio of investments with risk management strategies generating returns and is limited to accredited investors. Hedge funds are private limited partnerships or limited liability companies requiring large amounts of minimum investment. It has a lock-in period of 1 year. Also, it is less regulated as compared to mutual funds and is unregistered. Hedge funds are riskier and involve high-capital investments eliminating retail investors. Hedge fund managers use leveraging to earn high returns.

Hedge funds vs Mutual Funds ?
Hedge funds and mutual funds are investment vehicles offering managed investment portfolios. Both instruments pool large amounts of money from different investors and invest in securities. Hedge funds focus on high-net-worth individuals, institutional investors, or accredited investors while mutual funds are available to retail or small investors. Hedge funds are not regulated or unregistered, while mutual funds should be registered and regulated by SEBI. The fees charged by the fund managers in a hedge fund are performance-based while the mutual fund manager charges a percentage of the fund’s daily NAV.

What are P-Notes (Participatory notes) ?
P-notes (Participatory notes) are offshore derivative instruments used to invest in the Indian securities market by foreign investors, hedge funds, or other high-net-worth individuals without any mandatory registration with the regulator SEBI. The PNs are issued by brokers and FIIs(Foreign institutional investors) registered with SEBI and investments (known as offshore derivative investments(ODIs)) are done by them on behalf of the foreign investors. The dividends on the underlying securities or other capital gains are transferred to the investors. The brokers need to report SEBI regarding the issuance status for each quarter mandatorily. P-notes are advantageous because it maintains the anonymity of the investors, and ease of trading without having to go through complex scrutiny in the registration process.

What is Bluechip fund ?
A bluechip fund is an equity investment fund scheme offering a portfolio of stable financial performance to investors for a long time period. Blue chip stocks are high-profit stocks and high-market companies i.e., companies in high demand with a high PE ratio. It is also called a growth fund.

What is Exit load ?
The exit load is a fee charged by an AMC when investors exit or redeem or sell the fund units. It is also known as an exit penalty or commission to fund houses. The main purpose of exit load is to discourage investors from backing out and short-term trading and protect long-term investors from potential adverse effects of short-term trading. It is to compensate for the potential costs associated with early exit or redemption of units. Exit Load = % charged for exit load * no of units * NAV

What are Income funds ?
An income fund focuses on current income (monthly or quarterly) instead of capital gains. It is a type of mutual fund or a debt fund to be specific which involves investments in debentures, corporate bonds, or government securities for a longer duration of time. Income funds are those debt funds whose Macaulay duration is 4 years or more. Income funds can be classified into debt mutual funds of 2 types –

1. Medium to long Duration Fund – Macaulay Duration = between 4 and 7 years
2. Long Duration Fund – Macaulay Duration = More than 7 years

Also, income funds are less riskier than funds focussing on higher returns and capital gains.

What is Financial Derivative ?
A financial derivative is an instrument deriving its value from an underlying asset including stocks, bonds, or commodities. The performance of derivatives can be determined by the performance of the underlying asset. Derivatives are used to hedge or protect against volatility risk and speculation for the future.
Types of Derivatives

• Options – An option is a derivative instrument that provides the investors the right and no obligation to buy or sell the underlying asset at a predetermined price or a strike price at a specific future date.
• Forwards – A forward gives the investor the right and obliged to buy and sell the underlying assets at a predetermined price in the future. Also, trade doesn’t happen on the exchange, and forwards are not regulated.
• Futures – A futures is a derivative instrument that obligates the investor to buy and sell the asset at a specific time in the future. Also, futures trades happen on the exchange.
• Swaps – A swap is a derivative instrument involving an exchange of cash flows for a fixed specific amount (other than the principal amount), on which interest is calculated and exchanged.

What is a Fund Factsheet?

A fund fact sheet is an overview of the mutual fund scheme with the information involving –

• The objective of the scheme
• NAV of different plans
• Fees paid to the fund manager
• Risk assessment
• Returns of the scheme
• The benchmark for the scheme
• Options available (growth/dividend)
• Minimum investment amount
• Exit loads applicable
• Plans (direct or regular)
• Systematic features (SIP, SWP, STP)
• AUM (Asset under management)

What is 20-25 rule ?
According to the regulatory mandate each mutual fund scheme should have at least 20 investors and each investor should not account for more than 25% of the corpus of the scheme. This is to reduce the cluster of investors in schemes.

What is Dividend Stripping ?
Dividend Stripping is the practice of buying a stock prior to the declaration of dividends and selling it off once the dividend is declared with the objective of saving taxes, by showing a capital loss on the sale transaction When dividends are declared, the price of a stock falls to the extent of the dividend declared. So, when an investor buys a stock just before the dividend is to be declared and sells it post the declaration of the dividend, he incurs a short-term capital loss on the sale since the price of the stock has fallen. He can use this capital loss to set off against some capital gain he may have in his overall investment portfolio. He also earns the dividend which is tax-free in the hands of investors.

What is a Unit Trust ?
A unit trust is an organization that pools money from different investors and invests the collected amount in varied businesses and financial assets It is also known as a mutual fund and offers mutual fund units for sale in public.

Are all mutual funds risky ?
Risk is involved in each investment differing in degree and nature. Risk in mutual funds can be of different types including liquidity risk, measuring the ease of asset conversion to cash. The degree of such risk is low in mutual funds. While there are many other risks involved with varying degrees in terms of return on investment.

Aren’t RDs and FDs enough to secure the future ?
Fixed Deposits (FDs) and Recurring Deposit (RDs) are the safest investment instrument with fixed rates of returns and minimum risk involved irrespective of taxes and inflation or interest rates. They offer a predictable income timely or at regular intervals without any risk posed to the principal amount

Who is a RTA (Registrar and Transfer Agent) in mutual funds ?
Registrar and Transfer Agents (RTA) maintain the records with all mutual fund investment-related information in a single window. It is a registered private firm under SEBI.

Direct Plan vs Regular Plan?
Direct Plan includes investment in mutual funds directly i.e., without involving or routing the investment through any distributor/agent and Regular Plan includes investment in mutual funds with the help of a Mutual Fund distributor/agent. Direct Plan has a lower expense ratio and higher NAV than the Regular Plan.

Is it Wise for Retirees to Invest in Mutual Funds ?
FDs, gold, real estate, PPFs, pension plans or insurance are mostly preferred financial instruments by retired people because of being less risky and predictable income. While it is to note that these instruments provide less liquidity to the invested amount. While the money invested in mutual funds can be liquidated and withdrawn easily and provide higher returns comparatively.

What are Basis Points ?
Basis point (bp or bps) is the hundredth of one percent i.e, 100 basis point is equal to 1%. It is the smallest measurement unit in finance.

• 1/100 0f 1% = 0.01% representing a basis point.
• 1 basis point = 0.01%
• 10 basis points = 0.10%
• 50 basis points = 0.50%
• 100 basis points = 1%
• 1000 basis points = 10%
• 10000 basis points = 100%

What are Equity Fund?
Equity fund is a Mutual Fund Scheme that mainly invest in Equity i.e. Shares or Stock of companies. They are also known as growth funds

What is Debt Fund ?
A debt mutual fund (also known as a fixed-income fund) is mutual fund scheme that invests a significant portion of money in fixed-income securities like government securities, debentures, corporate bonds and other money-market instruments. By investing money in such avenues, debt mutual funds lower the risk factor considerably for investors. This is a relatively stable investment avenue that could help to generate wealth

What are the benefits of investing in Debt Funds?
Debt funds offers the following benefits

• Stability of Income- Although returns are not guranteed and subject to market risks, Debt Funds comes with lower degree of risk as compared ton Equity funds
• Tax Efiiciency- Many people invest money primarily for saving Tax . Debt funds provide better tax efficiency than traditional investment option
• High Liquidity- Debt Fund offers high liquidity than investing in FD as FD have a specified lock in period
• Flexibility- Debt mutual funds also offer you the option of moving around your money to different funds. This is possible through a Systematic Transfer Plan (STP)

What is Systematic Transfer Plan(STP) in Debt Fund?
In Systematic Transfer Plan, the investor has the option to invest a lump sum amount in debt funds and systematically transfer a small portion of the fund into equity at regular intervals. This way the investor can spread out the risk of equities over a specified period of a few months rather than investing the entire amount at one point.

