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What is Mutual fund?
Mutual fund is an investment option which pool investor’s money and invests in stock markets for generating better returns by diversifying the risks. The collective holding of invested amount in mutual funds is called as portfolio. It’s not an alternate to stocks, but its collectively investing minimizing the risk involved in stock markets
Why invest in mutual funds ?
To diversify risks it is recommended to invest in mutual funds rather than stocks where your investment is linked to one or two specific stocks. In mutual funds, the fund manager purchases many stocks from of the same sector, as well as diversifies the investment in different sector to broaden risks. So even if one or two stocks fail, it does not affect the entire invested funds as the risk is minimized.
What is Equity fund ?
Equity fund is a fund designed by the fund manager who invests more than 70% in stocks or equity related instruments which are linked in various sectors. The primary objective focus of an equity mutual fund is to make investment in equities or stocks of companies listed on the stock exchanges. This helps beating inflation and increase returns from the market. The universe of equity mutual funds is further divided based on the investment objective and risk appetite of the investor.
Large cap funds
They invest their money in the top 100 companies listed on the stock exchange. The investment is made majorly in blue-chip companies. It means that large cap funds carry low risk as the Companies they invest are fundamentally very strong and backbone of economy, thus making these investments perfect for conservative investors. The large cap funds investment is at least 80% investment in Large cap stocks. (Source- AMFIindia.com)
What is debt fund ?
Debt funds invests in Commercial Papers (CP), Certificate of Deposit (CD), Corporate Bonds, T-Bills, government securities and other money market instruments in order to generate stable returns as the interest rates in the above investments vehicle is fixed. Such investments have a fixed maturity date and they are considered to be safe in volatile markets where stocks show a very high alpha ranges. This investments vehicle is best for people who do not wish to take risk or senior citizens who are not in a position to bear the up and downs of the equity components.
Multiassest Fund
Multi-asset fund is nothing but multi-asset class .In Multi-asset classes there is a combination of asset classes such as cash, bond, and equity. And these are used as an investment. A multi-asset class, also known as a multiple-asset class or multi-asset fund, is a combination of asset classes (such as cash, equity, index tracking funds or bonds) used as an investment. A multi- asset class investment contains more than one asset class, thus creating a group or portfolio of assets. The weights and types of classes vary according to the individual investor. The diversity allows portfolio managers to potentially balance risk with reward and deliver steady, long-term returns for investors, particularly in volatile markets. (Source- AMFIindia.com)
Wealth Management
Whether for retirement, college fees, school fees, foreign trips, purchase of a luxury car wealth managers play a crucial role in planning one's finances. Wealth managers not only manage the finances of any high-net-worth individual (HNI), but also have a dynamic role in plans of finances and payments of other engagements of an HNI. Wealth management addresses portfolio construction, active and passive investing styles, alternative investments, managing risk and return, developing investment policy statements, and having the capabilities to fully understand and construct portfolios as a fiduciary for the client. Wealth management grows funds in a highly sophisticated manner tailored to their clients' needs. It requires considerable time for wealth managers to understand the psychology and demands of their clients and apply their skills to help their portfolios grow and thrive. Wealth management is delivered through a holistic and multidisciplinary team approach to gain insights into their clients. From last 2 decades wealth management has grown significantly and has become a full time profession which needs monitoring, evaluating and decision making for selection of appropriate funds for the client. India has witnessed various swings in markets right from scams of Lehman brothers in 2008-2009 which shook on the international markets only to see a rise post changes in various financials strategies and political winds post 2016. India witnessed stability during the pandemic times of Covid 19 and post that a significant rise in markets. From the above cycle of markets, wealth manager have made switches, redemptions, transfers in their portfolio to manage their clients’ portfolios, and have made good profits for their clients who stood rock solid during the downfalls and corrections of the markets post various turnkey events in the country. Their portfolio did not erode but grew significantly after various events which turned on to be positive for them with a good wealth manager. It is imperative to mention that wealth managers are not deities and they too go through some incorrect decisions however, they should have their wisdom to balance their decision with proper hedging of funds and justify the purchase or sell of any particular funds. Selection of a wealth manager is very crucial in your idea to grow your portfolio. Your wealth manager should consider your risk appetite and goals towards the investment. You should look towards a wealth manager who shall jewel with your thoughts and ideologies. One should also respect the decisions and choices of their wealth managers’ funds considering his/her expertise in this field of dynamic markets and stand by his call on purchases and exits. A wealth manager considers every aspect of investments, may be lump sum or a Systematic investment plan (SIP) even though the net worth of the client in high. HNI should not go on hearsay calls during purchase of investments and look at the corpus and past returns of the funds, but should aim in investing money in funds which have not yet grown to its potential. For such decisions call of wealth manager plays a significant role provided one should trust. Wealth management is a very skilled profession which requires lots of learning, expertise and wisdom from their past experience. One should look for long term relationship with the wealth manager as he/she shall provide you guidance and ensure you exit at the right point without experimenting your predictions of markets. Whether for retirement, college fees, school fees, foreign trips, or the purchase of luxury car wealth managers play a crucial role in planning one’s finances.
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