Frequently Asked
Questions

What is a mutual fund?

A mutual fund is a financial instrument that collects money from several investors like you, and invests it in various investment options like shares, bonds, etc. This fund is managed by experts.

What are the types of mutual funds?

Depending on where your money is invested, mutual funds can be classified into three types: Equity, Debt and Hybrid. Equity mutual funds invest in shares of companies listed on the stock exchange. Debt mutual funds invest in bonds of reputed companies and government bonds. Hybrid mutual funds invest in both, shares and bonds.

How does a mutual fund operate?

A mutual fund company collects money from many investors, and invests it in various options like shares, bonds, etc. This fund is managed by professionals who understand the market well, and try to achieve growth by making strategic investments. Investors get units of the mutual fund according to the amount they have invested.

What are the benefits of investing in a mutual fund?

Some of the major benefits on investing in a mutual fund are:
- Diversification
- Professional management
- Convenience
- Liquidity
- Variety of schemes and types
- Tax benefits

What are the consequences of being NON Compliant?

Suspension of AMFI Certificate.
In case Self Declaration not submitted to AMC before the end of the financial year, or within 3 months from the start of next financial year then his brokerage will be suspended thereafter till submission.

What is NFO?

NFO stands for a New Fund Offer. When a new fund is launched for investors, it is known as a NFO. A NFO could also be the launch of additional units of a close-ended fund.

What is a Fund of Funds?

A fund of fund is a kind of mutual fund that invests in a variety of mutual funds.

What are equity mutual funds?

Equity mutual funds collect money from several investors like you, and invest this amount in shares of various companies. The primary objective of equity mutual funds is to invest in shares of different companies and generate good returns.

What are debt mutual funds?

Debt mutual funds collect money from several investors like you, and invest this amount in bonds of reputed companies and government bonds.

What are hybrid mutual funds?

Hybrid mutual funds invest both in shares and bonds. The portion invested in shares helps grow your wealth, while the portion invested in bonds offers stability to your portfolio.

What is a Systematic Investment Plan (SIP)?

A Systematic Investment Plan (SIP) is a convenient method of investing in mutual funds. Under this plan, an investor contributes a fixed amount towards the mutual fund scheme at regular intervals, and gets units at the prevailing NAV.

What are the benefits of investing in a SIP?

Investing in SIP offers two major benefits:
- You can start investing with a small amount
- You can average out your investment, as SIP involves buying units at different points of time and at different NAV levels

What is a Systematic Withdrawal Plan (SWP)?

Under a Systematic Withdrawal Plan (SWP), an investor redeems a fixed number of mutual fund units at regular intervals.

What are Exchange Traded Funds?

Exchange Traded Funds (ETFs) are funds that can be traded on a stock exchange, just like shares. These funds invest in shares, indexes or commodities.

What are index funds?

Index funds are mutual funds that invest in shares of companies comprising a particular index. These funds intend to replicate the performance of a particular index.

What is rupee cost averaging?

Rupee cost averaging is one method to save regularly and minimise the effect of market volatility on investments. By investing through methods like SIP, you invest a fixed amount in mutual funds at regular intervals. So, you get more units when the NAV is low and fewer units when it is high. Eventually, your average cost per unit is brought down.

What is NAV?

NAV stands for Net Asset Value of a mutual fund. This is basically the price of one unit of a mutual fund.

How is NAV calculated?

NAV can be calculated as follows:
Assets of the fund – Liabilities of the fund / Number of outstanding units for that fund

How often is the NAV of a fund declared?

Mutual fund companies have to declare the NAV of their funds at least once a week. However, most companies declare it at the end of every working day.

What are gilt funds?

A gilt fund is a kind of mutual fund that invest your money only in government securities. These funds are considered to be safe as they bear no default risk.

What are sectoral mutual funds?

Sectoral mutual funds invest your money in shares of companies of one particular sector. The main objective of these funds is to provide high returns from one particular sector that has the potential to grow.

What are liquid funds?

Liquid funds are mutual funds that offer high liquidity. This means, the units of these funds can be sold immediately, and the invested amount can be redeemed quickly.

What are capital protection funds?

Capital protection funds are mutual funds designed to protect your capital. These funds put a major portion of the investment in bonds, and a small portion in shares. Over time, the portion invested in bonds grows to the size of your original investment. So even if the portion invested in shares does not do well, your capital is still protected.

What is an open-ended mutual fund?

Open-ended funds can be bought and sold at any time; they have no fixed tenure.

What is a close-ended mutual fund?

You can buy units of close-ended mutual funds only when a mutual fund company launches the fund. Once you buy them, you have to hold your investment for a fixed tenure.

