Types of Mutual Fund schemes

Mutual Fund schemes available are specific to investor needs such as financial position, risk tolerance and return expectations etc.

These can be classified by:


  1. Open-end Funds

Open-ended funds are MFs which can issue and redeem their shares at any time.


Investors can conveniently buy and sell units at the existing NAV of the scheme.

There is no fixed maturity of these funds.

Key feature: liquidity of funds.

  1. Close-ended Funds

Close-ended schemes are MFs with a fixed no. of shares (or units) which are issued through a New Fund Offer (NFO).

The fund is open for subscription only during this specified period.


The fund is then structured, listed and traded on stock exchange. Investors can buy or sell the units on this stock exchange.

Some close-ended funds also give an option of selling back the units to the MF through periodic repurchase at NAV related prices.

They have stipulated maturity period (usually 3 to 15 years).

Key features: fixed no. of units, limited availability.


  1. Interval Schemes

Interval schemes combine features of both open-ended and close-ended schemes.


The units may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV-related prices.

Key features: features of both open-ended and close-ended schemes.

Investment Objective

  1. Growth or Equity-Oriented Schemes

The aim of growth funds is to provide capital appreciation over the medium to long-term.


These schemes usually invest majority of their portfolio in equities and so have comparatively high risks.

Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.

Key features: capital appreciation over the medium to long-term.

It can be further classified into following depending upon objective:

  • Large-Cap Funds: invest in companies from different sectors largely in BSE 100 and BSE 200 Stocks.
  • Mid-Cap Funds: invest in companies from different sectors largely in BSE Mid Cap Stocks.
  • Sector Specific Funds: invest in a particular sector eg. IT.
  • Thematic: invest in various sectors but restricted to specific theme e.g., services, exports, consumerism, infrastructure, etc.
  • Diversified Equity Funds: all non-theme and non-sector funds.
  • Tax Savings Funds (ELSS): investments in these funds are exempt from income tax at the time of investment.
  1. Income or Debt oriented Schemes

The aim of Income Funds is to provide regular and steady income to investors.


These funds generally invest in fixed income securities such as bonds, corporate debentures and Government securities and money-market instruments. So, the opportunities of capital appreciation get restricted.

These funds do not participate into markets. Hence, there is no market risk or volatility and are less risky compared to equity schemes.

Key features: regular and steady income to investors.

  1. Balanced Funds

The aim of Balanced Funds is to provide both growth and regular income.


These schemes invest both in equities and fixed income instruments in the proportion indicated in their offer documents.

Balanced funds are ideal for investors looking for income as well as moderate growth.

Key features: capital appreciation and regular income to investors.

  1. Money Market Funds or Liquid Funds

The aim of Money Market Funds is to provide easy liquidity, preservation of capital and moderate income.


These funds exclusively invest in safer short-term instruments such as Treasury Bills, Certificates of Deposits, Commercial Paper and inter-bank call money, Government Securities, etc.

Fluctuations in returns of these schemes are much less than other funds.

These are appropriate for investors who wish to invest for short periods.

Key features: easy liquidity, preservation of capital and moderate income.


  1. Gilt Funds

These funds invest exclusively in Government Securities.

  1. Fund of Funds Schemes

Fund of Funds invests in other MF schemes.

Such schemes can help investors reduce their chances of selecting a wrong MF.

  1. Gold Exchange Traded Funds

It is an open-ended Exchange Traded Fund which provides return that is in line with the return on investment in physical gold.


  1. Floating Rate Funds

These are open-ended income schemes which invest equally in floating rate debt instruments and fixed rate debt instruments.

Other Schemes

  1. Tax Saving Schemes or Equity linked Savings Schemes (ELSS)

Investments in these funds are exempt from income tax at the time of investment upto Rs. 1,50,000 per annum under Section 80C.


ELSS have a lock in period of 3 years.

  1. Index Schemes

Index schemes replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc.

  1. Sectoral Schemes

Sectoral Funds are those which invest exclusively in a specified sector(s) such as FMCG, IT, Pharmaceuticals, Infrastructure, petroleum stocks, etc.


While these funds may give higher returns, they are more risky compared to diversified funds as their portfolio is restricted to the specific sectors.

  1. Load or No-Load Funds

A load fund is one that charges a percentage of NAV for exit ie.

A charge is payable each time one sells units in the fund.

This charge is used by the MF for marketing and distribution expenses.

  1. Dividend Payout Schemes

As and when MF companies make profits, part of the money is distributed to the investors by way of dividends.


  1. Dividend Reinvestment Schemes

This is similar to the previous scheme.

However, the dividend declared is re-invested in the same fund on the same day’s NAV.

 For more information please visit http://www.fortunawealth.in


Mutual fund basics

What is a Mutual Fund (MF)?

A mutual fund is a trust that pools money of like-minded investors with similar investment objective.

These MF schemes are managed by respective Asset Management Companies (AMC).

The AMC hires a professional money manager, who buys and sells securities in line with the fund’s stated objective.


The pooled money is invested in a diversified portfolio of securities including equity shares, debentures, convertibles, bonds, money market instruments or other securities.

Each unit of any scheme represents the proportion of pool owned by the investor (unit holder).