How do Debt fund work ?
The Debt Funds work by earning interest for the investors by investing their money in avenues like bonds and other fixed-income securities

What are different types of Debt Fund ?
The different types of Debt Fund are as follows:

• a. Liquid Fund
  A liquid fund as its name suggest is a Debt Mutual Fund that is highly liquid .These funds invest in debt instruments with a maturity period of not more than 91 days. These funds are considered to be among the least risky within mutual funds.
• b. Short Term Funds
  The Debt Fund that come with a maturity period of 1-3 years are referred to as Short Term Debt Funds.
• c. Medium Term Funds
  The funds that have a maturity period of 3-5 years are reffered to as Medium Term Debt Mutual Fund
• d. Long Term Debt Funds

Who should invest in Debt Funds ?
The investors who are not willing to take high risk should invest in debt funds. The risk of investing in debt mutual funds is lower than in equity funds. If the investor has a lower appetite for risk, these funds can be a right choice for them

How to choose Debt Fund ?
Before selecting a Debt Fund ,here are some of the factors to look into:

• Investment Objective- Before investing,the investor must ask herself about the investmet obejctive as differet types of Debt Funds cater to different types of goals so it become all the way important for the investor to indentify the investment objective to invest in right type of fund
• Time Duration-The investment goal as per time duration as every investment goal has a specific time limit.
• Risk Associated- The amount and the type of risk associated with Debt Fund that the investor is ready to take

What is Arbitrage ?
Arbitrage is a trading strategy that involves taking advantage of price differences between two or more markets or securities. In other words it can be defined as the simultaneous sale and purchase of the same or simiar assets in different markets in order to profit from tiny differences in the asset’s listed price.Arbitrage is legal in India as long as the investor is taking the delivery of shares. SEBI promotes such activities as it helps keep the prices of securities the same across different exchanges.

Explain Capital market. ?
Capital market refers to the financial market where long-term securities such as stocks, bonds, and other financial instruments are traded. It is a market where companies and governments can raise funds by issuing securities to investors. Capital markets play a crucial role in facilitating the flow of capital from investors who have surplus funds to those who need funds for long-term investments. This market is divided into two main components: the primary market, where securities are issued for the first time, and the secondary market, where these securities are traded among investors.

What is a Primary Market ?
A Primary Market is a marketplace in which the securities are sold for the first time in order to collect long term capital for the business .It is also known as New Issue Market as it is basically responsible for acquiring new issues

What is Secondary Market ?
The secondary market is where investors buy and sell securities. Trades take place on the secondary market between other investors and traders rather than from the companies that issue the securities. People typically associate the secondary market with the stock market.

What are different types of Secondary Market ?
Secondary Market primarily are of two types:

1. Stock Exchange
2. Over the Counter Market

What is EPS ?
EPS stands for Earning Per Share. It is calculated by dividing the annual or quaterly income (minus dividends) by the number of outstanding stock shares.The EPS is a measure of Companys profitablity .Higher the Company’s EPS ,higher is the profit and the value perceived by investors. What is the difference between Basic EPS and Dilluted EPS ?
Basic EPS takes into account only the common shares in calculation process whereas the Diluted EPS takes into account common shares as well as convertible security of any company .Both are important metric for companies to find an accurate P/E ratio .The value of diluted EPS can be less or equal to basic EPS.

What is P/E ratio ?
P/E ratio stands for Price to Earning Ratio. It is the ratio of the current market price of the company’s share in relation to its earning per share .
P/E Ratio = (Current Market Price of a Share / Earnings per Share)
It is one of the most widely used metrics by analysts while making investment decisions
It signifies the amount of money an investor is willing to invest in a single share of a company for Re. 1 of its earnings
For example if the P/E ratio of the company is 50.It implies that the investors are willing to pay Rs 50 for Re 1 of their current earings
When a company has a high P/E ratio it demonstrate that either the company is overvalued or is on a path towards growth and rise in te revenue in the future.Whereas a low P/E ratio on the other hand demonstrates undervaluation of stocks due to any systematic or unsystematic risk im the market 8) How are the funds managed by an AMC?

What are the advantages of investing in Mutual Funds ?
Investing in Mutual Funds offers certain advantages ,some of which are as follows:

1. Professional Management
   Mutual funds are managed by experienced and knowledgeable fund managers who make investment decisions on behalf of the investors. These professionals conduct in-depth research, analyze market trends, and monitor the performance of the underlying securities. Their expertise can potentially lead to better investment decisions, especially for investors who may not have the time or expertise to manage their own investments.
2. Divesification
   Mutual funds allow investors to pool their money with other investors to create a diversified portfolio of securities. By investing in a variety of assets, such as stocks, bonds, and commodities, mutual funds spread the risk across different investments. This diversification helps reduce the impact of any single security’s poor performance on the overall portfolio.
3. Liquidity
   Mutual funds are highly liquid investments. Investors can buy or sell mutual fund shares on any business day at the fund’s net asset value (NAV) . This liquidity provides flexibility and allows investors to access their funds quickly in comparison to other investment options such as real estate or certain types of fixed-term investments..
4. Accessibility:
   Mutual funds are accessible to a wide range of investors. They have relatively low minimum investment requirements, allowing individuals to start investing with a modest amount of money. This accessibility makes mutual funds suitable for both beginner investors and those with limited investment capital.
5. Affordability
   Mutual funds enable investors to participate in a diversified portfolio of securities without the need for a large initial investment. This is particularly beneficial for small investors who may not have sufficient funds to build a diversified portfolio on their own. By pooling their resources with other investors, they can benefit from the economies of scale associated with mutual funds.
6. Transparency
   Mutual funds are regulated investment vehicles, and as such, they are required to provide regular and comprehensive information to investors. This includes regular reporting of the fund’s holdings, performance, and expenses. Investors receive periodic statements and prospectuses that outline the fund’s investment strategy, risk factors, and associated costs. This transparency helps investors make informed decisions and evaluate the fund’s suitability for their investment goals.
7. Convenience
   Investing in mutual funds is convenient and time-efficient. Investors can easily set up automatic investment plans, allowing them to contribute a fixed amount regularly. This systematic investment approach helps investors save and invest consistently without requiring active monitoring of the market or frequent trading decisions.

What are the risks associated with investing in mutual funds?
Investing in Mutual Funds is not risk free . It also involves certain risk which the investor must be aware about. Some of the risk associated with Mutual Funds are:-

• Market Risk- Mutual funds are subject to market risk,meaning the value of the fund’s investments can fluctuate based on the performance of the overall financial markets. Factors such as economic conditions, interest rates, political events, and investor sentiment can impact the value of the fund’s securities.
• Managerial Risk-The performance of Mutaul Funds largely depends on the skills and decisions of the Fund Manager. Fund Mnager’s poor deision or inability to understand the market can negatively impact the funds performance
• Asset Specific Risk- There is a specific risk associated with every asset and Mutual Fund invests in a specific set of Assets
• Past Performance is not indicative of future growth -Although past performance is often considered when evaluating mutual funds, it does not guarantee future results. Market conditions, economic factors, and other variables may change, affecting the fund’s performance going forward.

