Zebu blog

Category: Mutual Funds

  • What Is NAV And How Is It Calculated?

    If you have never invested in a mutual fund before, you might want to know what NAV stands for. NAV, which stands for “net asset value,” is a term for how much each unit of a mutual fund costs. The NAV is calculated every day based on the closing prices of all the securities that the different mutual fund schemes own. Unlike share prices, which change often during trading hours, the NAV is based on the closing prices of all the securities. The expenses of a mutual fund scheme, such as fund management, administration, distribution, etc., are charged in proportion to the scheme’s assets and are reflected in the NAV.

    How do you figure out NAV?

    Once you know what NAV is, you should be curious about how it is decided.

    A mutual fund company (AMC) asks people to join a new scheme through a “new fund offering” (NFO). In an NFO, each unit of a plan costs Rs 10. Let’s say that during the NFO, different investors give Rs 1,000 crores to the AMC. The fixed issue price of Rs 10 for NFO subscribers means that the AMC gives investors units based on how much money was raised. In this example, Rs 1 trillion was raised through the NFO, and Rs 10 was set as the NAV. Because of this, the AMC issues 100 billion units (1,000 billion rupees / 10 rupees NAV) and gives them to investors in proportion to how much they have invested. So, if you gave Rs 1 lakh to this NFO, you would get 10,000 units in return. So, you now know how NAV is calculated.

    Let’s look at this in more detail. According to the program mandate, the Rs 1,000 crores raised in the NFO are invested in a variety of assets. The market value of these assets changes every day. Let’s also say that the next day, the value of the scheme’s portfolio of assets goes up from Rs 1000 crore to Rs 1020 crore. For now, let’s forget about the costs of the plan to keep things simple. The plan’s NAV will be Rs. 10.2. (Rs 1,020 billion divided by 100 billion outstanding units) Your original Rs. 1 lakh NFO investment is now worth Rs. (10,000 units x Rs 10.20 NAV).

    With the NAV for the day, investors can buy or sell units in an open-ended mutual fund scheme at any time. If there is no exit load, investors can sell their shares for the same price as when they bought them (exit load is a charge applied by the scheme for redemptions within a certain specified period). In other words, NAV stands for the price at which investors can buy or sell units of a mutual fund.

    What does the net value of an asset mean for investors?
    Does the NAV really matter? NAV is the only thing that decides how many units you get for your investment amount. As an investor, you should care more about the value of your investment than the number of units you own. The growth of a scheme’s NAV is more important than the NAV itself. That is, return should be more important than NAV.

    The role of a fund’s NAV in how well it does
    Some investors think that NFOs are cheap because they are sold at a NAV of Rs. 10. The NAV of a mutual fund unit is based on the value of the securities it owns and the total amount of money it has made since the beginning of the scheme. Even though two different mutual fund schemes may have the exact same portfolio of securities, they might have different NAVs but the intrinsic value of both schemes will be the same.

    So, the NAV of a mutual fund scheme is not a good way to measure how well that scheme has done. Before choosing an investment, an investor should always think about how well the scheme has done in the past and how much it costs overall, among other things.

    Conclusion

    We’ve talked about what NAV means and how to figure it out. The NAV is only used to figure out how many units will be given to your investments. It doesn’t matter what the NAV was when you bought the units as much as how much their value has grown. The growth in NAV is much more important than NAV. With this information about NAV, you should be able to make better decisions about how to invest.

  • What Is A New Fund Offer In Mutual Funds?

    An asset management company sets up a new mutual fund using a New Fund Offer (NFO).

    The way the New Fund Offer works

    In a new fund offer, you only have a small window of time to sign up for the mutual fund plan. Investors can buy units of the mutual fund scheme and subscribe to the NFO at a certain price during the set time. This is usually sold for Rs. 10. After the term is over, investors will be able to buy fund units at the set price. In general, subscribers to NFOs have been able to make a lot more money after being listed.

    Why is the NFO such a great thing?

    Through an NFO, the fund house asks the public for money so it can buy securities like stocks, bonds, and other financial instruments on the market. Because NFO is a new product, it costs less than the funds that are already on the market. They are like initial public offerings (IPOs), in which shares are sold to the public before being listed on a stock market. Also, the many marketing strategies used to promote them make it an opportunity that is too good to pass up. Sometimes you have to use your smarts and common sense before picking one.

