How to Choose the Best Mutual Fund for Investment

How to Choose the Best Mutual Fund for Investment

How to Choose the Best Mutual Fund for Investment

The popularity of investing in mutual funds has been steadily growing in India as individuals aim to achieve their financial goals and grow their wealth. Mutual funds offer a professionally managed and diversified investment option, which can be instrumental in building wealth over time. However, with a vast array of mutual funds available in the market, selecting the best one can be a daunting task. In this comprehensive guide, we will explore the key factors to consider when choosing the ideal mutual fund for your investment needs in India.

                                                                                                                         Subas Tiwari

Understanding Mutual Funds

Before embarking on the selection process, it is essential to have a clear understanding of what mutual funds are and how they operate. A mutual fund is essentially a pool of funds collected from numerous investors with the objective of investing in a diversified portfolio of assets, which may include stocks, bonds, or other securities. These funds are managed by professional fund managers who make investment decisions on behalf of the investors.

Mutual funds offer various advantages, including diversification, professional management, liquidity, and accessibility, making them an appealing choice for both novice and experienced investors. However, it is important to acknowledge that not all mutual funds are created equal, and choosing the right one is crucial for achieving your financial goals.

Determine Your Investment Goals and Risk Tolerance

The first step in selecting the best mutual fund for investment is to define your financial goals and ascertain your risk tolerance. Your investment objectives will dictate the type of mutual funds that align with your needs. Here are some common investment goals and the types of mutual funds that are suitable for them:

  1. Wealth Creation (Long-Term Growth): In this scenario, Equity Mutual Funds are appropriate. These funds primarily invest in stocks and are well-suited for investors with a long-term horizon (typically five years or more). They offer the potential for higher returns but come with higher volatility.
  2. Capital Preservation (Low Risk): If your objective is capital preservation with low risk, Debt Mutual Funds are the right choice. These funds invest in fixed-income securities like government bonds, corporate bonds, and money market instruments. They are relatively less risky and are ideal for conservative investors looking for stable returns.
  3. Income Generation (Regular Income): Hybrid Mutual Funds, also known as balanced funds, are suitable for those seeking regular income and capital appreciation. These funds invest in a combination of equity and debt instruments.
  4. Tax Saving: For tax-saving purposes, consider ELSS (Equity Linked Savings Scheme) Mutual Funds. ELSS funds offer tax benefits under Section 80C of the Income Tax Act and predominantly invest in equities. They come with a lock-in period of three years.

Understanding your risk tolerance is equally important. Your risk tolerance depends on factors such as your age, financial situation, and your willingness to endure market fluctuations. Generally, younger investors with a longer investment horizon can afford to take on more risk, while older investors may prefer more conservative options.

Evaluate Fund Performance

Once you’ve identified your investment goals and assessed your risk tolerance, the next step is to evaluate the performance of mutual funds. Past performance can offer insights into how a fund has historically performed, but it should not be the sole basis for your decision. Here are some key factors to consider when evaluating fund performance:

  1. Historical Returns: Examine the fund’s historical returns over different timeframes, including one year, three years, five years, and ten years. Compare these returns to relevant benchmark indices to gauge how well the fund has performed.
  2. Risk-Adjusted Returns: Take risk-adjusted measures like the Sharpe ratio and the Sortino ratio into account. These metrics consider the level of risk a fund has taken to generate its returns, with a higher ratio indicating better risk-adjusted performance.
  3. Consistency: Look for funds that have demonstrated consistent performance over multiple market cycles. Funds that consistently outperform their peers may be a good choice.
  4. Fund Manager’s Track Record: Assess the track record and experience of the fund manager. A skilled and experienced fund manager can significantly impact a fund’s success.
  5. Expense Ratio: Pay attention to the fund’s expense ratio, which represents the annual fees and charges deducted from the fund’s assets. Lower expense ratios can translate to higher returns for investors.

Understand Fund Categories and Objectives

Mutual funds are categorized into various types based on their investment objectives and asset allocation. Understanding these categories can help you narrow down your options. Here are some common mutual fund categories in India:

Equity Funds

  1. Large-Cap Funds: These funds invest in large-cap stocks.
  2. Mid-Cap Funds: Focus on mid-sized companies.
  3. Small-Cap Funds: Invest in small-cap stocks.
  4. Sectoral Funds: Concentrate on specific sectors like technology, banking, or healthcare.

Debt Funds

  1. Liquid Funds: Invest in very short-term debt instruments for liquidity.
  2. Income Funds: Focus on generating regular income.
  3. Gilt Funds: Invest in government securities for stability.
  4. Credit Risk Funds: Invest in lower-rated corporate bonds for potentially higher returns.

Hybrid Funds

  1. Balanced Funds: Maintain a balance between equity and debt.
  2. Aggressive Hybrid Funds: Have a higher allocation to equities.
  3. Conservative Hybrid Funds: Have a higher allocation to debt.

Other Funds

  1. Index Funds: Mirror the performance of a specific market index.
  2. Fund of Funds: Invest in other mutual funds.
  3. International Funds: Invest in foreign markets.

Understanding the category and objective of a fund will help you align it with your investment goals. For example, if you want exposure to international markets, you may consider international funds, while if you seek regular income, income funds may be more suitable.

Assess Fund Size and Asset under Management (AUM)

The size of a mutual fund and its assets under management (AUM) can provide insights into its popularity and liquidity. A larger AUM can indicate investor trust and stability, but it’s essential to strike a balance. Extremely large funds may face challenges in deploying capital effectively, potentially leading to diluted returns.

On the other hand, very small funds may lack the resources and expertise to manage assets efficiently. It’s advisable to consider funds with a reasonable AUM that aligns with your investment objectives. Smaller investors may find smaller funds more accessible, while larger investors may prefer funds with substantial AUM.

Analyse Fund Expenses

Mutual funds come with various expenses, and it’s essential to understand how these costs can impact your returns. The two primary expenses associated with mutual funds are:

  1. Expense Ratio: The expense ratio represents the annual fees and charges deducted from the fund’s assets. It includes management fees, administrative expenses, and other operational costs. Lower expense ratios can lead to higher returns for investors, so it’s wise to compare expense ratios within the same category.
  2. Exit Load: An exit load is a fee charged when investors redeem their units before a specified holding period. Different funds have different exit load structures, so be aware of these fees, especially if you might need to access your money in the short term.

