Direct Equity investment refers to the buying and holding of shares on a stock market by investors in anticipation of dividends and capital gains with changes in the value of the stock.

Equities have the potential to increase in value over time. Research studies have proved that the equity returns have outperformed the returns of most other forms of investments in the long term.

Equities are considered the most rewarding, when compared to other investment options if held over a long duration. Equities are high risk investments. Though higher the risk, higher the potential returns, high risk also indicates that the investor stands to lose some or all his investment amount if prices move unfavorably. One needs to study equity markets and stocks in which investments are being made carefully, before investing.

Mutual funds are in the form of Trust (usually called Asset Management Company) that manages the pool of money collected from various investors for investment in various investors for investment in various classes of assets to achieve certain financial goals.

We can say that Mutual Fund is trusts which pool the savings of large number of investors and then reinvests those funds for earning profits and then distribute the dividend among the investors. In return for such services, Asset Management Companies charge small fees.

Every Mutual Fund launches different schemes, each with a specific objective. Investors who share the same objectives invest in that particular Scheme. Each Mutual Fund Scheme is managed by a Fund Manager with the help of his team of professionals (One Fund Manager may be managing more than one scheme also).

Thus a Mutual Fund may be the most suitable investment for investors as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.

Different types of mutual fund schemes:

There are a wide variety of Mutual Fund schemes that cater to your needs, whatever your age, financial position, risk tolerance and return expectations. Whether as the foundation of your investment program or as a supplement, Mutual Fund schemes can help you meet your financial goals.

By Structure

i. Open-Ended Schemes
This scheme allows investors to buy or sell units at any point in time. These do not have a fixed maturity. You deal directly with the Mutual Fund for your investments and redemptions. The key feature is liquidity. You can conveniently buy and sell your units at net asset value (“NAV”) related prices.

a) Debt/ Income – In a debt/income scheme, a major part of the investable fund are channelized towards debentures, government securities, and other debt instruments. Although capital appreciation is low (compared to the equity mutual funds), this is a relatively low risk-low return investment avenue which is ideal for investors seeing a steady income.

b) Money Market/ Liquid – This is ideal for investors looking to utilize their surplus funds in short term instruments while awaiting better options. These schemes invest in short-term debt instruments and seek to provide reasonable returns for the investors.

c) Equity/ Growth – Equities are a popular mutual fund category amongst retail investors. Although it could be a high-risk investment in the short term, investors can expect capital appreciation in the long run. If you are at your prime earning stage and looking for long-term benefits, growth schemes could be an ideal investment.

• Index Scheme – Index schemes is a widely popular concept in the west. These follow a passive investment strategy where your investments replicate the movements of benchmark indices like Nifty, Sensex, etc.
• Sectoral Scheme – Sectoral funds are invested in a specific sector like infrastructure, IT, pharmaceuticals, etc. or segments of the capital market like large caps, mid caps, etc. This scheme provides a relatively high risk-high return opportunity within the equity space.
• Tax Saving – As the name suggests, this scheme offers tax benefits to its investors. The funds are invested in equities thereby offering long-term growth opportunities. Tax saving mutual funds (called Equity Linked Savings Schemes) has a 3-year lock-in period.

d) Balanced fund – A balanced fund is geared toward investors who are looking for a mixture of safety, income and modest capital appreciation. Funds are invested in both equities and fixed income securities; the proportion is pre-determined and disclosed in the scheme related offer document. These are ideal for the cautiously aggressive investors.

e) Exchange Traded Funds/ Schemes Exchange Traded Funds/ Schemes (ETFs) are a basket of securities that are traded on the stock exchange.

f) Fund of Funds Scheme A “Fund of Funds Scheme” means a mutual fund scheme that invests primarily in other schemes of the same mutual fund or other mutual funds.

ii. Close-Ended Schemes Schemes that have a stipulated maturity period (ranging from 2 to 15 years) are called close-ended schemes. You can invest directly in the scheme at the time of the initial issue and thereafter you can buy or sell the units of the scheme on the stock exchanges where they are listed. The market price at the stock exchange could vary from the scheme’s NAV on account of demand and supply situation, unit holders’ expectations and other market factors. One of the characteristics of the close-ended schemes is that they are generally traded at a discount to NAV; but closer to maturity, the discount narrows.