What are Financial Ratios ?
Financial ratios are quantitative metrics used to analyze and assess a company’s financial performance, stability, and efficiency. They provide valuable insights into various aspects of a company’s operations, profitability, liquidity, solvency, and overall financial health These ratios are calculated by comparing different financial figures from a company’s financial statements, such as the balance sheet, income statement, and cash flow statement. Financial ratios help investors, analysts, and stakeholders evaluate a company’s performance over time, compare it to industry peers, and make informed investment or business decisions. They provide a standardized way to interpret financial data and facilitate meaningful comparisons across companies of different sizes and industries.

What are different types of financial ratios ?
Finacial Ratios can be categorized into the following types:-

• Liquidity Ratios
• Solvency Ratio
• Profitability Ratio
• Valuation Ratio
• Efficiency Ratio
• Cash Flow Ratio

What are liquidity`Ratio ?

Liquidity ratios are financial ratios that measure a company’s ability to meet its short-term obligations and assess its liquidity and working capital management. These ratios provide insights into a company’s ability to convert its assets into cash quickly to meet its immediate financial obligations. They are crucial for evaluating a company’s short-term financial health and its ability to handle unexpected expenses or downturns. The two common types of Liquidity Ratio are as follows;

1. Current Ratio
   The current ratio is a fundamental liquidity ratio that measures the company’s ability to cover its short-term liabilities with its short-term assets. It is calculated by dividing the company’s current assets by its current liabilities
   Current Ratio = Current Assets / Current Liabilities where,
   Current Assets-Current assets are a category of assets on a company’s balance sheet that are expected to be converted into cash or consumed within one year or the normal operating cycle of the business, whichever is longer. These assets are considered short-term in nature and are crucial for a company’s day-to-day operations.
   Current Assets include Cash and Cash Equivalents ,Marketable Securities ,Accounts Receivables,Inventory,Prepaid Expenses,Short Term Investments
   Current LIabilities:-Current liabilities are a category of liabilities on a company’s balance sheet that are expected to be settled within one year or the normal operating cycle of the business, whichever is longer. These liabilities represent the company’s obligations that require payment or fulfillment in the short term
   Current liabilities include Accounts Payable, Short Term Borrowings, Accrued Expenses,Notes Payable
2. Quick Ratio /Liquid Ratio / Acid Test Ratio
   The quick ratio is a more stringent measure of liquidity compared to the current ratio. It excludes inventory from current assets since inventory may not be easily converted into cash in the short term. The quick ratio provides an indication of the company’s ability to cover its short-term obligations with its most liquid assets.
   Quick Ratio = (Current Assets – Inventory-Prepaid Expenses) / Current Liabilities

Explain Solvency Ratios ?
Solvency ratios are financial ratios that measure a company’s ability to meet its long-term debt obligations. These ratios assess the company’s financial stability and its ability to repay its debts in the long run. Solvency ratios are crucial for creditors, investors, and other stakeholders to evaluate the financial health and risk associated with a company. Here are some important solvency ratios

• Debt to Equity Ratio
• Debt Ratio
• Interest Coverage Ratio
• Debt Service Coverage Ratios

Cash Flow to Debt Ratio
Hence solvency ratios help stakeholders evaluate a company’s ability to manage its long-term debt obligations, assess its financial risk, and make informed decisions regarding lending, investment, and overall financial health.

What is Debt-to-Equity Ratio,what is its significance and how it is calculated ?
The debt-to-equity ratio is a financial ratio that compares a company’s total debt to its shareholders’ equity. It provides insight into the company’s capital structure and financial leverage. The debt-to-equity ratio is important because it helps assess the level of financial risk and the extent to which a company relies on debt financing. To calculate the debt-to-equity ratio, you divide a company’s total debt by its shareholders’ equity. The formula is as follows:

Debt-to-Equity Ratio = Total Debt / Shareholders’ Equity
Both total debt and shareholders’ equity can be found on a company’s balance sheet. The resulting ratio helps stakeholders evaluate a company’s capital structure, financial risk, and its ability to meet its long-term debt obligations.
The significance of the debt-to-equity ratio lies in its ability to indicate the proportion of debt and equity used to finance a company’s assets .Here are some key points regarding its significance:-
The significance of the debt-to-equity ratio lies in its ability to indicate the proportion of debt and equity used to finance a company’s asset

1. Financial Risk Assessment: Debt-to-Equity Ratio helps in the the Financial Risk Assesment of the company A high debt-to-equity ratio suggests that a company relies heavily on debt financing, which can increase financial risk High debt levels make a company more vulnerable to economic downturns, interest rate fluctuations, and the potential inability to meet debt obligations.
2. Stability and Flexibility: Debt-to-Equity ratio also helps in determining the flexibilty and the stability of the company . A lower debt-to-equity ratio indicates a more stable and flexible financial position. It implies that the company has a higher proportion of equity financing, which provides a cushion against financial distress and improves its ability to withstand economic challenges.
3. Borrowing Capacity: Lenders and creditors use the debt-to-equity ratio to evaluate a company’s borrowing capacity. A higher ratio indicates a higher level of debt relative to equity, which may make it more challenging for a company to obtain additional financing.
4. Industry Comparison :Comparing the debt-to-equity ratio with industry peers helps assess a company’s competitiveness and risk profile. It provides a benchmark to determine if a company has a higher or lower debt burden compared to its industry norms.

What is Debt Ratio ?
The debt ratio, also known as the debt-to-assets ratio, is a financial ratio that measures the proportion of a company’s assets that are financed by debt. It assesses the level of financial leverage and indicates the extent to which a company relies on borrowed funds to finance its operations. The debt ratio is calculated by dividing a company’s total debt by its total assets. The formula is as follows: Debt Ratio = Total Debt / Total Assets

The resulting ratio represents the percentage of a company’s assets that are funded by debt. It provides insight into the company’s overall financial risk and its ability to meet its debt obligations.
The Debt Ratio helps in determining the following:-

1. Financial Risk
2. Creditworthiness
3. Industry comparision
4. Long Term Financial Health

However it is important to note that the ideal debt ratio varies across industries and depends on factors such as business model, stability, and risk appetite. Therefore, it is crucial to analyze the debt ratio in conjunction with other financial ratios and industry benchmarks to get a comprehensive understanding of a company’s financial position and risk profile

What is Interest Coverage Ratio ?
The interest coverage ratio is a financial ratio that measures a company’s ability to cover its interest expenses with its earnings before interest and taxes (EBIT). It provides insight into a company’s ability to generate sufficient operating income to meet its interest obligations. The interest coverage ratio is calculated by dividing a company’s EBIT by its interest expenses. The formula is as follows: Interest Coverage Ratio = EBIT / Interest Expenses A higher interest coverage ratio indicates that a company generates more than enough operating income to cover its interest expenses. This suggests a stronger ability to fulfill its interest payment obligations and reflects a lower risk of defaulting on its debt.