Additionally, some funds charge load fees when you invest (entry load), but these have become less common due to regulatory changes in India.

Consider Tax Implications

Tax efficiency is a crucial factor when choosing a mutual fund in India. Different types of mutual funds have varying tax implications. Here’s a brief overview:

  1. Equity Funds: Long-term capital gains (LTCG) from equity funds are tax-free if the holding period is more than one year. However, a 10% LTCG tax is applicable on gains exceeding Rs 1 lakh.
  2. Debt Funds: LTCG tax on debt funds is applicable after three years, and it is taxed at 20% with indexation benefits. Short-term capital gains are taxed as per the individual’s tax slab.
  3. ELSS Funds: ELSS funds offer tax benefits under Section 80C of the Income Tax Act, with a lock-in period of 3 years.

Understanding the tax implications can help you optimize your investment strategy and minimize tax liabilities.

Review Fund Holdings and Portfolio

Examining a mutual fund’s portfolio and holdings can provide valuable insights into its investment strategy. Key points to consider include:

  1. Asset Allocation: Determine the fund’s allocation to different asset classes (equity, debt, and cash) and sectors. Ensure it aligns with your risk tolerance and investment goals.
  2. Top Holdings: Review the top holdings of the fund. Are they in line with your expectations? Assess the quality and diversity of these holdings.
  3. Portfolio Turnover: Higher portfolio turnover can lead to higher transaction costs and tax implications. A fund with a low turnover may be more tax-efficient.
  4. Concentration Risk: Be cautious of funds with high concentration in a few stocks or sectors, as they may be riskier.

Evaluate Fund Management Team

The fund manager plays a pivotal role in the performance of a mutual fund. Here’s how to assess the fund management team:

  1. Track Record: Research the fund manager’s past performance and experience in managing similar funds.
  2. Investment Philosophy: Understand the fund manager’s investment approach and philosophy. Does it align with your investment goals?
  3. Fund Management Changes: Check if there have been recent changes in the fund management team. Frequent changes can be a red flag.

Review Fund House Reputation

The reputation of the mutual fund house is another crucial factor to consider. Look for a fund house with a history of ethical practices, transparent reporting, and investor-friendly policies. Research the fund house’s overall performance and credibility in the market.

Consider Systematic Investment Plans (SIPs)

Systematic Investment Plans (SIPs) are a popular way to invest in mutual funds regularly. SIPs allow investors to invest fixed amounts at regular intervals (e.g., monthly) and benefit from rupee cost averaging. SIPs can be an excellent strategy for long-term investors looking to mitigate market volatility.

Seek Professional Advice

Choosing the best mutual fund for your investment needs can be complex, and seeking professional advice can be beneficial. Financial advisors can help assess your financial situation, risk tolerance, and investment goals to recommend suitable mutual funds.

Monitor Your Investments

Once you’ve selected a mutual fund, your job doesn’t end there. Regularly monitor your investments to ensure they align with your objectives. Review your portfolio periodically and make adjustments if necessary. Avoid making impulsive decisions based on short-term market fluctuations.


Choosing the best mutual fund for investment in India requires careful consideration of your financial goals, risk tolerance, and various fund-related factors. It’s essential to conduct thorough research, evaluate fund performance, assess expenses, and consider tax implications. Additionally, stay informed about market developments and seek professional advice when necessary. By taking a disciplined and informed approach to mutual fund investing, you can work towards achieving your financial objectives and building long-term wealth in India’s dynamic investment landscape.


Unit Linked Insurance Plans (ULIPs)

Unit Linked Insurance Plans (ULIPs)

Unit Linked Insurance Plans (ULIPs)

Unit Linked Insurance Plan is a great investment option. This is a kind of life insurance plan in which you will get an opportunity to build a hefty corpus with the convenience of a life insurance policy by investing in it. On investing in this scheme, the investor gets a rebate of 1.5 lakhs under section 80C of Income Tax. Along with this, you also get the facility of higher returns by investing in this scheme. If you are also planning to invest in this scheme, then first of all be aware of the advantages of doing so.

                                                                                                                                 Subas Tiwari

Many investors often associate ULIPs (Unit Linked Insurance Plans) with mutual fund schemes. By investing in ULIPs, they feel that they are investing money in some mutual fund scheme. However, this is not true at all. These two are different types of products.

ULIP is an insurance product. It is a different matter that in the initial years of the privatization of the insurance sector, insurance companies and their agents continued to present ULIPs as an investment product. In the earlier ULIPs, the commission of agents was very hefty. About 60 per cent of the first installment of premium used to go into the pockets of insurance agents. This was the reason that they were being sold wrongly. At the end, the Insurance Regulatory and Development Authority of India (IRDAI) caught sight of this side. They cracked down on this entire game. After this, ULIPs with low commission and high insurance cover started coming. ULIPs have improved a lot since then. However, even today they are sold wrongly.

Many relationship managers of banks sell ULIPs as bonds. Some intermediaries sell these as mutual funds that give guaranteed returns after five years. Also insurance cover is available free.

The question is, what exactly is a Unit Linked Insurance Plan or ULIP? The simple answer is that a ULIP is an insurance product with an investment component. Or as some insurance agents claim, these are like mutual fund schemes which also include the feature of insurance.

History of ULIPs

When Life Insurance Corporation of India (LIC) was under the umbrella rule, the insurance cover always had the feature of saving. This is the reason why insurance was essentially used for savings and tax saving purposes. Before privatization, it was sold saying ‘you will invest x amount, you will get x plus bonus’. At that time, endowment plans and insurance products with savings were dominated. After privatization, insurance covers started coming with investment feature. Investment options range from conservative fixed income to high-risk equities. This is the history of ULIPs.

How do they work?

A Unit-Linked Insurance Plan is a combination of insurance and investment. A portion of the premium is paid by the policyholder and is utilized to provide insurance coverage to the policyholder and the remaining portion is invested in equity and debt instruments. The aggregate premiums collected by the insurance company providing such plans is pooled and invested in varying proportions of debt and equity securities. Each policyholder has the option to select a personalized investment plan based on his/her investment needs and risk appetite. Each policyholder’s Unit-Linked Insurance Plan holds a certain number of fund units, each of which has a net asset value (NAV) that is declared on a daily basis. The NAV is the value upon which net rates of return on ULIPs are determined. The NAV varies from one ULIP to another based on market conditions and fund performance.