What is redemption price?

Redemption price is the price that you receive on selling each unit of your mutual fund investment.

Where can I get more information on mutual funds?

Most mutual fund companies have their website, where information related to all the mutual fund schemes is available. You can also log on to the official website of the Association of Mutual Funds in India (AMFI): www.amfiindia.com.
To view information related to regulations and guidelines for mutual funds, addresses of mutual funds, etc. one can log on to www.sebi.gov.in and click on the 'Mutual Funds' section.

How do I subscribe and redeem units of a mutual fund scheme on stock exchanges?

In order to extend the convenience that investors in the secondary market have, to investors in Mutual Funds, SEBI has allowed Stock Exchanges to offer their existing infrastructure for subscribing and redeeming units of a mutual fund scheme.

In accordance with the same, National Stock Exchange of India Ltd. offers Mutual Fund Service System (MFSS) and Bombay Stock Exchange Ltd. offers BSE Stock Exchange Platform for Allotment and Repurchase of Mutual Funds (BSE StAR MF) [collectively called as Stock Exchange Platform(s) for Mutual Funds] for transacting in certain schemes of Birla Sun Life Mutual Fund.

For further details on trading through Stock Exchange Platform(s), you may refer to the following websites:

http://www.nseindia.com/products/content/equities/mutual_funds/mfss.htm

http://www.bseindia.com/about/BSEstarmf.asp

All transactions carried out through the Stock Exchange Platform for Mutual Funds shall be subject to such guidelines as may be issued by NSE, BSE and also SEBI (Mutual Funds) Regulations, 1996 and circulars / guidelines issued thereunder from time to time, in this regard.

Can NRIs invest in Mutual Funds? Do they require any special permission from the RBI?

Non Resident Indians and Persons of Indian Origin residing abroad (NRIs) / Foreign Institutional Investors (FIIs) have been granted a general permission by Reserve Bank of India Schedule 5 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 for investing in / redeeming units of the mutual funds subject to conditions set out in the aforesaid regulations


What are the consequences of being NON Compliant?

Suspension of AMFI Certificate. In case Self Declaration not submitted to AMC before the end of the financial year, or within 3 months from the start of next financial year then his brokerage will be suspended thereafter till submission.

Where can I get more information on mutual funds?

Most mutual fund companies have their website, where information related to all the mutual fund schemes is available. You can also log on to the official website of the Association of Mutual Funds in India (AMFI): www.amfiindia.com. To view information related to regulations and guidelines for mutual funds, addresses of mutual funds, etc. one can log on to www.sebi.gov.in and click on the 'Mutual Funds' section.

How do I subscribe and redeem units of a mutual fund scheme on stock exchanges?

In order to extend the convenience that investors in the secondary market have, to investors in Mutual Funds, SEBI has allowed Stock Exchanges to offer their existing infrastructure for subscribing and redeeming units of a mutual fund scheme.

In accordance with the same, National Stock Exchange of India Ltd. offers Mutual Fund Service System (MFSS) and Bombay Stock Exchange Ltd. offers BSE Stock Exchange Platform for Allotment and Repurchase of Mutual Funds (BSE StAR MF) [collectively called as Stock Exchange Platform(s) for Mutual Funds] for transacting in certain schemes of Birla Sun Life Mutual Fund.

For further details on trading through Stock Exchange Platform(s), you may refer to the following websites:

http://www.nseindia.com/products/content/equities/mutual_funds/mfss.htm

http://www.bseindia.com/about/BSEstarmf.asp

All transactions carried out through the Stock Exchange Platform for Mutual Funds shall be subject to such guidelines as may be issued by NSE, BSE and also SEBI (Mutual Funds) Regulations, 1996 and circulars / guidelines issued thereunder from time to time, in this regard.

Click here to view List of schemes on BSE STAR MF

Click here to view List of schemes on MFSS

Are there any additional services offered by the Mutual Fund for NRI's?

Yes. NRI's are allowed access to Birla Sun Life's Online Portfolio Management System.
This free and 24/7 service allows investors to:
- Track and manage their investment portfolio online
- Transact Online – Additional Purchases, Switches and Redemptions
- Download Account Statement
- Post your queries & requests on email to a relationship manager

What are the taxes applicable for income from Mutual Funds for NRIs?