Explain Debt Service Coverage Ratio ?
The Debt Service Coverage Ratio (DSCR) is a financial ratio that measures a company’s ability to meet its debt service obligations. It evaluates whether a company generates sufficient cash flow to cover its debt repayment requirements, including principal and interest payments, within a given period. The Debt Service Coverage Ratio is calculated by dividing a company’s operating income or cash flow by its total debt service obligations. The formula is as follows: DSCR = Operating Income / Total Debt Service

What is Cash flow to Debt ratio ?
The Cash Flow to Debt Ratio is a financial ratio that measures a company’s ability to generate sufficient cash flow to cover its total debt obligations. It assesses the company’s ability to generate cash flow from its operations and compares it to the total debt it owes.
The Cash Flow to Debt Ratio is calculated by dividing a company’s operating cash flow by its total debt. The formula is as follows:
Cash Flow to Debt Ratio = Operating Cash Flow / Total Debt
The operating cash flow used in the calculation refers to the cash generated by a company’s core operations, excluding financing and investing activities. Total debt includes both short-term and long-term debt obligations. Cash Flow to Debt Ratio signifies the following:

1. Debt Repayment Facility
2. Financial Stability
3. Creditworthiness
4. Investment analysis

Generally, a higher ratio is desirable as it signifies a stronger ability to generate cash flow and manage debt obligations however It’s important to note that the ideal Cash Flow to Debt Ratio can vary depending on the industry, business model, and specific circumstances

What are Profitability Ratio ?
Profitability ratios are financial ratios that assess a company’s ability to generate profits from its operations and measure its overall profitability.These ratios provide insights into the company’s efficiency in managing costs, generating revenue, and maximizing profits.
Profitability ratios are crucial for investors, creditors, and stakeholders to evaluate the financial performance and sustainability of a company.
Some commonly used profitability ratios are as follows:

1. Gross Profit Margin
2. Net Profit Margin
3. Return On Assets(ROA)
4. Return on Equity(ROE)
5. Earnings Per Share (EPS)
6. Return on Investment (ROI)
7. Operating Cash Flow Margin
8. Operating Profit Margin

What is Gross Profit Margin Ratio ?
Gross profit margin is a profitability ratio that measures the percentage of revenue remaining after deducting the cost of goods sold (COGS). It assesses how efficiently a company manages its production or direct costs in relation to its revenue.
To calculate the gross profit margin, you need to subtract the COGS from the total revenue and then divide the result by the total revenue. The formula is as follows:

• Gross Profit Margin = (Total Revenue – COGS) / Total Revenue
• The resulting ratio is expressed as a percentage.

The gross profit margin provides valuable insights into a company’s ability to generate profits from its core operations and manage its costs effectively. However, it should be used in conjunction with other profitability ratios and financial indicators to obtain a comprehensive understanding of the company’s overall financial health

What is Operaing Profit Margin ratio ?
Operating profit margin is a profitability ratio that measures the percentage of operating income (or operating profit) relative to revenue. It evaluates a company’s ability to generate profits from its core operations, excluding non-operating items such as interest and taxes. The operating profit margin indicates the company’s efficiency in managing its operating expenses and generating profit from each rupee of revenue.
Operating profit margin is obtained in percentage .It is calculated by dividing the operating income from total revenue and multiplying it by 100
Operating Profit Margin = (Operating Income / Total Revenue) * 100

What is Net Profit Margin ratio ?
Net profit margin is a profitability ratio that measures the percentage of net income relative to total revenue. It assesses a company’s ability to generate profit after considering all expenses, including operating costs, interest, taxes, and other non-operating items.
To calculate the net profit margin, you divide the net income by the total revenue and multiply the result by 100 to express it as a percentage. The formula is as follows:
Net Profit Margin = (Net Income / Total Revenue) * 100 t’s important to note that the net profit margin can vary significantly across industries. Some industries may have naturally higher or lower profit margins due to factors such as industry dynamics, competition, and cost structures.

What do you mean Return On Equity ?
Return on Equity (ROE) is a financial ratio that measures the profitability of a company and its efficiency in generating profits from the shareholders’ equity invested in the business.. It is a widely used metric by investors, analysts, and financial institutions to assess a company’s performance.
ROE is calculated by dividing the net income of a company by its average shareholders’ equity
ROE in simple terms can be understood as Return, an investor gets on investing in the equity of any company.Higher the ROE ,better it is
The formula for Return on Equity (ROE) is as follows:
ROE = (Net Income / Average Shareholders’ Equity) * 100
Where Net Income represents the company’s total earnings after deducting expenses, taxes, and interest .

Explain Valuation Ratios ?
Valuation ratios are financial metrics used to assess the relative value of a company’s stock or business. These ratios provide insights into whether a stock is overvalued, undervalued, or fairly priced. They are widely used by investors, analysts, and financial professionals to make investment decisions and compare companies within the same industry.
Some common Valuation Ratios are as follows:

1. Price-to-Earnings Ratio (P/E Ratio)
2. Price/Sales Ratio (P/S Ratio)
3. Price/Book Ratio (P/B Ratio)
4. Enterprise Value/EBITDA (EV/EBITDA)
5. Dividend Yield

Explain P/S Ratio ?
P/S ratios, or price-to-sales ratios, are a valuation metric that compares a company’s stock price to its revenues. It is an indicator of the value that financial markets have placed on each rupee of a company’s sales or revenues.
The P/S ratio is calculated by dividing the market capitalization of a company by its annual revenue:
A low P/S ratio indicates that investors are paying less for each dollar of the company’s sales, which could be a sign that the stock is undervalued. A high P/S ratio indicates that investors are paying more for each dollar of the company’s sales, which could be a sign that the stock is overvalued.

What is P/B ratio ?
The Price/Book ratio (P/B ratio), also known as the book value multiple or price-to-book ratio, is a valuation ratio that compares a company’s market price per share to its book value per share. It is used to assess the relative value of a company’s stock based on its book value.
The P/B ratio is calculated by dividing the market price per share by the book value per share:
P/B Ratio = Market Price per Share / Book Value per Share
The market price per share represents the current trading price of the company’s stock in the market. The book value per share, on the other hand, is the total shareholder’s equity (net assets) divided by the number of outstanding shares.

What is the significance of P/B ratio ?
The Price/Book ratio (P/B ratio) has several significant implications and uses in financial analysis and investment decision-making

• Value Assesment
• Asset Based Analysis
• Historical Trend analysis
• Risk Assesment
• Comparision with peers

What is Modified Duration ?
Modified duration is a measure used in fixed-income investments to estimate the sensitivity of a bond’s price to changes in interest rates. It provides an indication of how much the price of a bond is expected to change for a given change in yield.
Modified duration takes into account the concept of bond duration, which measures the weighted average time it takes to receive the cash flows (coupon payments and principal) from a bond. However, modified duration adjusts for the effect of changes in yield on a bond’s price.
The formula for modified duration is as follows:
Modified Duration = Macaulay Duration / (1 + Yield-to-Maturity)

What is Dividend yield ?
Dividend yield is a financial ratio that indicates the return on investment in the form of dividends received from a company’s stock. It is calculated by dividing the annual dividend per share by the stock’s current market price and expressing the result as a percentage.
The formula for dividend yield is:
Dividend Yield = (Annual Dividend per Share / Market Price per Share) * 100
Dividend yield is often used by investors as an indicator of the income they can expect to receive from an investment relative to its current market price. It allows investors to compare the dividend-paying ability of different stocks or investments.
Generally, higher dividend yields are considered more attractive because they indicate a higher income stream relative to the investment’s price.

What are ETFs ?
ETFs (Exchange Traded Funds) are financial security traded on the secondary market ie., in a registered stock exchange. Its NAV varied according to the market movements. ETF funds track the returns and yields of the native indices (like NIFTY, BSE Sensex, etc). It is a type of index fund but does not outperform the index it is tracking instead just replicates its progress.
ETF charges are lower than that of usual mutual fund schemes and have higher daily liquidity.