A portion of premium goes towards mortality charges i.e. providing life cover. The remaining portion gets invested funds of policyholder’s choice. Invested funds continue to earn market linked returns.

ULIP policy holders can make use of features such as top-up facilities, switching between various funds during the tenure of the policy, reduce or increase the level of protection, options to surrender, additional riders to enhance coverage and returns as well as tax benefits.

What’s the strategy?

Once you get enough life cover, you can start investing in mutual funds for your investment needs. There are advantages to this strategy. First, you get enough cover by paying a small premium. You then track the performance of your mutual fund schemes. You will not be able to do this work with an insurance plan like ULIP. If the investment portion of the ULIP plan is not doing well then you can just switch to another investment option. Selling it outright is not an option as then you lose the insurance cover. As you age, getting life insurance cover becomes costly and complicated.

Types of ULIPs

Depending upon the death benefit, there are broadly two types of ULIPs. They are- 

  • Type-I ULIP- Under this plan, the nominee gets the higher of sum assured and fund value.
  • Type-II ULIP- Here, the nominee of the policy holder gets the sum assured and fund value in the event of demise of the policy holder.

There are a variety of ULIP plans to choose from based on the investment objectives of the investor, their risk appetite as well as the investment horizon. Some ULIPs play it safe by allocating a larger portion of the invested capital in debt instruments while others purely invest in equity. Again, all this is totally based on the type of ULIP chosen for investment and the investor preference and risk appetite.

What does IRDAI say in regard to ULIPs?

As per the IRDAI, with effect from 1st September, 2010, the following are the restrictions on ULIP policies.

  • The lock-in period is 5 years (earlier 3 years)
  • Except single premium payment plans, premiums have to be paid for a minimum of 5 years

Compelling reasons for you to go in for ULIP

  • Market-linked returns
  • Investment & life protection combined
  • Flexibility to choose between basket of funds of a Fund House
  • Income tax deductions (under 80 C & 10 (10) D of the Income Tax Act)
  • Financial security post retirement

Understand these Terminologies: Charges that could be levied on the Policy

  • Premium allocation fee

The charge is imposed beforehand on the premium amount. These are initial expenses incurred by the company in issuing the policy. These are charged on yearly basis as a percentage on the premium depending upon the premium payment term.

  • Fund management fee

This is an aggregated sum of fees incurred in units invested in equity and debt instruments. These charges vary according to the type of fund & plan and are borne by the insured. These charges are payable on a yearly basis as a percentage depending upon the premium payment term.

  • Policy administration fee

These are related to recovery of expenses borne by the insurers for maintaining the life insurance policy. These are however borne by the insured on a monthly basis as a fixed sum charged on the premium amount paid.

  • Mortality fee

This is an expense charged by the insurer to provide life cover to insured which vary with the age & sum assured, risk, etc. of the insured. These charges are deducted on a monthly basis.

  • Surrender charge

This charge refers to the deduction for full or partial encashment of premature units subject to the policy document. This charge is levied as a percentage of the fund value or a percentage of the premium amount.

  • Fund switching charge

This charge is levied while switching from one fund to another & beyond the free switches allowed in a year. The charge is applicable for each switch.

  • Discontinuance charge

On premature discontinuation during the lock-in period, this charge is levied.

Do they perform well in the market?

The performance of the various ULIP policies with reference to growth of units, depend on market forces & the efficient management of the investment by the appointed Fund Managers in various sectors of the economy.  Due to the ups & downs of the market based on demand/supply & the state of the economy, the returns get averaged & coupled with life cover, the returns on the Units invested is modest.


  • Avoid everyday hassle of managing stocks
  • Multiple fund options to choose from
  • Transparent product with no hidden charges
  • Liquidity
  • Low surrender charges
  • ULIP is a two-in-one plan in terms of giving  twin benefits of life insurance plus savings
  • Some of the policies offer partial withdrawals without breaking the units ensuring liquidity
  • Flexibility in increase/decrease in Base Sum Assured
  • Initially, the various charges look to be costlier. But it has to be remembered that these charges look costly as viewed within the lock-in period (short term). The charges tend to taper off during the period after the lock-in period. 


  • Mortality charges levied have no fixed fee but based on a lot of other factors (such as age of the insured, cost of insurance & applicable sum assured).
  • Due to the nature of the Unit-linked Funds, only a handful of the companies can guarantee the price of the units as this product is different from the other traditional insurance products & are subject to market & other risk-based factors.
  • Very few insurance companies offer a discount on the premium that too is available only when the policy is purchased directly from the website of the company concerned; this acts as a dampener for attracting prospective customers.
  • Charges such as Premium Allocation, Policy Administration & Fund Management offsets any growth which is achieved over the years during the short term period.

Differences between Mutual Funds and ULIPs: Whether you choose to invest in ULIPs or Mutual Funds, you can base your decision on these factors.

  • ULIPs come with life cover alongside investment benefits, while Mutual Funds only offer investment benefits.
  • If you are looking for long-term investment while providing protection to your loved ones, ULIPs should be your pick. Mutual Funds, on the other hand, are ideal to accomplish financial goals for your near future.
  • With Mutual Funds, you can redeem the units at any time because of flexible withdrawal options.  While regular funds don’t come with any lock-in period, for tax-saving Equity-Linked Savings Scheme (ELSS) schemes there’s a 3-year lock-in period. However, when it comes to ULIPs, they have a minimum lock-in period of 5 years.
  • In terms of tax benefits, when it comes to Mutual Funds, you can claim deductions only for ELSS schemes. For ULIPs, you can get tax benefits on the premiums paid under Section 80C of the Income Tax Act, 1961. Under Section 10(10D), even the maturity amount is tax-free. However, those ULIPs issued after February 1, 2021, will be treated as capital gains if the annual premium is more than ₹ 2.5 lakh.
  • When it comes to expenses, liquid Mutual Funds have no entry or exit fee. However, for ULIPs, there are premium allocation charges, administration charges, fees for managing funds, etc.