    When to put money into a New Fund Offer?

    When the markets are at their best, most investors look for ways to invest in mutual funds. They want to get into the investment market, whether it’s for gold or real estate, because they think it will continue to grow. But they also choose investments that make money but don’t cost as much. Asset management companies (AMCs) try to make money off of this way of thinking on the part of investors. This explains why people are more interested in NFOs that seem to cost less. Investors decide that NFOs are a good way to put their money to work and sign up for them. So, the fund companies might be able to reach their goal of increasing their Assets Under Management (AUM).

    Things investors should think about

    The credibility of the fund house
    Investors who want to put money into NFOs must do a lot of research on the fund house. Make sure that the fund house has been in the mutual fund business for a long time, preferably between five and ten years. You can use it to look at how the fund house has done during ups and downs in the market. If the fund firm has a good track record, the NFO could do what it says it will do.

    Funding Goals

    In the fund’s goals, things like the asset mix, level of risk, expected returns, and liquidity are all laid out. It helps you figure out if the NFO is possible. An NFO must give a detailed explanation of the investment process it will use for the time frame given. Simply put, it means that people who want to invest in the fund should read the offer document to learn more about how the fund management plans to use their money. If investors can’t figure out what the NFO’s goals are, this shows that there are problems with the way they do things.

    The theme of the new fund offer

    There are a lot of mutual fund programs in the Indian mutual fund industry. So, if you come across an NFO, you should read the fine print carefully to figure out what the fund is about. The investment topic needs to be long-lasting and different from what is already on there. But it’s usually not a good idea if you find out that the new fund offer is just a copy of a tactic that has already been used.

    If you’re interested in an NFO, it’s a good idea to look at past returns. The offer agreement might or might not say anything about this. You can look at the fund based on a rate of return that you think it will get. If you have already put money into the fund, you might want to look at it every three years for the first three years. To figure out the trend of returns, you can compare the performance of the mutual fund to that of the index and peer funds.

    Risk involved

    Putting money into NFOs could be risky. NFOs don’t have a track record of how well they’ve done, unlike existing funds, where it’s easy to check the asset allocation and risks. Also, you won’t know how the manager of the fund plans to use your money. If there were no benchmarks or measurements, it would be hard to predict how well the fund would do. It can be hard to know what happens to the fund, whether it succeeds or fails.

    Investment cost

    The total cost of the investment is one of the things that affect how much money you could make from it. Even though there is no entry load, you may have to pay an exit load if you want to cash in your units before the term ends. If the lock-in period is longer than your investment horizon, the exit loads may change how well your investment does. The expense ratio is another important factor. This is the fee that the fund house charges you every year to manage your money. It is best to find out if the ratio of expenses is less than or the same as what SEBI wants.

    The minimum cost of a subscription
    Most NFOs tell investors how much they need to put down before they can join. It could be anywhere between 500 and 5,000 rupees. As an investor, this could be the most important thing you use to narrow down your choices. If the minimum cost of a subscription is more than you can afford, you might want to look at your other options. In this case, you might want to choose a systematic investment plan (SIP), which is cheaper and easier to use and is part of a high-performing scheme that is already in place.

    Investment Horizon

    NFOs also have lock-in periods of between three and five years. You will be expected to maintain your investment for the whole term in such circumstances. Make sure your goals and time frame for investing match up with your investments. If you joined a mutual fund scheme, it’s possible that you won’t be able to cash in your units before they mature. In rare cases, you could also be charged a “pre-exit cost” or “exit load” for the same thing. If your chosen NFO lasts longer than your investment time frame, you might want to look at other options.

    Zebu makes it easy and paperless to invest in mutual funds without a lot of hassle. To get started today, please get in touch with us.

  • When Should You Move To Debt Funds?

    In October 2021, the NIFTY reached its all-time high. The price of stocks was going up. Because of easy monetary policy, low interest rates, and FPI, the world stock market reached all-time highs. Some mutual funds, such as SBI Small Cap and Union Small Cap, had 100% returns.

    How should you invest when the market is very unstable and the NIFTY has dropped more than 25%? Do you have to put all of your money into debt funds?

    What are debt funds?
    Debt funds are types of mutual funds in which the money is invested in different debt securities. The debt funds also buy government and corporate bonds.