How do I get returns on a MF?

Returns on a MF are earned in the form of:

  1. Dividends- Unit holders earn dividends on MFs, which are distributed from the income generated through dividends on stocks and interest on other instruments.


  1. Capital gains- If the fund sells securities that have appreciated in value, it earns capital gains. These capital gains are usually distributed to investors.
  1. Profit from higher NAV- Increase in value of fund’s asset increases the NAV of the fund. An investor can make profit by selling back their units to the fund house.


What is Net asset value (NAV)?

NAV is the appreciation or reduction in value of investments which is regularly declared by the fund.

NAV per unit is calculated as:


What are the benefits of MFs?

  • Diversification- MF portfolio includes a wide variety of investments in order to mitigate risks.


  • Flexibility- MFs offer a variety of plans such as regular investment, regular withdrawal and dividend reinvestment plans. Depending upon your preferences and convenience, you can invest or withdraw funds, accordingly.
  • Liquidity- Investors can buy or sell an open-ended scheme from the fund house anytime. Close-ended schemes too can be sold on the stock exchange. Few close-ended and interval schemes allow direct repurchase of units from time to time.


  • Cost Effective- MFs are less expensive as compared to direct investment in the capital markets.
  • Professional Management- MFs are managed by experienced and skilled professionals who research and analyse the performance and prospects of various instruments before selecting a particular investment.


  • Transparency- MF fact sheets, offer documents, annual reports and promotional materials provide high degree of transparency.
  • Return Potential- Depending on the investment portfolio, the MFs offer a chance of higher potential of returns.


  • Choice of Schemes- There are wide variety of MF schemes available to suit each investor.
  • Well Regulated- MFs in India are regulated and monitored by the Securities and Exchange Board of India (SEBI), which strives to protect the interests of investors.

For more information please visit http://www.fortunawealth.in

Child education plan

Whatever path your child chooses, you would always wish his or her dreams come true.


To realise your child’s aspirations, right financial planning for his or her secured future is very important.

What is a child education plan?

Child education plans are regular life insurance policies specially designed to meet your child’s financial needs.


The plan provides amount on maturity for your child’s education expenses.

In case of policy owner’s untimely demise, the child will be paid the death benefit amount and all future premiums are waived off.


The policy does not lapse, the insurance company continues to invest future premium amount on policyholder’s behalf.

On maturity of the policy, the maturity amount is paid to the child.

Do I need a child plan?

Increasing education expenses are a worry of every parent.

Higher education costs would increase drastically by the time your child grows up.


Hence, you need to start planning for your child’s education as soon as possible. An early start would give time for your money to grow.

A child education plan will provide funds for your child’s higher education and secure your child’s future in any uncertainty.

What are the features of child plan?

  • Flexible policy term of 5-25 years
  • Premium amount as per your requirements
  • Tax benefit under Section 80C


  • Partial withdrawal benefit
  • Mode of premium payment- monthly, quarterly, half-yearly or yearly
  • Loan on deposits
  • Pre-mature closure allowed

Most child plans are good; however, these are designed for longer duration. So are more beneficial if your child is less than 5 years old.

Even if you have missed investing in such plans, there are plans offered by mutual fund companies for older kids.

The funds are invested in hybrid plans like debt and equity which are a mix of G-Sec, bond and equity shares with moderate risk and good returns.

However, these plans do not provide insurance coverage.

Though, you can buy a separate plan for insurance coverage. Do contact your financial adviser for further details.

Types of plans


Tips while choosing a policy:

  • Decide the amount you want to save for your child’s education.
  • Calculate the amount considering the inflation rate.
  • Choose the premium as per your affordability.


  • You can choose a policy which gives you the flexibility to gradually increase the savings in future.
  • Opt for the payer benefit rider- your child’s education fund will be taken care in case you are unable to pay due to untimely death, critical illness or disability.

For more information please visit http://www.fortunawealth.in

What is wealth management?

The value and need of money constantly changes in our lives. As wealth grows, needs become more diverse. Every individual has unique financial needs. Wealth managers understand these specific financial goals and provide appropriate financial products and services.

Wealth managers like Fortuna Wealth Management provide services such as:


  • Financial planning
  • Portfolio management
  • Retirement planning
  • Children’s education planning
  • Insurance
  • Mutual funds
  • Virtual real estate
  • Gated community plots
  • Capital gain bond
  • Pan card services
  • Income tax filing
  • Stocks and shares

Financial planning starts with a comprehensive financial analysis of the client. This helps in understanding his or her financial situation, needs, goals and preferences.

Risk profiling is done to find out the client’s risk tolerance.

On the basis of financial planning and risk profiling,  personalised wealth management plan is developed.

The client’s financial portfolio is reviewed regularly to update his or her goals, review and rebalance the financial portfolio and check if any additional services needed.

Wealth management services provide a holistic approach to manage and plan a client’s current and future financial needs. These needs could be as diverse as planning for a child’s higher education, wedding, buy a house or even planning for retirement. Thus, wealth management provides financial opportunities for all such needs by managing and potentially growing the client’s wealth.

For more information please visit http://www.fortunawealth.in