Keep these things in mind before investing in ULIP

1. ULIP plans have flexible investment options

A ULIP policy holder can choose to invest their premium in either equity options or debt or even a mixture of both, depending on their risk appetite. Someone who doesn’t mind high risk can choose ULIP investment options in equity funds while someone who is more cautious can invest in mutual funds. 

2. ULIPs have a top-up option

In some cases, a policyholder can change the premium amount they’re putting into the ULIP plan and are not obligated to put a fixed amount each time. ULIP policies allow investors to “top up” or add extra funds to their existing investment amount.

3. Newer ULIP plans don’t have transaction charges

ULIP plans are a smart and secure first step into investing. However, older policies still come with a number of transaction charges related to premium allocation, mortality change, and fund management. Before investing, ensure that the policy is newer and eliminates these charges after a few years. For example, the Future Generali Easy Invest Online Plan starts with a 5% premium allocation charge that reduces to 2.5% after two to five years. After six years, the charge is fully eliminated. 

4. ULIP plans are tax deductible under Section 80C

A ULIP policy is a tax deductible investment under Section 80C of the Income Tax Act 1961. This means that premiums of up to Rs 1 lakh are tax-free for the investor, making ULIP plans an attractive investor for first-timers. Even when the plan matures, the final amount is tax-deductible under Section 10 (10D) of the Income Tax Act 1961.

5. Lock-in period ensures discipline

A ULIP policy can come with lock-in periods of around five years, meaning that the investor must continue to add money into the policy for that time frame. The lock-in period encourages investors to save consistently and build their savings. After the lock-in period, investors can withdraw a part of their money if they want to or even discontinue the ULIP plan.

6. ULIP plans are strong long-term investments

Despite lock-in periods and transaction charges, ULIP policies are popular long-term investments. They require regular payments to remain active, teaching investors to be more disciplined while also increasing wealth. The lock-in period motivates investors to keep money in the market and ride out fluctuations with high returns, as well. A ULIP plan also allows investors to mix and match assets, making a diverse portfolio— Future Generali Future Opportunity Fund is one such plan.

7. Different premium payment options

ULIP policies are famous for their flexibility that also includes the payment structure. Investors have three different choices when it comes to paying premiums: single premium plan where the full investment is paid in a lump sum, regular premium plan where a fixed amount can be deposited for the duration of the ULIP policy, and limited premium plan where the amount is paid for a certain number of years.

8. A ULIP policy has the potential for high returns

One of the best parts of ULIP plans is that the return on investment can be potentially very high— even in double digits. When the premiums are invested smartly, in different types of assets and in tax-saving funds, the investor reaps huge benefits. A ULIP policy can be profitable, tax-savvy investment.

9. Maturity dates can be deferred

Some ULIP plans allow the investor to defer their maturity date, meaning that the date at which the policy matures and the money can be fully withdrawn is extended to the future. The main benefit of having a policy that allows the extension of the maturity date is that an investor can minimize risk in case the date falls in a market slump or decline. If the ULIP policy matures when the markets improve, the investor will see higher returns in the end.

10. ULIP policies help family planning

One of the most attractive aspects of a ULIP policy is that it offers insurance coverage and death benefits. So if the investor dies suddenly, their family can fall back on the ULIP and get financial security. ULIP plans are also good for family planning like retirement and children’s education, and any emergencies.


Mutual Funds- Infrastructure Funds

Mutual Funds- Infrastructure Funds

Mutual Funds- Infrastructure Funds

What is infrastructure?

Infrastructure is said to be the tangible aspects such as roads, railways, transportation, and electricity and so on which are indispensible to the day to day functioning of an economy. The state of the infrastructure is instrumental in determining whether the economy is a developed or developing economy. 

                                                                                                                             Subas Tiwari

What are infrastructure funds?

Mutual Funds that invest in infrastructure sector or its ancillary companies that own manufacture and operate infrastructure assets or infrastructure projects are known as Infrastructure funds. The companies invested in these sectors could be directly linked to infrastructure such a construction or production of capital goods or indirectly benefit from sectors like banking and metal. Currently these funds are heavily tilted in their investments towards sectors like, Auto & Auto ancillaries, Banking and Financial Services, fast moving Consumer goods, Telecom, Constructions and Projects and Petroleum and Gas.

Infrastructure Assets include

  • Toll roads
  • Airports
  • Communication assets such as broadcasting, telecom towers
  • Materials-handling facilities such as Docks
  • Rail facilities & other transport assets
  • Utilities such as Electricity, Power Lines & Gas pipelines

Companies/Sectors which are DIRECTLY connected to infrastructure segment

  • Energy
  • Real Estate
  • Power
  • Metals

Companies/ Sectors which are INDIRECTLY connected to infrastructure segment

  • Banking
  • Finance
  • Transportation

Why anyone has to invest in infrastructure funds in MF portfolio?

  • Infrastructure funds are likely to perform better during the next 3-5 years (the budget for 2017-18 has provided Rs.2,41,387 cr (with Rs.1,31,000 cr for railways)
  • The present Government is bullish on providing infrastructure (like roads, rails & shipping to boost Indian economy & also provide huge employment opportunities) to the Indian public
  • There is expectation that capital expenditure, both from private companies & the Government, are likely to increase in the coming years
  • The investor market expects falling interest rates which is bound to boost private companies in expanding capacities

What should an investor do in such a situation? 

(Make hay when the sun shines)

  • Do invest in this sector-be it rail, road, airways or shipping
  • Diversify your portfolio & limit your exposure to a particular sector
  •  Keep your investments in a particular  infra sector to 10-15% of the total investment portfolio
  • By spreading your investments across sectors, one can minimize the risks to a great extent
  • Invest in Systematic Investment Plan (SIP) or Systematic Transfer Plan (STP) to benefit from any likely volatility in the market

What one should desist from doing? 

(Do not put all your eggs in a single basket)

  • Never take exposure in by investing in lump sum in these funds
  • Maximize your investments within a time frame between 3-5 years only

(Infra funds have given good returns over a 3 year investment period than for a 5 -7 year period run)

  • Stock markets crashed in 2008. Infra funds did not get over the –ve impact till 2014. With the new Government in office, the infra sector is picking up and looking up. HAPPY DAYS ARE HERE AGAIN! But don’t throw caution to the winds! 
  • In a growth-oriented economy, infrastructure funds may not get you stable income in the short term but the fund seeks to achieve capital growth in the medium term.

