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Investor Knowledge Hub

Frequently Asked Questions

Everything you need to know about mutual funds, SIPs, regulatory protection, and wealth accumulation.

A mutual fund is a collective investment vehicle that pools money from multiple investors and invests it in equities, bonds, government securities, and money market instruments according to a specified investment objective.

The money collected is managed by professional Fund Managers. Income and gains generated from the underlying securities are distributed proportionately among unit holders after deducting applicable operating expenses (Expense Ratio) and calculating the Net Asset Value (NAV).

When you invest in a mutual fund, units are allocated to your folio based on the prevailing NAV. Investors benefit from potential capital appreciation when units are redeemed at a higher NAV, as well as dividend or interest distributions.

Ideal for investors who:

  • Lack time or expertise to research individual stock markets directly.
  • Wish to grow wealth systematically through small initial amounts.
  • Prefer professional risk management & asset allocation.
1. Professional Management: Managed by full-time, experienced money managers who continuously monitor investments and rebalance portfolios.
2. Risk Diversification: Spreads investments across equity, debt, and gold, protecting your portfolio from headwinds in any single company.
3. Affordability: Start SIPs with as low as ₹500/month rather than buying expensive single shares directly.
4. High Liquidity: Open-ended funds can be redeemed easily on business days with proceeds credited directly into your bank account.
5. Low Cost Structure: Regulated expense ratios capped under SEBI Mutual Fund Regulations, 1996.
6. Well-Regulated Framework: Monitored strictly by SEBI to ensure transparency and investor protection.
7. Tax Benefits (ELSS): Investments in ELSS up to ₹1,50,000 qualify for tax deduction under Section 80C of Income Tax Act, 1961.

The Indian Mutual Fund industry has evolved through 5 major phases since 1963:

  • First Phase (1964–1987): UTI formed under an Act of Parliament with Unit Scheme 1964 (US '64). AUM grew to ₹6,700 crores.
  • Second Phase (1987–1993): Entry of Public Sector funds (SBI Mutual Fund in 1987, LIC, Canbank, Bank of Baroda). Industry AUM reached ₹47,004 crores.
  • Third Phase (1993–2003): Private Sector entry under SEBI (Mutual Funds) Regulations 1996. Kothari Pioneer was the first private fund.
  • Fourth Phase (2003–2014): UTI bifurcation & post-2009 global financial recovery period.
  • Fifth Phase (2014–Present): Exponential retail participation, AUM expanding from ₹10 Lakh Crores (2014) past ₹35+ Lakh Crores.
MYTH 1: Mutual Funds are only for Experts

FACT: Mutual funds are designed precisely for everyday investors who lack specialized stock picking skills, placing money under full-time professional managers.

MYTH 2: Mutual Funds are strictly for Long Term

FACT: There are liquid and ultra-short duration debt funds suitable for a few days, weeks, or months alongside long-term equity schemes.

MYTH 3: Mutual Funds are the same as Stock Market

FACT: Mutual funds invest across corporate bonds, government treasury bills, commercial papers, and gold in addition to equities.

MYTH 4: You need a huge amount of capital to start

FACT: You can start a Systematic Investment Plan (SIP) with as little as ₹500 per month!