Dividends

Dividends NRI
Equity schemes Tax free
Debt schemes Tax free

Dividend Distribution Tax

Dividend Distribution Tax NRI
Equity schemes Nil
Debt schemes 14.163%
With Indexetion 11.33% (10% Tax + 10% Surcharge + 3% Cess)
Without Indexetion 22.66% (20% Tax + 10% Surcharge + 3% Cess)
Short Term Capital Gains Tax NRI
Equity schemes 17% (15% Tax + 10% Surcharge + 3% Cess)
Debt schemes 33.99% (30% Tax + 10% Surcharge + 3% Cess)

Tax Deducted At Source (Applicable only to NRI Investors)

Tax Deducted At Source Short term Long term
Equity schemes 11.33% NIL
Debt schemes 33.99% 22.66%

Tax Benefits u/s 80 C:

The introduction of section 80C, in the Union Budget 2005, has allowed investors to save tax by investing in Equity Linked Savings Scheme (ELSS) schemes on investments upto Rs.1 Lac. and at the same time avail the growth potential of equity markets.

The following table draws a comparison of the investment avenues available under Section 80C

Investment Options Lock-in Time Period (In Years) Max Investment for Sec 80C Benefits (Rs.) % Return (CAGR) Tax Treatment of interest
ELSS (Mutual Fund Schemes under Equity: Tax Planning Category) 3 1,00,000 49.83 * Dividend and Capital Gains Tax Free
Public Providend Fund (PPF) 15 70,000 8 * Tax Free
National Savings Certificate (NSC) 6 1,00,000 8 * Taxable

* Equity Tax Planning Category average for 3 yrs, Source: Value Research Mutual Fund Performance Report 31 Oct, 2007

# Source: www.indiapost.gov.in/banking.html

Are there any specific procedures to be followed for making the investment on a repartiable/non repartiable basis?

PURCHASES BY NRIs/FIIs

Repatriation basis:

Payments by NRIs/FIIs may be made by way of Indian rupee drafts purchased abroad or out of funds held in NRE/FCNR account or by way of cheques drawn on non-resident external accounts payable at par and payable at the cities where the Investor Service Centres are located.

In case of Indian rupee drafts purchased and subscriptions through NRIs/FCNR account, an account debit certificate from the bank issuing the draft confirming the debit should also be enclosed.

Non Repatriation basis:

NRIs investing on a non repatriable basis may do so by issuing cheques/demand drafts drawn on Non-Resident Ordinary (NRO) account payable at the cities where the Investor Service Centres are located.

REDEMPTIONS BY NRIs/FIIs

Payment to NRI/FII Unit holders will be subject to the relevant laws / guidelines of the RBI as are applicable from time to time (subject to deduction of tax at source as applicable).

In the case of NRIs :

- Credited only to NRSR account of the NRI investor where the payment for purchase of Units redeemed was made out of funds held in NRSR account or
- Credited, at the NRI investor's option, to his / her NRO or NRSR account, where the payment for the purchase of the Units redeemed was made out of funds held in NRO account or
- Remitted abroad or at the NRI investor's option, credited to his / its NRE / FCNR / NRO / NRSR account, where the Units were purchased on repatriation basis and the payment for the purchase of Units redeemed was made by inward remittance through normal banking channels or out of funds held in NRE / FCNR account.

Can NRIs invest in Mutual Funds? Do they require any special permission from the RBI?

Non Resident Indians and Persons of Indian Origin residing abroad (NRIs) / Foreign Institutional Investors (FIIs) have been granted a general permission by Reserve Bank of India Schedule 5 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 for investing in / redeeming units of the mutual funds subject to conditions set out in the aforesaid regulations


Welcome to Jaanoge Tabhi Toh Maanoge – a Birla Sun Life Mutual Fund Initiative.

To empower you with knowledge on Mutual Funds, this website presents you with Informative and Interactive tools. As you explore the site, you will come across informative infographics which empower you with knowledge on various facets of mutual funds, and interactive tools like Ask a Question, Mutual Fund quiz, etc. which answers your queries, test your knowledge, and much more.

Before you delve into the world of Mutual Funds, have quick read on the basics.

When does mutual fund come into play in your life? It is the moment you are ready to achieve following in your life: Create wealth from your investments, achieve various financial goals in your life and/or save tax.

Before you start investing in mutual fund, you should answer two questions: What is the objective (goal) you want your money to achieve for you? And how long can you keep your money aside to grow?

For achieving short term goals like buying a car, going on a family vacation etc. you can invest in debt funds. For achieving long term goals like child's marriage, retirement etc. you can invest in equity funds.

So if you want to achieve a goal, say child's education, in 2 years, then your investment should be in debt schemes (2 days - 4 years). If you want to achieve this goal in next 10 years, then your investment should be in equity schemes (5 years+).

You are just a step away from planning for your financial freedom. Click here to learn and explore on Jaanoge Tabhi Toh Maanoge!

X

Request a call-back

Share your details and we’ll get in touch soon.

Please enter Name
Please enter Mobile number
Please enter City