Types of Mutual Funds

Let’s take a look at the MF jargon of wordplay at work. Most of us get confused by their funny names! But the following are the major terminology one needs to know in the ‘variety’ in Mutual Funds.


Mutual Fund Investments in Companies

With market capitalization of over Rs.20,000 Crores. The reference point to categorize them is at SENSEX or BSE-100 INDEX or NIFTY

MIDCAP FUNDS IN MUTUAL FUNDS Mutual Fund investments in Companies having market capitalization from Rs.5,000 to Rs.20,000 Crores. (The Index is as above)
SMALL CAP FUNDS IN MUTUAL FUNDS They are also called ‘micro-cap funds’. These refer to investments of less than Rs.5,000 Crores
MULTICAP FUNDS IN MUTUAL FUNDS They are nothing but Diversified Mutual Funds that can be invested in stocks across market capitalization. Assets can be invested in shares of large, medium & small sized companies
BALANCED FUNDS IN MF Is a combination of Stock Component (equity)  & Bond Component (debt)  in a single portfolio indicating investments that are likely to go into EQUITY-DEBT ratio (More equity-based will fetch more returns while the investment risk increases while Debt-oriented will get you modest returns while assuring you of modest risk of your investments)
INDEX FUNDS IN MF These funds attempt to replicate the performance of a particular index such as BSE, SENSEX OR NSE-50. The portfolio of these schemes will consist of only those stocks that constitute the INDEX. The percentage of each stock to the total holding will be identical to the stocks index weightage
LIQUID FUNDS IN MF These are open-ended schemes that invest in securities with a maturity of up to 91 days. These could include Treasury Bills (short term borrowing instruments of GOI which enables investors to park their surplus funds while reducing their market risk; they are regularly auctioned by RBI), Money-market instruments (Commercial Paper –CP)  and very short-term Corporate Paper (Corporate Bonds).
HYBRID FUNDS IN MF It is a category of mutual funds that is characterized by portfolio that is made of a mix of stocks & bonds which can vary proportionally over time or remain fixed
ARBITRAGE FUNDS IN MF These are special types of equity mutual funds which generates returns based on arbitrage opportunities available in stock markets

The Three Handles of this Story

  • Take a prudent exposure as a part of your investment portfolio
  • Go for a 3 year investment period
  • Look for a SIP investment mode

List of Infrastructure Mutual Funds in 2022

Fund name




Till Date CAGR

Quant Infrastructure Fund (G)

666.652 Cr




Bank of India Manufacturing & Infra fund (G)

82.63 Cr




Invesco India Infrastructure Fund (G)

450.581 Cr




ICICI Prudential Infrastructure Fund (G)

2116.925 Cr




Canara Robeco Infrastructure fund (G)

240.306 Cr




Tata Infrastructure Fund (G)

945.291 Cr




Kotak Infrastructure & Economic Reform Fund Standard Plan (G)

645.575 Cr




HSBC Infrastructure Equity Fund (G)

119.715 Cr




SBI Infrastructure Fund (G)

906.345 Cr




Nippon India Power & Infra Fund (G)

1825.346 Cr




IDFC Infrastructure Fund (G)

656.709 Cr




Aditya Birla Sun Life Infrastructure Plan A (G)

554.363 Cr




Franklin Build India Fund (G)

1174.258 Cr




LIC MF Infrastructure Fund (G)

90.738 Cr




Sundaram Infrastructure Advantage Fund (G)

636.831 Cr




Taurus Infrastructure Fund (G)

5.413 Cr




L&T Infrastructure Fund (G)

1448.301 Cr




UTI Infrastructure Fund (G)

1499.642 Cr




HDFC Infrastructure Fund (G)

609.125 Cr



  Sourced from- on 4th Oct 2022


Things you should know about Application Supported by Blocked Amount (ASBA)

Things you should know about Application Supported by Blocked Amount (ASBA)

Things you should know about Application Supported by Blocked Amount (ASBA)


With the Zomato IPO in the headlines, you might want to know how to subscribe an issue in the Initial Public Offering or IPO. If you’re so, we suggest you to understand what is an Application Supported by Blocked Amount (ASBA). It is a process developed by India’s Stock Market Regulator SEBI for applying to IPOs, Rights issue, FPS etc. In ASBA, an IPO applicant’s bank account doesn’t get debited until shares are allotted to them. Let us understand what it entails here and what a consumer needs to go though. 

Subas Tiwari

ASBA facility is adopted for application of Initial Public Issue IPO and Follow-on Public Offer (FPO). It is a SEBI based facility on your bank account which was launched in May 2010. It is a process by which retail investors block the relevant amount in their savings account till the shares are allotted, to apply for investment in an IPO or FPO. If shares are allotted to you then this amount is deducted from your bank account otherwise it is unblocked after the allotment process is completed. It can also be understood that if the investor has subscribed for the IPO, then under the process money will not be deducted from the investor’s account until he gets the IPO issue.

ASBA or Application Supported by Blocked Amount is an application containing an authorization to block the application money in the bank account, for subscribing to an issue.

If an investor is applying through ASBA, his application money shall be debited from the bank account only if his/her application is selected for allotment after the basis of allotment is finalised, or the issue is withdrawn/failed.  

Detailed procedure of applying in IPO through ASBA

Under ASBA facility, investors can apply in any public/rights issues by using their bank account. Investor submits the ASBA form (available at the designated branches of the banks acting as Self-Certified Syndicate Banks) after filling the details like name of the applicant, PAN number, de-mat account number, bid quantity, bid price and other relevant details, to their banking branch by giving an instruction to block the amount in their account. In turn, the bank will upload the details of the application in the bidding platform. Investors shall ensure that the details that are filled in the ASBA form are correct otherwise the form is liable to be rejected.

Who can apply through ASBA facility?

SEBI has been specifying the investors who can apply through ASBA. In public issues with effect from May 1, 2010, all the investors can apply through ASBA.  