Direct Equity investment refers to the buying and holding of shares on a stock market by investors in anticipation of dividends and capital gains with changes in the value of the stock. Equities have the potential to increase in value over time. Research studies have proved that the equity returns have outperformed the returns of most other forms of investments in the long term. Equities are considered the most rewarding, when compared to other investment options if held over a long duration. Equities are high risk investments. Though higher the risk, higher the potential returns, high risk also indicates that the investor stands to lose some or all his investment amount if prices move unfavorably. One needs to study equity markets and stocks in which investments are being made carefully, before investing. Mutual funds are in the form of Trust (usually called Asset Management Company) that manages the pool of money collected from various investors for investment in various investors for investment in various classes of assets to achieve certain financial goals. We can say that Mutual Fund is trusts which pool the savings of large number of investors and then reinvests those funds for earning profits and then distribute the dividend among the investors. In return for such services, Asset Management Companies charge small fees. Every Mutual Fund launches different schemes, each with a specific objective. Investors who share the same objectives invest in that particular Scheme. Each Mutual Fund Scheme is managed by a Fund Manager with the help of his team of professionals (One Fund Manager may be managing more than one scheme also). Thus a Mutual Fund may be the most suitable investment for investors as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. Different types of mutual fund schemes: There are a wide variety of Mutual Fund schemes that cater to your needs, whatever your age, financial position, risk tolerance and return expectations. Whether as the foundation of your investment program or as a supplement, Mutual Fund schemes can help you meet your financial goals. (I) By Structure i. Open-Ended Schemes This scheme allows investors to buy or sell units at any point in time. These do not have a fixed maturity. You deal directly with the Mutual Fund for your investments and redemptions. The key feature is liquidity. You can conveniently buy and sell your units at net asset value (“NAV”) related prices. a) Debt/ Income – In a debt/income scheme, a major part of the investable fund are channelized towards debentures, government securities, and other debt instruments. Although capital appreciation is low (compared to the equity mutual funds), this is a relatively low risk-low return investment avenue which is ideal for investors seeing a steady income. b) Money Market/ Liquid – This is ideal for investors looking to utilize their surplus funds in short term instruments while awaiting better options. These schemes invest in short-term debt instruments and seek to provide reasonable returns for the investors. c) Equity/ Growth – Equities are a popular mutual fund category amongst retail investors. Although it could be a high-risk investment in the short term, investors can expect capital appreciation in the long run. If you are at your prime earning stage and looking for long-term benefits, growth schemes could be an ideal investment. Index Scheme – Index schemes is a widely popular concept in the west. These follow a passive investment strategy where your investments replicate the movements of benchmark indices like Nifty, Sensex, etc. Sectoral Scheme – Sectoral funds are invested in a specific sector like infrastructure, IT, pharmaceuticals, etc. or segments of the capital market like large caps, mid caps, etc. This scheme provides a relatively high risk-high return opportunity within the equity space. Tax Saving – As the name suggests, this scheme offers tax benefits to its investors. The funds are invested in equities thereby offering long-term growth opportunities. Tax saving mutual funds (called Equity Linked Savings Schemes) has a 3-year lock-in period. d) Balanced fund – A balanced fund is geared toward investors who are looking for a mixture of safety, income and modest capital appreciation. Funds are invested in both equities and fixed income securities; the proportion is pre-determined and disclosed in the scheme related offer document. These are ideal for the cautiously aggressive investors. e) Exchange Traded Funds/ Schemes Exchange Traded Funds/ Schemes (ETFs) are a basket of securities that are traded on the stock exchange. f) Fund of Funds Scheme A “Fund of Funds Scheme” means a mutual fund scheme that invests primarily in other schemes of the same mutual fund or other mutual funds. ii. Close-Ended Schemes Schemes that have a stipulated maturity period (ranging from 2 to 15 years) are called close-ended schemes. You can invest directly in the scheme at the time of the initial issue and thereafter you can buy or sell the units of the scheme on the stock exchanges where they are listed. The market price at the stock exchange could vary from the scheme’s NAV on account of demand and supply situation, unit holders’ expectations and other market factors. One of the characteristics of the close-ended schemes is that they are generally traded at a discount to NAV; but closer to maturity, the discount narrows. Some close-ended schemes give you an additional option of selling your units directly to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations ensure that at least one of the two exit routes are provided to the investor.

a) Capital Protection – The primary objective of this scheme is to safeguard the principal amount while trying to deliver reasonable returns. These invest in high-quality fixed income securities with marginal exposure to equities and mature along with the maturity period of the scheme.

b) Fixed Maturity Plans (FMPs) – FMPs, as the name suggests, are mutual fund schemes with a defined maturity period. These schemes normally comprise of debt instruments which mature in line with the maturity of the scheme, thereby earning through the interest component (also called coupons) of the securities in the portfolio. FMPs are normally passively managed, i.e. there is no active trading of debt instruments in the portfolio. The expenses which are charged to the scheme, are hence, generally lower than actively managed schemes.

