Transactions in Mutual Funds
NAV is the measure of performance of an individual scheme of a mutual fund. It is essentially, the market value of the securities held by the scheme. The NAV per unit is the market value of all the securities held by the scheme divided by the number of units. Example, if the market value of securities is INR 200 lakhs, and the mutual fund has issued 10 lakh units of INR 10 each, the NAV of each unit is INR 20. Since the market value of securities changes every day, so does the NAV of funds. Depending on the type of scheme, it is mandatory for the NAV to be disclosed daily or weekly.
A load fund is a fund where you need to pay a certain percentage of the NAV, each time you buy or sell a unit of that fund. Example, if a unit of the fund costs Rs. 10 and the load is 1%, you will need to pay Rs. 10.10 for each unit you buy and will receive Rs. 9.90 for each unit you sell.
A no-load fund is a fund with no extra charges required on the entry or exit, which means, you can buy units and sell units at the current NAV.
A no-load fund is a fund with no extra charges required on the entry or exit, which means, you can buy units and sell units at the current NAV.
No. Only the percentage of load mentioned when you invested, will be applicable to your investments. Even if the load is increased, it will only be applicable on the investments that follow, and not the investments that have already been done before. Also, in case of any such change, it is mandatory that mutual funds update their scheme document and make their investors aware of the same.
The price or NAV that you pay for each unit, when you invest in an open ended mutual fund scheme, is called the sales price of the scheme. This may include a sales or entry load. The price or NAV at which you sell your investment units, and the open-ended mutual fund scheme buys them back from you, is called the repurchase or redemption price. This price may include an exit load.
An assured return scheme is a scheme that offers you a guarantee of a certain amount of returns, irrespective of how it performs in the market. If a scheme provides assured returns, you will find it clearly mentioned in the fund document. Some schemes offer assured returns only for a specific period and some schemes may declare assured returns one year at a time, reviewing their performance each year. So it’s important to keep track of such updates and understand details before investing.
Yes. Fund managers do have the flexibility to change the percentage of investments in debt and equity instruments, as a short term measure, to maintain the NAV and ensure good performance of the fund. However, if the change in asset allocation percentage is going to be permanent, it is mandatory to make an announcement about it and give investors an option to exit the scheme without paying an exit-load.
You are entitled to receive the dividend from your mutual fund within 30 days of it being declared. In case you sell your mutual fund units, repurchase proceeds should be made available to you within 10 working days of receiving your repurchase / redemption request. If you don’t receive either of these in the stipulated duration, your mutual fund company is liable to pay you interest as per the rate declared by Securities and Exchange Board of India (SEBI). Currently, this rate is 15%.
Yes, you can. A nominee can be appointed by individuals who hold mutual fund units jointly or singly. However non-individuals including society, trust, body corporate, partnership firm, Kata of Hindu undivided family , holder of Power of Attorney cannot appoint a nominee.
In case a scheme winds up, the mutual fund will pay out a sum based on prevailing NAV, after adjusting for the expenses. You will also receive a report on the winding up, which will include all the necessary details.
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