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| ELSS (Tax
Benefit) Schemes |
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Equity
Linked Saving Schemes (ELSS) are those that invest pre-dominantly in equity
shares of companies The objective of ELSS is to provide long-term capital gains
to the investors through capital appreciation along with tax saving benefits.
These schemes have a three year
lock-in period.
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| Equity / Growth
Schemes |
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Equity schemes are those that invest
pre-dominantly in equity shares of companies The objective of an equity fund is
long-term growth through capital appreciation, although dividends and interest
are also sources of revenue. Equity funds may be a mutual fund or
exchange-traded fund. Equity funds provide a high level of return, but have a
high level of risk too. Equity investments can be sold at any time, with prices
based on the current market value.
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| Fund of Funds |
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Fund of Funds schemes are those schemes
that invests primarily in other schemes of the same mutual fund or other mutual
funds. The objective of such schemes is to provide long term capital
appreciatiion by predominantly investing in mutual fund schemes and a certain
portion of its corpus in Money Market / Liquid Securities.
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Debt/Income Schemes
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Debt schemes are those that pre-dominantly
invest in debt securities. Since most debt securities pay periodic interest to
investors, these funds are also known as income funds. However, it must be
remembered that funds investing in debt products can also offer a growth option
to their investors. Debt funds have the advantage of being much less risky than
equities. If steady, predictable returns are what you expect, a debt fund will
deliver precisely that. Debt funds tend to create a variety of options for
investors by choosing one or more of these segments of the debt markets in
their investment portfolio.
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Liquid Schemes
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Liquid schemes are those that
pre-dominantly invest only in short-term money market instruments including
treasury bills, commercial paper and certificates of deposit. The objective is
to provide liquidity and preserve the capital. The period of investment could
be as short as a day. They provide easy liquidity. They have emerged as an
alternative for savings and short-term fixed deposit accounts with
comparatively higher returns. These funds are ideal for Corporate,
institutional investors and business houses who invest their funds for very
short periods.
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Balanced Schemes
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Balanced schemes are also called hybrid
schemes. Balanced schemes are those that invest in a combination of common
stock, preferred stock bonds, and short term bonds to provide income and
capital appreciation while avoiding excessive risks. Balanced funds invest in
equity (shares) and debt (fixed income instruments). Usually, they put around
50% of their total investments in debt and 50% in equity.
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MIP Schemes
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MIP schemes are those that invest,
typically a large portion (80-100%) of the fund is invested in debt and money
market instruments and the rest (0-20% approximately) in equity. MIP scheme are
best for a risk-averse investor who wishes to better the returns offered by
conventional fixed income instruments and yet retain liquidity.
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