When most people think about fixed deposits, the first thing that comes to the mind is approaching a bank to open a fixed deposit. However, that is not the only place where you can open fixed deposits. Many finance houses also offer investors the facility to open fixed deposits that offer interest rates that can be higher than what most banks offer.

Corporate/Company Fixed Deposit:
The deposit placed by investors with companies for a fixed term carrying a prescribed rate of interest is called Company Fixed Deposit. Financial institutions and Non-Banking Finance Companies (NBFCs) also accept such deposits. Deposits thus mobilised are governed by the Companies Act. These deposits are unsecured, i.e., if the company defaults, the investor cannot sell the documents to recover his capital, thus making them a risky investment option.

Non-Convertible Debentures (NCDs): It is a Debt instruments with a fixed tenure & Companies issue NCDs to raise money for business purposes.

Fixed Deposit Account means the account which is opened for a particular fixed period (time) by depositing particular amount (money) is known as Fixed (Term) Deposit Account.

The term ‘fixed deposit’ means that the deposit is fixed and is repayable only after a specific period is over.

Under fixed deposit account, money is deposited for a fixed period say six months, one year, five years or even ten years. The money deposited in this account cannot be withdrawn before the expiry of period.

The rate of interest paid for fixed deposit vary (changes) according to amount, period and from bank to bank.

If you are a mid to long term equity market investor who believes in disciplined wealth creation from stock market, Portfolio Advisory Services is “The Right Choice” for you. Unlike traditional Portfolio Management Services, PAS is non-discretionary in nature – thus keeping you in complete control of your stocks & money while you seek professional advice.

Portfolio Advisory Services strongly believes that every investor is unique – in terms of risk profile, equity investment style, return expectations from market, holding capacity etc., and so is his portfolio – in terms of number of stocks, relative weight-age among different stocks & sectors, time of entry & impact of volatility. Thus PAS provides “Custom Made Advice” on restructuring your existing portfolio & fresh recommendations that best suit the “Investor in You”.

Portfolio Advisory Services includes discretionary investment management services for individuals, joint account holders, certain retirement plans, Individual Retirement Accounts (“IRAs”) as well as certain trusts, estates, business entities, and charitable organizations.

Grouped under the general category called ‘fixed-income’ securities, the term ‘bond’ is commonly used to refer to any founded on debt. When you purchase a bond, you are lending out your money to a company or government. In return, they agree to give you interest on your money and eventually pay you back the amount you lent out.

The main attraction of bonds is their relative safety. If you are buying bonds from a stable government, your investment is virtually guaranteed (or “risk-free” in investing parlance). The safety and stability, however, come at a cost. Because there is little risk, there is little potential return. As a result, the rate of return on bonds is generally lower than other securities.

What is Portfolio Management Services (PMS) ?
Portfolio Management Services (PMS), service offered by the Portfolio Manager, is an investment portfolio in stocks, fixed income, debt, cash, structured products and other individual securities, managed by a professional money manager that can potentially be tailored to meet specific investment objectives. When you invest in PMS, you own individual securities unlike a mutual fund investor, who owns units of the fund. You have the freedom and flexibility to tailor your portfolio to address personal preferences and financial goals. Although portfolio managers may oversee hundreds of portfolios, your account may be unique.

Discretionary:
Under these services, the choice as well as the timings of the investment decisions rest solely with the Portfolio Manager.

Non Discretionary:
Under these services, the portfolio manager only suggests the investment ideas. The choice as well as the timings of the investment decisions rest solely with the Investor. However the execution of trade is done by the portfolio manager.

Advisory:
Under these services, the portfolio manager only suggests the investment ideas. The choice as well as the execution of the investment decisions rest solely with the Investor. Note: In India majority of Portfolio Managers offer Discretionary Services.