    Companies put out debt instruments in order to get money from the market. So, lending is the same as putting money into debt funds. The main reason to invest in debt funds is to get a steady stream of income. The issuers give returns based on a fixed interest rate that everyone agrees on. Because of this, debt instruments are sometimes called “fixed income securities.”

    When your portfolio is losing money is not the best time to invest in debt funds. Instead, the best time is when the stock market is hitting new highs. You can lock in your earnings by putting the money in safe, low-risk debt funds.

    When the interest rate is going up is yet another case. Since the interest rate goes up when the stock market goes down, and vice versa, this often happens when there is a lot of chaos in the stock market.

    It shows the way things are right now in the economy. The market is in a very bad place right now, and NIFTY has lost a lot of its value. In order to stop inflation from getting worse, governments are tightening their monetary policies. One way they are doing this is by raising bank interest rates. Because FD interest rates are going up right now, you might decide to put some of your money into debt funds.

    If you want to invest for the short term, you should invest in debt mutual funds to reduce risk. For short-term capital needs, you might want to think about liquid, ultra-short, low duration, and money market funds. These funds are given out over a six- to twelve-month period.

    Debt funds have low-risk returns and may be good for certain types of investors. There are many different ways to put money into debt mutual funds.

    Bond funds that are managed dynamically move money as interest rates change, which is what the name suggests.

    Income funds are safer than dynamic funds because the fund manager will invest in long-term funds.

    A very short-term fund’s life span is between one and three years. With a short-term investment goal, ultra short-term funds offer stable returns and a lot of cash.

    Conclusion
    If you were thinking of sending money to a debt fund, you should think again! You should buy more stocks when the market is unstable and going down. Debt mutual funds may make your portfolio less risky, but they also make it less likely that it will make money. Debt funds, or FDs, are good investments for short-term investments or for people who are retired and depend on income from investments.

  • What Impacts The Performance Of A Mutual Fund?

    There are many different mutual fund investments that people can choose from. There are some good reasons to invest in mutual funds, like getting help from a qualified asset manager.

    Investors trust fund managers to choose investments that will be good for their money. If you’re an investor, it’s best to know how fund managers do their jobs.

    Here are a few factors that impact the returns from a mutual fund.

    1. The cost of running a fund

    The expense ratio, which is also called the fund management fee, is a typical fee that the fund house charges investors to cover costs like operating costs, wages, compliance costs, administrative fees, etc. It usually shows how much of the investor’s mutual fund holdings it is. Most hedge fund companies use the 2/20 model, which lets them take 2% of the fund’s AUM as a cost ratio and 20% of the fund’s profits as performance fees.

    2. Window dressing illusion

    Mutual funds sometimes use “window dressing” to hide the fact that they aren’t doing well by making it look like they are. They don’t have to explain what happened to make them perform badly. Before putting money into a fund, a potential investor should carefully look at how the fund has done in the past and how it invests overall.

    3. Indexing as a way to lower risk

    Investors prize fund managers’ stock-picking skills. But now, a lot of mutual funds invest in a portfolio that is like an index. It lets them get similar returns and lowers their risk. But if they charge you a management fee, this may not be the best way to invest.

    4. Giving short-term growth more importance than long-term growth

    Fund managers may put more emphasis on the fund’s short-term growth to make it look more appealing to individual investors. This lack of long-term thinking could force the fund manager to ignore the bigger picture and focus only on how the next quarter will go. The short-term goals of a fund may affect how you do as an investor and what your financial goals are.

    5. Incentives

    Mutual fund companies need to increase AUM to grow their market share and profits. They often use advertising and marketing methods to get people to invest. It leaves the manager of the fund with little time to run the fund. But none of these things improve how well the fund works. By investing in index funds that are passively managed, small investors can avoid being affected by the fund manager’s goals.

    How to figure out how well a mutual fund did

    Set goals for your investments

    Before you make an investment, you should know what you want to get out of it. Finding the answer to the question is the first step in choosing the best mutual funds.

    Choosing between mutual funds

    The best way to find the best mutual funds is to compare the returns of several similar funds.

    Check out how things worked in the past

    Even though a fund’s past performance doesn’t tell you how it will do in the future, it might be helpful to know how it has done in different market conditions.

