What are Debt Funds?

A debt fund is a Mutual Fund scheme that invests in fixed income instruments, such as Corporate and Government Bonds, corporate debt securities, and money market instruments etc. that offer capital appreciation. Debt funds are also referred to as Fixed Income Funds or Bond Funds.

A few major advantages of investing in debt funds are low cost structure, relatively stable returns, relatively high liquidity and reasonable safety.

Debt funds are ideal for investors who aim for regular income, but are risk-averse. Debt funds are less volatile and, hence, are less risky than equity funds. If you have been saving in traditional fixed income products like Bank Deposits, and looking for steady returns with low volatility, debt Mutual Funds could be a better option, as they help you achieve your financial goals in a more tax efficient manner and therefore earn better returns.

What are equity funds?

An Equity Fund is a Scheme that invests predominantly in shares/stocks of companies. They are also known as Growth Funds.

Equity Funds are either Active or Passive. In an Active Fund, a fund manager scans the market, conducts research on companies, examines performance and looks for the best stocks to invest. In a Passive Fund, the fund manager builds a portfolio that mirrors a popular market index, say Sensex or Nifty Fifty.

Furthermore, Equity Funds can also be divided as per Market Capitalisation, i.e. how much the capital market values an entire company’s equity. There can be Large Cap, Mid Cap, Small or Micro Cap Funds.

Also there can be a further classification as Diversified or Sectoral / Thematic. In the former, the scheme invests in stocks across the entire market spectrum, while in the latter it is restricted to only a particular sector or theme, say, Infotech or Infrastructure.

Thus, an equity fund essentially invests in company shares, and aims to provide the benefit of professional management and diversification to ordinary investors.

What are equity hybrid funds?

To simplify hybrid funds meaning - it can be said that hybrid funds are a combination of equity and debt investments that are designed to meet the investment objective of the scheme.

Each hybrid fund has a different combination of equity and debt targeted at different types of investors.

In its investing strategy, it has a wide portfolio that includes both equities and debt, as well as other assets. Through a single fund, you can invest in multiple asset classes.

Hybrid funds have a well-balanced portfolio that allows them to take advantage of the best of all asset groups. It strives to provide larger returns with lower risks while also assisting you in meeting both your short-term and long-term financial objectives. Equity components contribute to long-term wealth generation, and debt securities protect against market swings.

Different types of hybrid funds have different equity-debt combinations. They are intended to fulfil the financial demands and investing objectives of various types of investors. It also caters to large-scale investors' risk tolerance, which ranges from conservative to moderate to aggressive.The hybrid fund investment is appropriate for investors who can commit to holding the units for at least three to five years.

What are Multi Asset Allocation Funds?

The purpose of these funds is to enhance and diversify an investment portfolio through multi-asset allocation across several asset classes. Through such an action, the fund further aims at cushioning the risks that are associated with investing in just one class of asset.

The multi-asset allocation fund is liable for taxation. If an investor holds the funds for less than 3 years, they will be liable to tax on their short-term capital gain tax, as per their predefined slab.If they hold on to their investment for more than 3 years, a rate of 20% with indexation will be levied on their long-term capital gains.

The multi-asset allocation Mutual Funds are deemed suitable for investors who have a low-risk appetite but want to enjoy steady returns on their investments. The multi-asset allocation helps such investors to even out the risk that comes along with investing in just one type of asset class.

Additionally, it ensures a steady flow of income for the investors even at a time when some asset classes are underperforming than usual.

Even though the multi-asset allocation fund has not been through a full market cycle, significant returns can be earned in a short period. Investors with experience in asset allocation and portfolio rebalancing may be able to earn the full benefit from such funds.

What are Portfolio Management Solution?

Portfolio management’s meaning can be explained as the process of managing individuals’ investments so that they maximise their earnings within a given time horizon. Furthermore, such practices ensure that the capital invested by individuals is not exposed to too much market risk.

The entire process is based on the ability to make sound decisions. Typically, such a decision relates to – achieving a profitable investment mix, allocating assets as per risk and financial goals and diversifying resources to combat capital erosion.

Primarily, portfolio management serves as a SWOT analysis of different investment avenues with investors’ goals against their risk appetite. In turn, it helps to generate substantial earnings and protect such earnings against risks.

To make the most of one’s investment portfolio investors must participate actively in portfolio management. By doing so, they will not only be able to cushion their resources against market risks but will also be able to maximise their returns successfully.

Nonetheless, to make the most of portfolio management, investors should opt for a management type that suits their investment pattern.