In rights issues, all shareholders of the company as on record date are permitted to use ASBA for making applications provided he/she/it:

  • is holding shares in dematerialised form and has applied for entitlements or additional shares in the issue in de-materialised form;
  • has not renounced its entitlements in full or in part;
  • is not a renounce;
  • who is applying through blocking of funds in a bank account with the Self Certified Syndicate Bank (SCSB).  

Applying through ASBA vis‐à‐vis applying with a cheque

Applying through ASBA facility has the following advantages:

  1. The investor need not pay the application money by cheque; rather the investor submits ASBA which accompanies an authorisation to block the bank account to the extent of the application money.
  2. The investor does not have to bother about refunds, as in ASBA only that much money to the extent required for allotment of securities, is taken from the bank account only when his application is selected for allotment after the basis of allotment is finalised.
  3. The investor continues to earn interest on the application money as the same remains in the bank account, which is not the case in other modes of payment.
  4. The application form is simpler.
  5. The investor deals with the known intermediary i.e. its own bank.

Is it mandatory for investors eligible for ASBA, to apply through ASBA only?

No, it is not mandatory. An investor, who is eligible for ASBA, has the option of making the application through ASBA or through the existing facility of applying with cheque.  

Can I make application through ASBA facility in all issues?

Yes, you can make application through ASBA facility in all the issues (i.e. public and rights. List of Self Certified Syndicate Banks (SCSBs) and their designed branches i.e. branches where ASBA application form can be submitted, is available on the websites of BSE ( and NSE ( and on the website of SEBI ( The list of SCSBs would also be printed in the ASBA application form. 

Self-certified Syndicate Bank (SCSB)

SCSB is a bank which is recognised as a bank capable of providing ASBA services to its customers. Names of such banks would appear in the list available on the website of SEBI. No, ASBA can be submitted to the SCSB with which the investor is holding the bank account.  Five (5) applications can be made from a bank account per issue.  

You can either fill up the physical ASBA form available with SCSB and submit the same to the SCSB or apply electronically/online through the internet banking facility (if provided by your SCSB).  

Can I use the existing application form for public issues?

Investor is requested to check the form carefully. In case of public issue, the application form for ASBA will be different from the existing application form for public issues. The application forms will be available with designated branches of

SCSB. In case of rights issue, there will not be a separate form for ASBA. The investor has to apply by selecting ASBA option in Part A of the Composite Application Form. 

How to withdraw my ASBA bids

During the bidding period you can approach the same bank to which you had submitted the ASBA and request for withdrawal through a duly signed letter citing your application number, TRS number, if any. After the bid closure period, you may send your withdrawal request to the Registrars before the finalisation of basis of allotment, who will cancel your bid and instruct SCSB to unblock the application money in the bank account after the finalisation of basis of allotment.  

What to do when application gets rejected

You have to approach the concerned SCSB for any complaints regarding your ASBA applications. SCSB is required to give reply within 15 days. In case, you are not satisfied, you may write to SEBI thereafter.

It is to keep in mind that in ASBA, the entire bank account does not get blocked. Only the amount to the extent of application money authorised in the ASBA will be blocked in the bank account. The balance money, if any, in the account can still be used for other purposes.

If the withdrawal is made during the bidding period, the SCSB deletes the bid and unblocks the application money in the bank account. If the withdrawal is made after the bid closure date, the SCSB will unblock the application money only after getting appropriate instruction from the registrar, which is after the finalisation of basis of allotment in the issue.     

And investors need not necessarily have their DP account with the SCSB, where they are submitting the ASBA form. One is required to submit ASBA to the SCSBs only.  

An investor can apply either through ASBA or through existing system of payment through cheque. If an applicant applies through both, ASBA as well as non‐ASBA then both the applications having the same PAN, will be treated as multiple application and hence will be rejected.

The bids received through ASBA mode gets reflected in the demand graphs displayed in the website of stock exchanges. In case there is an error by SCSB in entering the data in the electronic bidding system of the stock exchanges, the SCSB shall be responsible.

The SCSB shall give a counterfoil as an acknowledgement at the time of submission of ASBA and also the order number, generated at the time of uploading the application details, if sought by the investors in case of need.

ASBA forms need to be treated similar to the non‐ASBA forms while finalising the basis of allotment. In case the issue fails/withdrawn the SCSB shall unblock the application money from the bank accounts upon receiving instructions from the registrar.

In case of any complaints, the investor shall approach the bank, where the application form was submitted or the registrars to the issue.

This can be done provided that your bank have core banking facility and the ASBA form is submitted at a branch which is identified as designated branch by the bank.

The chance of getting allotment is same for all the applicants whether application is made through ASBA or non‐ASBA. ASBA is a simple, easy and smart way of applying in public issues. There are many advantages of applying through ASBA like money does not go out of investors’ account, no hassle of refund, investor keep earning interest on the blocked amount as banks have started paying interest on daily basis w.e.f April 1, 2010 and it gives better opportunity for utilisation of money.

ASBA forms can be submitted only at the SCSBs. In case investor does not have an account with any of the SCSBs, then he cannot make use of the ASBA.

                                                                         (Source: SEBI)


Equity Linked Saving Scheme (ELSS Mutual Fund)

Equity Linked Saving Scheme (ELSS Mutual Fund)

Equity Linked Saving Scheme (ELSS Mutual Fund)

Mutual Funds

How good it would be if with the accumulation of money, there is a bumper exemption on tax as well. Tax exemption also means a kind of savings. This savings money can be put to good use elsewhere. There is a scheme named Equity Linked Saving Scheme or ELSS, with the help of which one can save up to Rs. 46,800. Let’s check it out here.

Subas Tewari

Compared to Fixed Deposit or NPS, ELSS offers many tax saving facilities along with giving higher returns. Mutual funds earn more than FDs or NPS. Therefore, people who invest in ELSS funds or equities consider ELSS to be more effective. ELSS is such a fund which gives maximum returns with minimum lock-in period. ELSS is actually a combination of large and medium size stocks. This fund has been designed in such a way that it is easy for the person taking it to save tax. If you hold this fund for a longer period, there are many possibilities of growth and higher returns. There are many features of this fund. For example, you can start it by investing at least Rs 500. Investment facility is also available in this through SIP. The minimum lock-in period of 3 years is available in this fund. That is, after 3 years, you can easily leave this fund and withdraw your money. The biggest feature is that with the help of this fund, a taxpayer can save up to Rs 46,800.

