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Ans: Hello Nitiksha and thanks for writing to me. You can consider evaluating the performance of 2 schemes based on:

1-Strength of the portfolio of the respective schemes.
2-Rolling returns and SIP XIRR returns.
3-Sharpe ratio of the respective schemes.
4-Expense ratio of the schemes.
5-Portfolio turnover ratio of the schemes.

Ans: Ofcourse, Mutual Funds can give you opportunities to invest in the below,

- Domestic Equity
- International Equity
- Gold
- Silver
- Fixed Income / Debt
- Real Estate

Ans: Hello Nitiksha and thanks for writing to me. In general, there are no costs charged when you redeem mutual fund units.

The funds are generally credited to your bank account or a cheque is dispatched to your address registered with the fund.

Ans: If you are a long-term investor don't worry about the fall. just keep adding blue chip stocks on major dips

Ans: Hybrid funds are those funds which invest money in both equity and debt funds. These funds are suitable for conservative investors who don’t wish to take higher risks but want to have exposure to equity as well. Amount can be invested in these funds with a time horizon of 3 to 5 years.

Also, in hybrid funds, there are multiple funds with different strategies, and investors should invest according to their risk appetite and time horizon. Some of the Hybrid fund categories are Hybrid Aggressive, Balanced Advantage and Hybrid conservative.

Ans: First, low NAV doesn’t mean that it’s a cheaper fund. Second, NO, cheap or low NAV is not better in mutual funds. In reality, the NAV of a fund is irrelevant and ideally, it shouldn’t even be considered when making an investment decision regarding investing in mutual funds.

Let me explain in simple terms why low NAV doesn’t matter at all.

Suppose two friends invest in 2 different mutual fund schemes having identical portfolios. But their NAVs are different. One was launched several years ago and hence, has a higher NAV of Rs 200. While the other is a relatively new fund with a NAV of Rs 20 only. But both funds have exactly the same portfolio of stocks they invest in.

Both friends invest Rs 1 lakh. The older fund investor gets 500 units at a NAV of Rs 200 per unit. While the new fund investor gets 5000 units at NAV of Rs 20 per unit. So it is true that lower NAV would give you more units while higher NAV would give you a lesser number of units.

Now let’s say that both funds rise by the same 20%. Since the portfolio is the same, the fund appreciation will be the same as well.

A 20% rise in the older fund will increase its NAV from Rs 200 to Rs 240. While that of the newer fund will increase from Rs 20 to Rs 24. At the fact of it, you might say that the older fund has risen by Rs 40 while the newer one has risen by Rs 4 only. But that is not the right way to look at it. You need to compare the value of your investment.

So older fund investor having 500 units (purchased at Rs 200 per unit) will see their investment increase from Rs 1 lakh to Rs 1.2 lakh due to the rise in NAV from Rs 200 to Rs 240.

Not surprisingly, the new fund investor having 5000 units (purchased at Rs 20 per unit) will also see his investment increase from Rs 1 lakh to Rs 1.2 lakh due to the rise in NAV from Rs 20 to Rs 24.

So inspite of the different number of units held due to different investment NAVs, the eventual value of the investment is the same. This is the reason that concept of low NAV or high NAV is irrelevant. What only matters is the future % increase in NAV. That’s it. Mutual fund schemes should not be judged on their NAVs but on their performance.

This confusion about low NAV vs high NAV arises because many investors make the mistake of looking at the fund’s NAV like stock prices. But that is not the case. Both are very different animals.

Low NAV doesn’t mean a cheaper fund. High NAV doesn’t mean an expensive fund.

Ans: Depends on what your requirement is.
- Less than 1 year of investment horizon, liquid funds or Arbitrage funds
- Less than 3 years of investment horizon, Balanced Advantage Funds
- More than 5 years, equity funds

Ans: First of all, bonds and stocks are not comparable. You can look at investing directly in bonds VS debt mutual funds. Similarly, stocks Vs Equity Mutual Funds. If you have the expertise to invest in stocks or are able to evaluate the credit risk, you can directly invest into stocks or bonds respectively. Otherwise, you can give it to a fund manager who is likely to do a better job than most retail investors. Further, mutual funds give you benefit of diversification which you would otherwise need to do on your own. Mutual funds also offer liquidity, smaller size and it is easier to invest through STPs. Based on our experience, we find that retail investors tend to lose out much more than the fund management fees that they end up paying.

Ans: Hi Nitishka , Risk Can be defined as your response to tolerance level. So its subjective and what's risky for me many not be risky for you. So in Mutual Funds specially wherever you will see equity as a component, you will see that much part of the portfolio as RED or GREEN depending on equity market performance. But more te equity in the portfolio more is the possibility of good gains and vice versa. So All in all i can say when you are driving your car on the road you drive it with safety and not with the intention of meeting with an accident. So in mutual funds too risk is there in the form of equity to create possibility of better returns and fund house takes care as to not spoil the party by choosing wrong equity as they have their own set of rules to assess the stock selection.

Ans: Two points from me since this will happen very frequently when you’re invested for the long run:-

1. This is how the markets behave – if they were not to have volatility, they would give FD-type returns only. Note that I call it volatile behaviour and not risky behaviour.
2. Do not change your character just because markets are volatile – do not turn into a short term investor when markets go down. You should take out any investments only if either your goal for which that investment had been done has arrived or if that investment is no longer a good one to continue and you wish to shift to another better one.

I get excited when markets fall, rather than when they go up, because a fall gives me more opportunities to acquire good securities at low rates.