Investment Options

Direct

Under the Direct Investment Facility, an NRI can freely invest in any equity / debt scheme from NRE, NRO account or by way of foreign exchange remittance from abroad, in Indian Rupees.

Systematic Investment Plan (SIP)

An SIP is a method of investing a fixed sum, on a regular basis, in a mutual fund scheme. It is similar to regular saving schemes like a recurring deposit. An SIP allows one to buy units on a given date each month, so that one can implement a saving plan for themselves. A SIP can be started with as small as Rs 500 per month in ELSS schemes to Rs 1,000 per month in diversified equity schemes. Buy low sell high, just four words sum up a winning strategy for the stock markets. But timing the market is not easy for everyone. In timing the markets one can miss the larger rally and may stay out while the markets were doing well. Therefore, rather than timing the market, investing month after month will ensure that one is invested at the high and the low, and make the best out of an opportunity that could be tough to predict in advance. 

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Systematic Transfer Plan (STP)

STP allows you to make a lump sum investment in a money-market or a debt oriented Scheme and subsequently transfer partial amounts to any equity oriented  at regular intervals. This way your money continues to earn while it waits to be fully deployed in the equity scheme of your choice. You can choose from three frequencies (weekly, monthly and quarterly) if you wish to transfer your investments from one scheme to another. 

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Systematic Withdrawal Plan ( SWP)

SWP operates like the reverse of SIP. It allows you to systematically    withdraw your existing investment in a scheme by redeeming your units in periodic installments instead of all at one go. As in the case of the SIP, this helps you reduce your risk of 

mistiming your exit from a particular scheme

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Growth Option

Dividend is not paid-out under a Growth Plan and the investor realizes only the capital appreciation on the investment (by an increase in NAV)

Dividend Payout Option

Dividends are paid-out to investors under a Dividend Payout Option. However, the NAV  of the mutual fund scheme falls to the extent of the dividend payout

Dividend Reinvestment Plan

Dividend plans of schemes carry an additional option for reinvestment of income distribution. This is referred to as the dividend reinvestment plan. Under this plan, dividends declared by a fund are reinvested on behalf of the investor, thus increasing the number of units held by the investors.

Open-ended Fund

An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis. These schemes do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices, which are declared on a daily basis. The key feature of open-end schemes is liquidity

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Close-ended Fund

A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme.  Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis. A scheme can also be classified as growth scheme, income scheme, or balanced scheme considering its investment objective. 

Load or no-load Fund  

A Load Fund is one that charges a percentage of NAV for entry or exit. That is, each time one buys or sells units in the fund, a charge will be payable. This charge is used by the mutual fund for marketing and distribution expenses. Suppose the NAV per unit is Rs.10. If the entry as well as exit load charged is 1%, then the investors who buy would be required to pay Rs.10.10 and those who offer their units for repurchase to the mutual fund will get only Rs.9.90 per unit. The investors should take the loads into consideration while making investment as these affect their yields/returns. However, the investors should also consider the performance track record and service standards of the mutual fund, which are more important. Efficient funds may give higher returns in spite of loads. A no-load fund is one that does not charge for entry or exit. It means the investors can enter the fund/scheme at NAV and no additional charges are payable on purchase or sale of units.

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