Fund’s salient features

There is a limit on the minimum deposit amount in this fund to save tax. In this fund, you get a minimum deposit of Rs 500 and a maximum of Rs 1,50,000. How much you will earn from this fund depends on your deposit amount and market conditions. If we look at the track record of the last one year, then the situation is satisfactory because mutual funds along with shares etc. have also given good returns.

Multiple benefits with single investment

Actually, ELSS fund is a type of tax saving fund in which most of the funds are deposited in equity schemes. Equity funds are such schemes in which money is invested in the shares of companies. Companies are decided under equity according to the capital in the market and are invested in them. If a person deposits Rs 1.5 lakh in ELSS every year, then one can save tax of Rs 46,800 under section 80C of Income Tax. Also, it is allowed to invest more than Rs 1.5 lakh.

Why invest in ELSS?

ELSS is considered to be much better than those who follow the traditional methods of tax saving. Compared to Fixed Deposit or NPS, ELSS offers many tax saving facilities along with giving higher returns. Mutual funds earn more than FDs or NPS. Therefore, people who invest in ELSS funds or equities consider ELSS to be more effective. The biggest thing is that the lock-in period of ELSS is very less as compared to FD or NPS. That is, the possibility of high returns in a short time can be found in ELSS.

Who can invest?

ELSS can be invested by any person who wants to reduce his income tax under section 80C by investing money in tax saving scheme. It is an equity investment, so those who invest money for a long term and expect returns, who are less concerned about market risk, can make the most of this fund. Since ELSS has a lock-in period of 3 years, the fund is taxed on the basis of long-term gains. If earning more than Rs 1 lakh then interest of 10 per cent will have to be paid.

More work with less investment

There is no need to deposit a lot of money in this fund at once. That is, you do not need to take the tension that you will deposit a lot of money, only then you will be able to take advantage of this tax saving scheme. You can enter this scheme with very little money. By taking out the average of this fund every year, you can start investing with the same money. There is no need to make huge payments for each unit of the fund. If you want, you can start investing from 500 rupees. This also gives you discipline in investing.

What are ELSS funds?

ELSS is a mutual fund scheme and is quite similar to diversified equity fund of Mutual Fund. As the name suggests, the scheme primarily invests in equity market by buying equity stocks of companies listed on the stock exchanges. The units of the scheme are offered at the NAV (Net Asset Value). The NAV is announced for all business days and keeps changing primarily depending upon the movement in the prices of stocks held in the portfolio of the scheme in relation to market fluctuations. Mutual Fund ELSS is a good tax-saving instrument but still is not invested in large numbers by tax-savers. So, this article is just to wake them up and take notice of this tax-saving investing option so that there is maximum participation of the public from all walks of life.

What is the urgency to invest in ELSS?

It is most likely that the Direct Tax Code (DTC) proposed by the Government will come into effect (sooner than later), and your most dependable tax saving section – Section 80C of the Income Tax Act would undergo amendments. While the DTC includes a proposal to increase the eligible deduction under Section 80 C, Equity Linked Savings Schemes (ELSS) -also known as “tax saving mutual funds”, would no longer continue to be a part of eligible tax saving instruments, thus leaving you with fewer market-linked investment options to accelerate the process of wealth creation.

Who are advised to invest in ELSS?

YES. This is an important aspect of tax-planning especially when you look at ELSS as a tax-saving option. The following are the factors that could be considered. 

Those who have clear and focused financial goals

If you have financial goals set in your life, the same too should influence the way you do your tax planning and invest in tax saving instruments. So, say for example your goal is retiring from work 5 years from now, then your tax saving investment portfolio should be less tilted towards market-linked tax saving instruments, as you are quite near to your goal and your regular income will cease. Likewise, if you are many years away from the financial goal, you should ideally allocate maximum to market-linked tax saving instruments and less towards those instruments (tax saving) which provide you assured returns.

Those who have risk appetite

It refers to your ability to take risk while investing, and it is totally dependent on your age, income, expenses, and nearness to your goal. So, if your willingness to take risk is high (aggressive), you can tilt your tax saving investment portfolio more towards the market-linked instruments such as ELSS. But if you have a moderate-risk profile, then you can take a mix of 60:40 into market-linked tax saving instruments and assured return tax saving instruments respectively.

Thus, now if you are young, income is higher, and therefore willingness to take risk is highest along with your financial goals being far away; you may look at ELSS mutual funds to avail a tax benefit under Section 80C. Please note that ELSS mutual funds are 100 per cent diversified equity funds and a distinguishing feature about them is the compulsory lock-in period of 3 years brings in financial discipline towards holding one’s investments for the long-term. For investment in ELSS, there is a minimum investment amount of Rs. 500 which is unlike the other equity-oriented funds (which generally demand Rs. 5,000 as the minimum investment amount).

What should be the income bracket to enter investing?

It is said that if your income is high, your willingness to take risk is generally high. This can work in your favour, as you can allot your portfolio more towards equity-related instruments such as ELSS, and make your portfolio appear more aggressive. Similarly, if your income is not high enough, you can invest in other tax-saving instruments which provide you assured returns.

What age to enter investing?

Your age should determine your asset allocation. If you are young, you can take more risk and vice-versa. Hence, for prudent tax planning too, if you are young, you should allocate more towards market-linked tax saving instruments such as ELSS. Moreover, you would also enjoy the advantage of greater investment tenure which would enable you make more aggressive investments and create wealth over the long-term to meet your financial goals.

How to select ELSS funds?

Ideally while evaluating ELSS mutual funds, one should assess their performance over a 3-Yr time frame, as this would enable you to judge whether they have created wealth for your post- lock-in period.

Moreover, the Fund has to ensure to its investors to fairly low-risk, but should provide risk-adjusted returns thereby making it a low risk-high return investment proposition in the category.

Also, the returns should have been achieved by the Fund without indulging in much portfolio churning.

What are the benefits of ELSS MF?

Tax benefit on the investment

You can get full tax benefit of investment under section 80 C of Income Tax Act. Maximum taxable limit is Rs. 1, 50, 000 for the current Assessment Year.

