Did you know?
Did you know that Direct Plans have a higher NAV as compared to Regular Plans!
As you know direct plans have a lower expense ratio as compared to regular plans. It is because the expense ratio is charged as a percentage of assets under management (AUM), higher the expense ratio lower would be the resulting AUM. So while computing the NAV i.e. [(Fund Assets – Fund Liabilities)/(Number of outstanding units], the direct plans tend to have a higher NAV than regular plans.
Did you know that Direct Plans have a higher star rating as compared to Regular Plans!
Star ratings are based on risk-adjusted returns. NAV of the fund is used to calculate the returns which ultimately decide the ratings that a fund receives. Owing to a lower expense ratio, the Direct Plans have higher NAV than Regular Plans. All other parameters being same, higher NAV ultimately translates into higher risk-adjusted returns and higher valuation of the fund. Hence, Direct Plans tend to have higher star ratings as compared to the Regular Plans.
Did you know an increase in the Interest Rates lead to a fall in the Value of Debt Funds!
Interest rates have an inverse relationship with the prices of fixed income bearing securities like bonds and money market instruments. Debt funds extensively invest in high-quality bonds and fixed income instruments. When the interest rates rise in the economy, the price of the securities underlying a debt fund falls. It ultimately leads to fall in the value of the assets and lowers the NAV of the fund. Its vice-versa when the interest rates fall in the economy.
Did you know that there is more to mutual funds than equity!
Mutual funds can offer the safety of fixed deposits, and still give you higher returns than the bank. Many investors believe that mutual funds (MFs) are only about equity investing. Yes, this is a very common misperception. The fact is MFs don't invest only in equities. They invest in fixed-income instruments and gold as well.
Did you know that you can avail loan on your mutual fund investments!
The investment you are making in any mutual fund either through a systematic investment plan (SIP) or a through a lump sum investment can also act as a contingency fund. During emergencies, liquidating your mutual fund investment is not the only option. You can avail loans from banks or NBFCs by opting for a loan against mutual funds. The amount of money you can get as a loan against mutual funds depends on the type of fund you own. For equity-based mutual funds, you can get as much as 50% lending on the Net Asset Value (NAV) of your funds. Some banks have limits on the minimum and maximum loan amount you can avail when opting for loan against mutual funds. Not all mutual fund units are eligible for a loan. Loans are granted only against the list of approved mutual funds or mutual fund schemes as determined by your respective bank. Mutual fund loans are available for both equity and debt funds, but check whether your mutual fund is approved by your bank for loan. While almost all banks offer loan against mutual funds, Reserve Bank of India rules state that only NBFCs with assets of more than Rs 100 crore can offer such a loan. You cannot redeem any fund units during the loan tenure but you can continue to receive dividends.
If you default on your loan, the bank can invoke the lien and request the mutual fund company to redeem your units for loan repayment.