What are features and benefits of Mutual Funds?

Unlike most other financial products like provident fund, insurance and post office schemes, Top Mutual Funds not only provides convenience while investing money, but it also offers a variety of features that benefit investors. A few of most common features and benefits of  top mutual funds are highlighted.

Micro SIP/Chota SIP
Feature of Mutual Fund
Invest as low as Rs 100/- in Mutual Fund Companies

Top Mutual Fund Companies offer its investors an option to invest extremely small amounts such as Rs 100/-, Rs 500/-, Rs 1000/- each month depending on individual’s capacity into many of its mutual fund schemes.

Benefits of Mutual Fund: Benefits of Mutual Fund are for people who want to invest small amounts. Daily Wage Workers, Rickshaw Taxi Drivers, Labourers who wish to invest into Mutual Funds.

Flexibility of Dates
Features of Mutual Fund

Ease of investing on convenient dates

Investor can invest in top Mutual Fund Scheme on their choice of dates. Many large Mutual Fund companies offer multiple dates for investing into its top performing mutual fund schemes. E.g Few dates would be 1st, 5th, 10th, 15th, 25th of each month. This makes regular investments on salary dates possible.

Benefit of Mutual Funds:  Benefits Salaried people who receive money at the end of the month and wish to invest in Mutual Funds.

Timely Payments through ECS
Feature of Mutual Funds

Hassle free, Regular Payments to allow you to concentrate on other important things in life

Investors in Mutual Funds need not worry about making timely payments each month through opting for ECS Payment Method. This ensures regular, hassle free, timely and correct monthly payments.

Benefit of Mutual Fund:  Feature is useful for people who are busy or travel a lot, as he does not have time to keep track of his monthly payments.

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Investing Through POA (Power of Attorney)
Feature of MutualFund

Investing without physical presence

Investments in Mutual Funds can be done through Assignment of a Power of Attorney for effective financial planning. Army Personnel, Officers posted on-duty at far off places, owners/directors of limited companies, Non-Resident Indians, Resident Indian posted onsite/outside India can invest through the convenience of POA.

Benefit of Mutual Fund: Your Financial Planning for family’s benefit cannot be discontinued in your absence. Defense and Police Officers can appoint wife or family members to be POA and allow them to invest on your behalf.

Top-up Facility for Mutual Funds
Feature of Funds

Happy with your fund performance, increase your payment amount

Apart from regular payments investors can also invest via top-up facility. The amount of SIP can be increased at fixed intervals. The Top-up amount has to be in multiples of Rs 500/- depending upon fund. The frequency is fixed at Yearly and Half-Yearly Basis.

Benefit of Mutual Fund: Received Huge Bonus Amount from your company in Middle of the Year, this amount can be parked in your existing Mutual Fund and Exchange Traded Fund (ETF)Account.

Direct Credit of Dividend Payments
Feature of MF

No need to rush to bank to deposit the Dividend Cheque

Asset Management Companies offer direct credit of dividend payment proceeds to investor’s bank accounts in order to ensure faster processing and timely credits of dividend amount.

Benefit of Mutual Fund: Helpful for people having bank accounts in PSU banks. These banks have small branches with too many customers to manage. No need to stand in huge bank queues to deposit your dividend cheques, Mutual Fund cheque will be deposited directly into your bank account.

Direct Credit of Redemption Payments
Feature of Mutual Fund

Get back your money quicker when you sell mutual fund units

When a mutual fund is sold the money is directly credited to investor’s bank account to facilitate quick withdrawal of funds.

Benefit of Mutual Fund: Useful for people having bank accounts in Large Private and Govt Banks. These banks have small branches with too many customers to handle. Avoid the need to stand in huge bank queues to deposit your redemption cheque, it will be deposited directly into your bank account.

Trigger/SWP/AEP Plans
Feature of Mutual Fund

Can fund book my profits for me? – Sure

In case price of investment goes up, investor’s can set automatic triggers to sell or transfer the portion of the increased value. This is to ensure that the profits are booked from increased valuation on their Mutual Fund Investment. E.g Trigger can be set to Sell/Transfer if the NAV appreciates by 12%, 20%, 50% and 100%.

Benefit of Mutual Fund: Useful for investors who need discipline in their investing. This feature of Mutual Fund helps trader to book profits and eliminates the need to time the market to sell Mutual Fund Units.

Register Multiple Bank Accounts

Feature of Mutual Fund

Can I have more than one registered bank account linked to my Fund Folio? – Yes, you can.

As a Mutual Fund investor you can register upto 5 different bank accounts in your folio. So in case if you have to close or transfer any one of the accounts the other can be utilised.

Benefit of Mutual Fund: People who need to change their work location or move into new city but the old bank does not have AT-PAR Cheque clearing facility OR old bank does not have Core Banking enabled so cannot accept cheques drawn on different branch.

Back to Basics Series I : This article is in response to SEBI's Public Appeal for following the right approach to Mutual Fund Industry.
SEBI Investor Education


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3 thoughts on “What are features and benefits of Mutual Funds?

  1. Sir,
    Presently I am investing mony in Mutual Funds of SBI Magnum Tax Gain and Reliance Vision Growth as SIP. Amount is being automatically deducting from my savings account of SBI. What is the procedure, if I want to top up my funds or to transfer automatically if the NAV appreciates without visiting the office.

    Like

    • @Rajendra Singh,

      1) Increase the TOP-UP amount of an Existing SIP.

      Almost all Mutual Fund allow investors to increase the amount of investments. Any type of money is good money. Write a simple letter and address it to your local Mutual Fund Office stating that you wish to increase the SIP Amount. E.g Increase my SIP amount Rs 100 to Rs 200.

      2) Auto-Trigger – Appreciation in NAV.

      As regards to Transfer of Funds Automatically if the NAV of Fund Appreciates – Many Fund Houses allow the option to withdraw part or whole of the appreciation. Option to choose Auto-Trigger is available for few schemes when registering for it for the first time. In case if it is already registered, kindly write a letter to the AMC office to avail of this particular feature.

      OMF

      Like

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