Shortest lock-in period (period during which payment will not be made if you go in for tax benefit)

Lock-in period of ELSS is 3 years which is shortest in comparison to any other tax saving investment. This lock-in period is the only difference between diversified equity mutual funds and ELSS. When compared to bank tax-saving FDs, ELSS scores over them as bank FDs have a lock-in period of 5 years.

Tax-free returns

Any profit/ capital gain you have from ELSS is completely tax free. If you compare the returns from NSC and Tax-Shield Bank FDs, these are completely taxable and paid interest is added to your income for tax computation. So, you end up paying tax on interest received. Only PPF Offers tax- free returns but it has a maturity period of 15 years.

Tax free dividends

ELSS schemes give dividends on regular intervals and the dividend you receive is tax free.

No entry loads

Say if you invest Rs. 15, 000 in ELSS Scheme, your Rs. 15, 000 is invested in ELSS Mutual Fund. You have to decide how much do you want to pay your financial advisor. Take a word of caution: some insurance agents sell ULIPS as Mutual Fund + Insurance with lots of ‘load’ expenses.

High growth

Equity funds can be volatile in the short run, but have been known to beat inflation and create wealth over the long run. If you are looking at investing some money that you won’t need in future, and are willing to stand atop the ups and downs of the market, you may find ELSS an ideal tax saving option.

Systematic Investment Plan (SIP) in ELSS

In SIP, you invest a certain amount each month in a fund. It’s an effective way of investing in ELSS as the concept of rupee cost-averaging and the power of compounding works well. Even if you have done your tax planning for this year, start from 1st AUGUST, 2015.

Comparison with Unit-Linked Insurance Plan

The investors and tax-saving public sometimes think of ELSS funds and ULIPs as alternatives. This is a mistake as functionally, there is nothing common between ELSS funds and ULIPs. It’s a basic rule of saving not to mix insurance with investments. ELSS and ULIPs are two different products that serve different purposes.

ELSS is an equity fund in the marketULIP is a mix of life insurance and investment offered by life insurance companies
ELSS have predictable cost, and easily understandable returns and are transparent about how the fund operates and what it invests inFrom the premium paid, the insurer deducts charges towards life insurance (mortality charges), administration expenses and fund management fees. So only the balance amount is invested
Only payment of Fund Management Charge (as expenses) per year is applicableULIPs have high first year charges towards acquisition (including agents' commissions)
The total investment under ELSS is in Equity Funds onlyIn a ULIP, the mix of investment and insurance prevents savers from having a clear cost-vs-benefit understanding of either of the two components
In ELSS there in no fixed period of maturity except for the lock-in period as the Fund is open-endedWith an ULIP, you have to block your money for long periods of time. So you sacrifice on transparency and liquidity.
ELSS has a 3 years lock-in periodULIPs have 5 years lock-in
ELSS has no switching facility of funds as it is controlled by the Fund ManagerULIPs provide for ‘switch’ from one fund to another

Where do ELSS stand as a preferred fund for investment?

ELSS is one of the popular tax saving option for savvy investors, as not only that ELSS is a diversified equity mutual fund which has a majority of the corpus invested in equities, but also that it has a lock-in period of 3 years from the date of investment. The returns from investment in ELSS are based on schemes from equity markets. Returns from ELSS schemes are also tax-free.

Based on previous years’ returns, some of these funds have grown 3 times in 5 years. There is also no limit on investment in ELSS funds, but you can claim tax deduction of up to Rs.1,50,000 under Section 80C of the Income Tax Act.

ELSS is always better to invest-

  • Via SIP mode rather than lump-sum (for cost-averaging)
  • In GROWTH options (for wealth accumulation)
  • In DIRECT Plan (to save costs & higher returns)
  • Compare ELSS with other investment options and see the difference.


Tenure15 years6 years3 years
Returns(Compounded Annually)
8.80 % ^
8.60 to 8.90 % ^
Not assured dividends/ returns
Minimum investmentsRs.500Rs. 100Rs. 500
Maximum investmentsRs.1,50,000No limit*No limit*
Amount eligible for
deduction under Section 80C
Taxation for interestTax freeTaxableDividends and capital gain tax free
Safety/ Rating Highest HighestHigh Risk


How to choose the best Liquid Mutual Fund

How to choose the best Liquid Mutual Fund

Liquid Mutual Fund
Liquid funds are best for those who are looking for short-term investment avenues. Instead of keeping it in a savings bank account, you can invest that recent bonus which you received in a liquid fund. In this case, you want to know the parameters of choosing the best liquid mutual fund. Also understand if there are limitations of the scheme.


  • Returns & Fund house checks: Past Performance of the fund and the track record of the AMC has to be checked. The long term track record of the AMC need to be given attention. Choose a fund house with a consistent fund history/performance/return record for the last 5 to 10 year.
  • Securities details: It will be good to know the portfolio break-up in terms of the type of securities. The ratio of CBLOs, commercial papers, treasury bills, certificate of deposits, bonds with residual maturity of less than 91 days. This shows the true liquidity of the liquid portfolios.
  • Credit Rating: Highest rating is AAA. Higher credit rating denotes less chances of default, hence less risky.
  • Portfolio Allocation: Liquid funds have nearly zero marked-to-market component hence credibility of the issuers in the portfolio has to be looked at.Scheme’s portfolio and instruments in which allocation has been done has to be checked.
  • Average Maturity: Liquid funds invest in instruments which mature within 91 days. Lower average maturity indicates that the fund is holding more cash, which in turn gives less return on capital gains.
  • Objective of the fund: There are different plans like growth plans, daily dividend plan, weekly dividend plans and monthly dividend plans. Plans have to be chosen based on your risk appetite & fund requirement.
  • Costs: Liquid funds charge a fee to manage your money called an expense ratio. Analyse least expense ratio with consistent fund returns.


Costs: Some mutual funds have a high cost associated with them. Depending on the fund, the expense ration can be significant. Different funds have different expense ratios and need to be checked.

Dilution: Diversification has an averaging effect on your investments. While it saves you from suffering any major losses, it also prevents you from making any big gains! Therefore, major gains get diluted. That is why it is recommended that you do not invest in too many mutual funds.

Any financial decision has to be an informed one, where all the details need to be read and understood. Mutual funds are subject to your risk appetite and financial goals. Liquid funds pose as a good investment for those who have idle cash for a short time span.


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