What are index funds ?
Index Mutual Fund is passively managed i.e., the fund manager does not select the securities for investment instead the investments are made in the securities present within the underlying index with the same composition of the portfolio. It mimics the market indices. The returns offered are similar to the index returns. While ETFs are traded throughout the tacking day, index funds can be traded for the price set at the end of the day.

What do you understand by EV/EBITDA ?
EV/EBITDA, or Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization, is a financial ratio that is commonly used to assess the valuation of a company relative to its operating performance
EV/EBITDA is calculated by dividing the enterprise value (EV) of a company by its EBITDA. The enterprise value represents the total value of a company, taking into account both its equity and debt. EBITDA, on the other hand, stands for Earnings Before Interest, Taxes, Depreciation, and Amortization, and it reflects a company’s operating profitability before considering these specific expenses.
The formula for EV/EBITDA is:
EV/EBITDA = Enterprise Value / EBITDA

What are the strategies that can be adopted for investing in Mutual Funds ?
Strategies to adopt while investing in mutual funds depend on factors including investment goal, risk tolerance, time horizon, and other personal preferences. Some common strategies are as follows –

1. Diversification – Diversification is a type of mutual fund strategy involving varied schemes across different sectors, investment styles, regions, or asset classes. Diversification reduces the impact of individual funds’ performance mitigating risk on the overall portfolio and ensures consistent returns.
2. Asset Allocation: Asset allocation is the distribution of funds over diversifying asset classes involving stocks, bonds, or cash. There are various asset allocation options available including equity, bonds, balanced funds, etc. The asset allocation should in alignment with the investors’ goals, time horizon, and risk tolerance. refers to the distribution of investments across different asset classes, such as stocks, bonds, and cash.
3. Index Fund Investing: Index funds mimic the performance and movement of the market indices, such as NIFTY. index funds are passively managed funds, and thus have a lower expense ratio. Also, it does not outperform the market index, instead, its performance is a replica of the performance of the market index.
4. Sector or Theme Investing: Mutual fund schemes focussing on specific themes or sectors involving healthcare, energy, technology, etc, according to the personal interest or the market trend. Also, it is to be noted that sectors specific funds are more volatile and pose higher risks compared to diversified funds.
5. Goal-based Investing: Goal-specific investing focuses on the particular goal of interest of the investor such as education financing, retirement funding, etc. It involves the selection of the time horizon for the goal, the return expectation of the investor, and its risk appetite. It may also involve regular speculation, monitoring, and modifications within the portfolio.
6. Active Fund Management: it is the mutual fund management strategy where the funds are actively managed by the fund manager aiming to outperform the market movement. The decisions taken by the fund managers are based on efficient research and analysis. Also, investors need to effectively evaluate the performance record of the fund manager before actually choosing to invest with him.

Are Mutual Funds an ideal investment for the small investor ?
Mutual funds investing promotes the regular investing culture within the society. Every investor, big or small can start a mutual fund investment with as low as Rs 500 monthly within a savings bank account.

Can you switch investments from one scheme to another of a Mutual Fund ?
Changes in the mutual fund schemes can be in the following ways –

• Change in plan (Regular/Direct)
• Options (Growth/Dividend)
• Sale (redemption) – change of scheme within the same mutual fund house. Also, redemption will include exit load and capital gains tax depending on the time period of investment.

Why should one invest in mutual funds ?
Financial Managers — Investors lack time and professional knowledge to research, analyze and purchase individual stocks. A mutual is managed by a professional fund manager with expertise and available resources to actively manage and monitor the funds, modifying the portfolio accordingly to achieve the fund’s objective. Mutual fund companies can be outsourced with a team of expert fund managers.
Risk Diversification — Diversifying your mutual fund portfolio by buying shares of varied securities and asset classes including equity, gold, and debt, spreads the risk and reduces the impact of individual security risk on the overall portfolio.
Tax Benefits – Under Section 80C of the Income Tax Act, 1961, ELSS mutual funds is a tax saving scheme offering tax exemptions of up to Rs 1,50,000 from investors’ annual taxable income. Also, LTCG schemes provide some tax deduction benefits.
Low Cost – Mutual fund is a cost-effective investment. The fees charged to manage the funds is relatively low than private funds or hedge fund.
Liquidity – Mutual funds can be easily liquidated i.e., whenever the investor is in need of cash, can sell the shares, and can access cash in exchange.
Diversification – The funds are invested in a variety of asset classes making the overall portfolio more diversified, spreading risks, and reducing the impact of one stock’s volatility on the overall portfolio.

How to deal with rumours while investing ?
Here are some tips that can help:
Don’t panic. It’s natural to feel anxious when you hear a rumor about a company you’re invested in, but it’s important to remember that rumors are just that – rumors. They may not be true, and even if they are, they may not have a significant impact on the company’s long-term prospects.
Do your research. If you hear a rumor, the best thing to do is to do your own research to see if there’s any truth to it. Check the company’s website, read recent news articles, and talk to your financial advisor. If you can’t find any evidence to support the rumor, then it’s probably best to ignore it.
Don’t act impulsively. If you’re considering selling a stock because of a rumor, take some time to think about it first. Make sure you understand the potential risks and rewards of selling, and don’t make any decisions based on emotion.
Stay focused on your long-term goals. It’s important to remember that rumors are just short-term noise. If you’re investing for the long term, then you shouldn’t let rumors derail your investment plan.

What are the indicators of risk in a Mutual Fund Scheme ?
The fund’s asset allocation: This refers to the mix of different asset classes that the fund invests in. A fund with a more aggressive asset allocation will be more volatile and have a higher risk of loss than a fund with a more conservative asset allocation.
The fund’s volatility: This is a measure of how much the value of a fund’s shares fluctuates over time. A fund with high volatility will experience more ups and downs in its price than a fund with low volatility.
The fund’s beta: This is a measure of how a fund’s returns correlate with the returns of the market as a whole. A fund with a beta of 1 will move in line with the market, while a fund with a beta of 2 will move twice as much as the market.
The fund’s expense ratio: This is a measure of the fees that a fund charges its investors. A higher expense ratio will eat into the fund’s returns, so it’s important to choose funds with low expense ratios.
The fund’s track record: This is a measure of how it has performed in the past. However, it’s important to remember that past performance is not necessarily indicative of future results.

Explain premium and discounts for Mutual funds ?
If the market price of close-ended funds is above its net asset value (NAV), the fund is trading at a premium.
However, if the market price of the fund is less than its NAV, the fund is trading at a discount.

What is Rupee Cost Averaging ?
Rupee cost averaging is averaging the cost at which the mutual fund units are bought. Equity investing involves volatility as an important factor representing the stability of the economy. According to the law of demand, with a decrease in demand, commodity prices increase. However, with the increase in demand, the price decreases.
Investing also follows the fundamental principle of buy-low and sell-high. It means that the investor should buy more units while the prices are down and buy less when the prices are high. However, if the investor does the opposite, rupee cost averaging increases and returns losses.

What do you mean by Private Equity ?
Private equity refers to a form of investment in which capital is invested directly into privately held companies or used to acquire a controlling stake in public companies with the goal of generating significant returns. Private equity firms raise funds from institutional investors, such as pension funds, endowments, and wealthy individuals, and use that capital to make investments in various businesses. Private equity firms typically operate as limited partnerships, with a general partner managing the investment fund and limited partners providing the capital. The general partner is responsible for sourcing and executing investment opportunities, while the limited partners contribute the majority of the capital and have limited involvement in the day-to-day operations of the firm.

