We have made it easy for you as an Axis Bank savings account customer, to invest in top performing mutual funds across different category of funds such as tax saving funds, funds for long term wealth creation, balanced funds for new-to-MFs customers who are not willing to take risk by investing in pure equity funds, liquid & debt funds for short-term requirements. You can invest through your internet banking account or Axis Mobile app, in just a few clicks.
Advantage Mutual Funds
Let’s you diversify your investments by investing in different asset classes
It is important to invest in a mix of assets, such as equity, debt, gold, etc. Not all asset classes perform favourably at all the times, hence it is important to diversify the investments across multiple asset classes. Also, certain asset classes require a longer investment period to earn meaningful returns. For instance, in the case of equity, the returns could fluctuate in the short to medium term, but it has potential to deliver inflation-adjusted returns over a long period of time.
Different funds for different needs
Mutual funds offer a convenient and easy manner to invest in the asset class of your choice and in the proportion you choose. You can invest either in equity or debt, or a mix of both. You can also choose based on how long you want to invest and the goal you are saving for.
Let us understand the classification of mutual funds:
Equity funds: These funds invest in listed stocks. These are ideal for your long-term goals such as your children’s education or their marriage or for your retirement planning or plain long-term wealth creation. Equity funds may be volatile in the short term but they stabilise over a period of time. Equity funds have the potential to deliver superior inflation-adjusted returns over a long period of time. Equity funds are further divided into:
- Large Cap, Mid Cap, Small Cap Funds: These funds invest in stocks of large, medium and small companies respectively depending on their market capitalization. There also exist Multi Cap funds which invest a mix of companies with varying market cap.
- Equity Linked Savings Scheme (ELSS) or Tax Saving Funds: ELSS is also an equity fund which offers twin benefits: tax saving under Section 80C and wealth creation as the money is invested in equities. These funds have a lock-in period of three years.
- Sectoral/Thematic funds: Sectoral funds invest in stocks of a particular sector or industry such as FMCG, pharma, healthcare, banking, auto, IT, realty, etc. While thematic funds invest in stocks with a common theme such as rural consumption, infrastructure, public sector companies, etc. A thematic fund can invest in companies across different industries or sectors.
These invest in debt instruments such as T-Bills, Government securities, corporate bonds, debentures, etc. The returns depend on the interest rate movement. These are suitable for goals that have a short to medium duration (2-3 years). This class of funds do not invest money in equities and are hence less volatile and comparatively less risky. Investment in debt funds however carries other risks such as credit risk which can arise out of credit default event, duration, interest rate movement etc.
Liquid Funds and ultra-short term bond funds are debt funds. Liquid funds invest in securities having maturity up to 91 days. They are highly liquid and low-risk. Ultra-short-term bond funds invest in instruments having maturity of up to one year. Short-term debt funds invest in securities having maturity of 4-5 years. Debt funds offer stable returns are suitable for conservative investors. Returns on these funds are linked to the maturity of the instruments they hold.
These funds invest in a mix of equity and debt. Hybrid funds can be equity-oriented or debt-oriented depending on the equity/debt proportion. Funds that are classified as Hybrid (equity) funds have a larger share of equity investment, while Hybrid (debt) funds have a larger share of debt investments. Some hybrid funds such as dynamic asset allocation funds adjust the equity/debt component of the investment basis market situation while in balanced funds, the share of equities and debt instruments is pre-determined.
These mutual funds address specific goals such as children’s education and retirement. They are open-ended funds and are either pure equity or hybrid funds. They are good for investors who wish to allocate funds for definite financial goals but don’t know which funds to select. Retirement Funds have a lock-in period of five years or retirement age and also offer tax benefits under Section 80 C. Children’s Funds also have a lock-in period of five years or till the child attains maturity age.
These funds invest in stocks that constitute a particular index. The index could be the broad Sensex or Nifty or a sectoral index, such as Banking index or Pharma index. Returns from an index fund tend to mirror the index it is benchmarked to.
Freedom to select amount/frequency
Mutual funds allow you to invest how much you want to and when you want to. While some funds have a minimum investment amount, there is no upper limit. You can invest any amount at any point of time. Some funds allow investment as low as Rs 500.
You could invest lump sum or in regular monthly instalments through Systematic Investment Plans (SIPs). You can link your bank account to the mutual fund and ensure that the investment is deducted automatically.
If you are a young investor start by investing Rs 500-1000 per month and increase the amount as your income increases. Even if you invest via SIP, you can invest a lump sum as and when you have additional money, say an annual bonus or incentive.
Invest as per your goals
The flexibility offered by mutual funds makes it easy to invest as per your goals. For a goal that is more than five years away invest in a pure equity fund. If your goal is less than five years away choose a hybrid or a debt fund. For instance, for your retirement planning, or if you want to save for a second home, invest in a large-cap or multi-cap equity fund. If you are planning a foreign trip after two years, invest in a debt or hybrid fund. Linking each financial goal to a mutual fund will make it easier for you to allocate and distribute your savings and also keep track of your money.
Easy to track
While mutual fund houses provide monthly updates about the fund’s performance, making it easy to keep track of your investments, you can also access all the details about your investments on Axis Mobile App or Axis Internet Banking. You can monitor your investments on-the-go on these platforms at a click of a button.
Expert Fund Manager who manages your money
The money invested in mutual funds is managed by an expert, also called as a fund manager. Fund Managers are subject matter experts who have in-depth understanding of the markets, companies and sectors. They use their experience and the inputs from analysts to take critical decisions with regards to investing money in stocks and other asset classes.
Important parameters to consider while choosing a fund
Two critical factors that you need to keep in mind before choosing to invest in mutual funds - your financial goal(s), time required to fulfil the goals and your risk taking ability. Once you are clear about these aspects, please do evaluate mutual fund schemes on parameters such as fund manager, fund house, investment objectives, investment portfolio, performance (of the scheme as well as its performance in the context of the market and peer group), cost which is expressed in terms of expense ratio. Do remember that while performance of a fund is important, past performance does not indicate how the fund will perform in future.