What do you mean by Alterantive Asset Management ?
Alternative asset management refers to the management and investment of assets that are considered non-traditional or alternative in nature. These assets are typically distinct from traditional investments like stocks, bonds, and cash. Alternative assets can include a wide range of investments, such as private equity, hedge funds, real estate, commodities, infrastructure, venture capital, distressed debt, and more.
Alternative asset management involves the professional management of these non-traditional investments on behalf of institutional investors, high-net-worth individuals, or other entities seeking to diversify their portfolios and potentially achieve higher returns. Alternative asset managers typically operate specialized funds or vehicles that invest in these alternative asset classes.

It’s important to note that alternative assets are typically less liquid compared to traditional investments, meaning they may have longer lock-up periods or limited avenues for selling or exiting the investment. Additionally, alternative asset management is subject to regulatory requirements and oversight, depending on the jurisdiction and the specific type of asset being managed.

What do you understand by Distressed Debt ?
Distressed debt refers to debt securities or loans that are issued by companies or individuals experiencing financial difficulties or facing the possibility of default. Distressed debt typically arises when the borrower is unable to meet its debt obligations, leading to a significant decline in the value of the debt instruments.
When a borrower is in financial distress, the value of its debt in the market may decline, as investors become concerned about the borrower’s ability to repay the debt. Distressed debt is often sold at a discounted price relative to its face value, reflecting the increased risk associated with the investment. Investors who specialize in distressed debt seek to purchase these debt instruments at a discount, anticipating a potential recovery or turnaround in the borrower’s financial situation.
Investing in distressed debt can be a strategy employed by hedge funds, private equity firms, or specialized distressed debt funds. These investors may acquire distressed debt through secondary markets or by participating in debt restructuring processes, bankruptcy proceedings, or loan auctions.

How does ELSS work ?
ELSS (Equity Linked Saving Scheme) works as a tax-saving mutual fund scheme in India with a focus on equity investments. Here’s how ELSS typically works:

1. Investment: Investors can invest in ELSS by purchasing units of the mutual fund scheme offered by an Asset Management Company (AMC) or a fund house. The minimum investment amount and subsequent investment amounts may vary across different ELSS schemes.
2. Lock-in Period: ELSS has a mandatory lock-in period of three years. Once invested, investors cannot redeem or withdraw their investment before the completion of this period. The lock-in period is calculated from the date of each investment made in the ELSS scheme. However, after the completion of the lock-in period, investors have the flexibility to redeem their investments partially or in full.
3. Tax Benefits: ELSS investments qualify for a tax deduction under Section 80C of the Indian Income Tax Act. Investors can claim a deduction of up to INR 1.5 lakh in a financial year for investments made in ELSS. This deduction reduces the taxable income, potentially resulting in tax savings for the investor. It’s important to note that tax laws and deductions are subject to change, so investors should stay updated with the latest regulations.
4. Equity Investments: ELSS funds primarily invest in equity and equity-related instruments. The fund manager and the investment team of the AMC actively manage the fund’s portfolio. They invest in a diversified basket of stocks across different sectors and market capitalizations to mitigate risk and potentially generate long-term capital appreciation.
5. SIP and Lump Sum Investments: Investors have the flexibility to invest in ELSS through both lump sum investments and systematic investment plans (SIPs). In SIPs, investors can contribute a fixed amount at regular intervals (monthly, quarterly, etc.), allowing them to invest systematically over time. This helps in averaging the investment cost and mitigating the impact of market volatility.
6. Returns and Risks: ELSS funds are subject to market risks, as they primarily invest in equities. The performance of ELSS funds depends on various factors, including the overall market conditions, stock selection by the fund manager, and the investor’s investment horizon. ELSS funds have the potential to generate higher returns over the long term but are also exposed to market
   volatility. Investors should carefully assess their risk tolerance and investment objectives before investing in ELSS.
7. Redemption: After the completion of the mandatory lock-in period of three years, investors have the option to redeem their ELSS investments partially or in full. The redemption process involves selling the units back to the fund house. The redemption proceeds are then credited to the investor’s registered bank account. It’s important to note that the performance of ELSS funds can fluctuate, and investors should consider their investment horizon and financial goals before making redemption decisions.

How inflation affects mutual fund return rates ?
Inflation is the increase in the prices of goods and services over a certain period of time, leading to declining purchasing power i.e., the cost of goods and services increases. It also leads to decreasing the value of money over time and a reduction in returns from investments. Actual returns can be calculated by calculating the difference between nominal return and inflation. Investors need to ensure that the returns on their investments should be to equal or greater than the rate of inflation. If the return on investment is less than the rate of inflation, the investor loses money, even if it shows gains. Also, salaried individuals need to ensure that their salaries should increase yearly to a rate equal to or greater than the rate of inflation, otherwise, individuals gain less money than they can.

What is the significance of credit rating on Debt mutual funds ?
Credit rating is a quantitative assessment of a specific debt instrument denoting the ability of the entity to fulfill its debt obligations. It assesses the risk associated of investing in fixed income instruments like bonds with corporate bodies or government. It is used in selecting appropriate debt instrument for investment while assessing the creditworthiness of the borrower of the fund.

What is financial contagion ?
Financial contagion is the risk of facing difficulties at one or more financial system entities responsible for spreading difficulties to other large numbers of other financial entities (such as banks, NBFCs, mutual funds, etc). This may lead to the failure of financial system entities which are connected through inter-bank funding markets, over-the-counter derivatives markets, etc, and other non-financial companies because of credit flows choked up.

What is the difference between AMC and AAM ?
AMC stands for Asset Management Company, while AAM stands for Alternative Asset Management.
Asset Management Company (AMC): An AMC is a financial institution that manages and administers investment funds, such as mutual funds, on behalf of investors. The primary role of an AMC is to pool funds from individual and institutional investors and invest them in various securities, such as stocks, bonds, and money market instruments, according to the investment objectives of the fund. AMCs offer a range of investment options and actively manage the portfolio to maximize returns while considering the risk tolerance of the investors. AMCs charge fees for their services, typically based on a percentage of the assets under management (AUM).

Alternative Asset Management (AAM): Alternative Asset Management refers to the management and investment of non-traditional or alternative assets, which are distinct from traditional investments like stocks and bonds. Alternative assets can include private equity, hedge funds, real estate, commodities, infrastructure, venture capital, distressed debt, and more. AAM involves the professional management of these alternative assets on behalf of investors who seek diversification, potential higher returns, and exposure to different market dynamics. Alternative asset managers employ specialized strategies and expertise to maximize returns and manage risks within their chosen asset classes. AAM may be offered by specialized investment firms or divisions within larger financial institutions.

In summary, AMC primarily focuses on managing and administering investment funds like mutual funds, while AAM involves the management of non-traditional or alternative assets like private equity and hedge funds. AMCs cater to a broader base of investors and offer a variety of investment options, while AAM is more specialized and targeted towards investors seeking exposure to alternative asset classes.

What is Balanced managed fund ?
A balanced managed fund, also known as a balanced fund or a balanced portfolio, is a type of investment fund that seeks to provide a balanced approach to investing by diversifying across multiple asset classes. The main objective of a balanced managed fund is to achieve moderate growth while also managing risk. In a balanced managed fund, the fund manager typically allocates the fund’s assets across different types of investments, such as stocks, bonds, and cash equivalents, in order to create a diversified portfolio. The specific asset allocation may vary depending on the investment goals and the fund manager’s strategy. The balance in a balanced managed fund refers to the distribution of investments across various asset classes in order to achieve a blend of growth and stability. By diversifying across multiple asset classes, the fund aims to reduce the impact of any single investment’s performance on the overall portfolio. This diversification helps to spread the risk and potentially provide more consistent returns over time. Investors who choose a balanced managed fund often have a moderate risk tolerance and are seeking a balanced approach that combines the potential for capital appreciation with some level of stability. These funds are commonly chosen by investors who want exposure to different asset classes without the need to actively manage their portfolio themselves.

What is the difference between life and pension funds ?
Life funds and pension funds are two types of investment vehicles that serve different purposes and cater to different stages of an individual’s financial life. Here are the key differences between the two:
Purpose:
Life Funds: Life funds are investment vehicles designed to provide long-term savings and financial protection for individuals and families. They are typically used to accumulate wealth, meet financial goals, and provide a safety net in case of unforeseen events such as disability, critical illness, or death. Pension Funds: Pension funds, on the other hand, are specifically designed to provide income during retirement. They are intended to support individuals after they stop working and no longer have a regular income stream from employment. Pension funds are structured to help individuals maintain their lifestyle and cover living expenses in their retirement years.
Investment Horizon:
Life Funds: Life funds have a longer investment horizon as they are meant to build wealth over several years or even decades. They often offer a range of investment options and may include equity funds, bond funds, and other asset classes to generate growth over the long term. Pension Funds: Pension funds have a relatively shorter investment horizon as they are focused on generating income during retirement. These funds tend to have a more conservative investment approach with a greater emphasis on income-generating assets, such as bonds, fixed income securities, and dividend-paying stocks. The objective is to preserve capital and provide a steady income stream.
Withdrawal Restrictions:
Life Funds: In life funds, there is typically no specific restriction on accessing the invested funds. Investors can withdraw their money or make partial withdrawals at any time, subject to any applicable charges or penalties. Pension Funds: Pension funds are subject to strict withdrawal restrictions and regulations. The accumulated funds are generally locked-in until the individual reaches a certain age (as per local regulations) or fulfills specific retirement criteria. Withdrawals from pension funds are often structured as periodic payments or annuities, ensuring a regular income during retirement.
Tax Benefits:
Life Funds: Depending on the jurisdiction, life funds may offer certain tax benefits such as tax-deferred growth, tax-exempt withdrawals under specific circumstances, or deductions for contributions made towards life insurance or savings plans. Pension Funds: Pension funds often come with tax advantages to incentivize retirement savings. Contributions to pension funds may be tax-deductible, and the growth within the fund is typically tax-deferred until withdrawals are made during retirement. Tax treatment of pension funds can vary across jurisdictions. It’s important to note that the specific features, regulations, and tax implications of life funds and pension funds can vary based on the country’s legal and regulatory frameworks. It is advisable to consult with a financial advisor or tax professional who can provide guidance tailored to your specific situation and local regulations.

What is the objective of Balanced Mnaged Fund ?
To generate long term capital appreciation along with current income from a combined portfolio of equity and debt market instruments. The equity exposure will be between 30%-60%.

What is Defensive Managed Fund ?
To enhance long term returns for a portfolio predominantly invested in fixed income securities by taking a moderate to medium exposure to equity and equity related securities. The equity exposure will be between 15%-30%

What is NPS ?
NPS(National Pension System) is a retirement savings scheme that enables subscribers to make optimum decisions for their future by saving systematically during their working life. It is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). The NPS offers two types of accounts:
Tier I: This is a retirement account that is mandatory for all subscribers. The contributions made to this account cannot be withdrawn before the age of 60, except in certain cases such as for the purchase of a home, medical emergencies, or education of children.
Tier II: This is a voluntary savings account that can be used for any purpose. The contributions made to this account can be withdrawn at any time.
The NPS allows subscribers to invest their contributions in a mix of equity, debt, and government securities. The investment pattern can be changed at any time.

The NPS offers a number of benefits, including:

Tax benefits under Section 80C of the Income Tax Act
Flexibility in choosing investment pattern and frequency of contributions
Security through a well-regulated scheme and diversified portfolio of assets
The NPS is a good option for individuals who want to save for their retirement in a tax-efficient manner and have more control over their investment decisions.

Here are some key features of the NPS scheme:

Voluntary participation: Individuals can choose to participate in the NPS or not.
Defined contribution scheme: The amount of pension that a subscriber receives will depend on the contributions made and the returns earned on those contributions.
Portable scheme: Subscribers can transfer their account from one NPS service provider to another.

What are the regulatory authorities responsible for NPS ?
The regulatory authorities responsible for the National Pension System (NPS) are: Pension Fund Regulatory and Development Authority (PFRDA): Established in 2008, PFRDA is a regulatory body maintaining the pension sector in India. It is responsible for regulating NPS. Central Recordkeeping Agency (CRA): CRA is the Indian venture responsible for record maintenance of subscribers, customer service, and facilitating fund transfers between NPS service providers. Pension Fund Managers (PFMs): Responsible for portfolio management for the subscribers. They invest the subscribers’ contributions in diversified portfolios including different asset classes. Annuity Service Providers (ASPs): Responsible for annuity provision to the NPS subscribers.

What is NPST ?
NPS Trust ( National Pension System Trust ) is a statutory body under the Pension Fund Regulatory and Development Authority (PFRDA) Act, 2008, and was established by the Government of India. Responsibilities –

1. Management of assets under NPS (including contributions of the subscribers and returns).
2. Issuing of NPS Certificates: NPS Certificates are issued to the subscribers representing the ownership of NPS assets.
3. Annuities are provided to the NPS subscribers after their retirement.
4. Other services to the subscribers such as opening an account, transferring funds, and redress of grievances.

What are the objectives NPS ?

1. To provide a retirement income that is adequate and sustainable
2. To provide a flexible and portable retirement savings scheme
3. To promote a national savings culture
4. To provide a secure and transparent retirement savings scheme

Who are the beneficiaries of NPS ?
NPS can be benefitted to any Citizen of India (Resident/NRI) between the age group of 18-70 years. They can open an NPS account by visiting the POP-SP website or the e-NPS website. Also, NRIs need to adhere to the prescribed regulatory requirements by RBI and FEMA (Foreign Exchange Management Act, 1991). However, OCI(Overseas Citizens of India) and PIO (Person of Indian Origin), and HUF(Hindu Undivided Family) are not eligible for NPS.

Can a person open multiple NPS accounts ?
No, multiple NPS accounts cannot be opened by a single individual. However, a person can have accounts in both NPS and Atal Pension Yojana.

What are the investment choices in NPS ?
Active choice – NPS offers subscribers the flexibility to design their own portfolio, and allocate the funds into 4 different asset classes according to their own risk appetite. Asset classes are
Equity E – (High return, High-risk fund) predominantly investing in Equity market instruments,
Corporate Bond C (Medium risk, Medium return) predominantly invests in fixed income-bearing instruments,
Government Bond G (Low risk, Low return) investing predominantly in government securities,
Alternate Investment Fund AIF – Investments are made in instruments like CMBS, MBS, REITS, AIFs, Invlts, etc.
Auto choice – NPS offers subscribers the flexibility to opt for dynamic and automatic allocation of funds within the portfolio. In this, the funds are allocated to 4 different asset classes in defined proportions according to the subscribers’ age and their risk appetite. Depending on the risk appetite of the subscriber, different options can be
Aggressive (LC-75) – Upto the age of 35, max equity exposure can be 75%
Moderate (LC-50)- Upto the age of 35, max equity exposure can be 50%
Conservative(LC-25) – Upto the age of 35, max equity exposure can be 25%
What are the sectors of NPS ?

1. Government sector
   • Central government – Central government introduced the NPS and it came into effect on 1st Jan 2004. It is applicable to all employees of the central government or CABS(Central Autonomous Bodies) who need to contribute towards pension from their monthly salary and an equal amount will be matched and contributed by the employer.
   • State government – The state government also adopted the architecture and initiated the implementation of NPS for the state government or SABS (State Autonomous Bodies) employees.
2. Non Government sector
   • Corporate sector
   • All citizens of India – Any citizen not covered under any of the above-mentioned categories can join NPS architecture under the All Citizens of India sector from May 1, 2009.

What is Annuity ?
An annuity is an agreement between the annuity service provider and subscriber where a payout is offered by the provider from the corpus built over a period of time at a later stage of life (usually retirement) of the subscriber.
It is a type of insurance vehicle rather than a saving or investment option with the provision of periodic payouts where payouts can be in different forms. For Example – NPS is an annuity scheme by the Government of India.

What are different types of Annuities ?
Based on payouts, there are different types of Annuities –

• Periodic Annuity – Subscriber receives regular payouts at a predetermined frequency (monthly or after a certain number of years).
• Lump-sum Annuity – One time or Lumpsum amount is received (usually a set % of corpus) after a particular time. However, the subscriber cannot withdraw 100% amount of the corpus.
• Deferred Annuity – Deferred means a certain period of lag. There is a pre-determined time gap(lag) between the accumulation of premiums(from the subscriber), called accumulation time, and the payouts to the subscriber. For example – Insurance.
• Immediate Annuity – It is the opposite of a deferred annuity. Premium is paid in fixed lumpsum percentage by the subscriber and he becomes eligible to receive the payout immediately after the payment.
• Fixed Annuity (can be immediate / deferred)- Fixed amount of payout. There are extremely low chances of significant increases in the corpus which results in low returns.
• Variable Annuity (Higher returns and Greater risks)- Corpus is invested in the securities market (usually in mutual funds), and eventual payouts depend on the performance of the fund invested. It is a risk-oriented annuity and payouts keep changing, based on market performance.
• Indexed Annuities – Guaranteed minimum payouts and performance of returns are based on the performance of a market index.

What is the difference between Accumulation phase vs Vesting phase ?
Accumulation Phase – When the subscriber starts investing or accumulating cash with first-time payments.
Vesting Phase – When subscriber starts getting annuity scheme benefits in the form of pension.

What is a Surrender period ?
The time period after which the investor can withdraw the funds from the annuity scheme without any penalty. Surrender charges/deferred sales fee is applied if withdrawal is done before the surrender period is over.

What are different forms of Annuities ?
Ordinary Annuity (Payout is done at the end of each period of the specified time)
Annuity Due (Payouts is done at the beginning of each period of the specified time)
How to calculate Annuity ?
Ordinary Annuity
Pesent Value = p*(1-(1+r)^-n)/r
Future Value = p*((1+r)^n-1)/r
Annuity Due
Present Value = Present Value of Ordinary * (1+r)
Future Value = Future Value of Ordinary * (1+r)
Where,
P denotes Periodic Payment
n denotes Number of Periods
r denotes Effective interest rate

What are Tier-1 and tier-2 accounts in NPS scheme ?
Tier-1 – It is a mandatory retirement account
Tier-2 – it is a voluntary savings account associated with subscriber’s PRAN. It can be withdrawn at any time.

What are the exit options available for NPS scheme ?
There are 3 exit options available for NPS scheme –
Premature exit/ Voluntary retirement (before the age of 60years)
Superannuation (Retirement at the age of 60yrs)
Exit due to unexpected death
What if the individual did not exit the NPS scheme after 60years of age? Where will the withheld amount be settled ?
Until the subscriber processes the exit request, the NPS account will be active.

Can the complete pension wealth accumulated be withdrawn without annuitization ?
No, subscriber cannot withdraw the complete accumulated pension wealth without annuitization. A min of 40% of the corpus needs to be used for annuity. However, a susbcriber can withdraw the entire corpus only if the accumulated pension wealth is upto 5lakhs at the time of exit.

What are the tax deductions benefits on exit from NPS scheme ?
There are tax deductions and exemption benefits available while exit from NPS scheme.

Tax Exemptions

• Subscribers can be exempted from tax liability if a lumpsum amount of 60% of the total pension wealth corpus is withdrawn.
• Amount used for purchase of annuity is tax exempted
• However, the annuity amount withdrawal periodically as pension is taxed according to the subscribers’ tax slab.
• Also, there are no tax benefits available for tier-2 withdrawal.

Explain the complete process of exit from NPS scheme ?
The exit process starts 6 months before the subscriber attains the age of 60years.
Protean CRA alerts the subscriber regarding the forthcoming superannuation and the options available with the subscribers to choose for the exit from NPS and start the pension process.
De-accumulation or vesting phase can be carried out online, by initiating an exit request in the system, uploading scanned KYC documents and signing the request digitally, reducing the intermediary dependency.
When the subscriber closes Tier 1 account. his tier-2 account closes automatically.

What are the different options for the subscribers to choose for exit ?

• Subscriber needs to annuitize atleast 40% of the total accumulated amount and can withdraw upto 60% as lumpsum. So, subscriber can chose to withdraw a lumpsum and annuitize the remaining amount.
• Subscriber can postpone or defer the withdrawal as lumpsum or annuity upto the age of 75 years.
• Also, subscriber can choose to continue till 75years of age.
• Subscriber can annuitize 100% of the pension wealth corpus, which will lead to higher pension amount.
• Subscriber can choose Pension fund manager (PFM) while accumulation phase and Annuity service provider (ASP) while de-accumulation or vesting phase.

How was PFRDA (Pension Fund Regulatory & Development Authority) initiated ?
A national project OASIS(Old age social & income security)was commissioned in 1999 by the govt of india. It was to examine the old age income security policy in india. Accn to the OASIS recommendations, Defined Contribution Pension System was introduced for the Central/state govt services new entrants (except armed forces), replacing Defined Benefit pension system, an existing system.
Interim PFRDA was eastbl. on 23 aug 2003 by the govt of india to promote, develop and regulate pension sector in india.NPS came into effect on 1st jan 2004 asa contributory pension system(as notified on 22dec 2003) extending the pension provision to all citizens from 1may 2009 including self employed individuals, professionals working in unorganized sectors or on voluntary basis.
PFRDA, Act was paased on 19sep 2013 and notified on 1feb 2014. PFRDA regulates NPS, which is subscribed by centrol govt emps, state govt emps, pvt orgns empsand professionals of unorganized sectors. It promotes growth and development of pension system in india.

What is main objective of PFRDA ?
Main objective of PFRDA is to be an ideal regulator, promoting and developing an organized pension system in India sustainable serving old age income requirements of all the citizens of the country.

What are the intermediaries of PFRDA ?

1. NPS Trust
2. Central Record Keeping Agency(CRA)
3. Pension Funds
4. Trustee bank
5. Custodian
6. Point of Presence (POP)
7. Aggregators
8. Retirement Advisers

What are the functions of PFRDA ?

1. To promote organized Pension System in India, by implementing both obligatory and voluntary pension schemes to meet the demands of retired professionals
2. Managing different indermediaries such as Pension Fund Managers(PFM), CRA(Central Record Keeping Agency) or NPS Trust etc.
3. Both Tier 1 and Tier 2 of NPS are governed by PFRDA.
4. Spreading awareness regarding importance of pension system.