    How they did compare to the index

    Even if the fund didn’t do well, management fees still have to be paid. So, before you put money into a fund, compare the fees. Most of the time, better funds will cost you more.

    Risk-adjusted returns

    Mutual funds have to take your capital risk into account. When a fund makes more money than its overall risk, this is called “risk-adjusted returns.”

    Conclusion
    As an investor, you should know how standard fund management works so you can have more control over your money. Start investing in mutual funds with Zebu right away by opening a demat account.

  • Why SIP Is Important For You

    Putting money into mutual funds through a structured investment plan (SIP) has become very common. Read on to find out why mutual funds are such a good way to invest and how SIP can help you reach your long-term financial goals. Looking for good stock trading platforms? We offer the best online trading platform and the lowest brokerage for intraday trading. Everyone has hopes, dreams, and goals they want to reach. Everyone wants to feel safe about their money. For example, a new car, a bigger house, or a trip with the whole family to a faraway place. But you can only reach your goals if you put in the work that is needed to make them happen. Investing in mutual funds through a Systematic Investment Plan (SIP) could be a simple way to help you reach your goals. So, let’s look at what SIP stands for, how they work, what the benefits of SIP are, and how investing in SIP can make it seem like you can reach your financial goals.

    HOW DOES SIP WORK?

    A Systematic Investment Plan, or SIP, is an investment in a mutual fund that lets you invest slowly over time. It is a way to invest fixed amounts of money on a regular basis, such as monthly, quarterly, or every six months. If you invest consistently in this way, you may find it easier to reach your financial goals. To make money, you don’t have to time the market. With SIP investing, this uncertainty is taken away. Once you’ve chosen the term and frequency of your investments, you can choose to have them made automatically. Then, tell your bank to regularly move money from your bank account to the SIP mutual fund of your choice.

    WHAT’S GOOD ABOUT SIP IN MUTUAL FUNDS?

    The investments are not affected by the volatility of the market. The markets show what’s going on in the economy, and just like the economy, the markets go up and down. So, a drop in the market could wipe out some of your gains, but a SIP can turn this to your advantage. One of the benefits of SIP is that it keeps investors from gambling in markets that are very unstable. Investors may buy more units when the market is low and fewer units when the market is high. Because of this, the long-term average cost of each unit is expected to be less, and the returns on investments are good. Because you invest every month, the NAV of each scheme changes, so the number of units you get each month also changes. When the market goes up, the price goes up every month, and you get fewer units. When the cycle turns and markets start to fall, the price to buy drops and you start to get more units for the same amount of money. Rupee Cost Averaging is the process of investing at different times in the market so that the costs are spread out over a longer period of time.

    HELPS TO BUILD CORPUS WITH SMALL AMOUNTS

     Another benefit of SIP investment is that it lets you put as little as Rs. 500 per month into mutual funds. Even if you don’t have a lot of money, you may be able to benefit from India’s growth by investing in mutual funds. This could be a cheap way to put money away every month without going over budget. With the SIP step-up feature, you can increase the amount you put away each month as your income goes up. Investors can also add more money to their SIPs regularly through mutual fund firms. With a systematic investment plan (SIP), you invest the same amount of money in a mutual fund scheme every month. Over time, this adds up to a large corpus. One of the main reasons why your savings grow is because of compounding. Because mutual fund returns are re-invested and you get returns on your returns, you benefit from compounding, which is a simple but powerful force.

    YOU BECOME MORE DISCIPLINED WITH YOUR SAVINGS

    One of the most well-known benefits of SIP investments is that they allow investors to save money in a structured way. Also, a monthly budget helps teach people to be responsible with their money. SIPs are very flexible, so they can be stopped at any time and the amount invested can be increased or decreased. By using SIP to save first and spend later, you can follow the golden rule of personal finance. Now, all you have to do is pick a monthly SIP date that matches the date you get paid. And before you start spending, every month you’ll end up investing.

    BOTTOM LINE

    Investing in mutual funds through SIP has many benefits besides the top three listed here, such as convenience, diversification, flexibility, no fees to start a SIP, etc. Also, SIP goes against the idea that making money requires a lot of work and planning. In reality, SIP shows that you should avoid complicated investment strategies like “timing the market” and instead invest regularly to keep your money in good shape. If you are looking for a good stock trading platform, then check out Zubu’s website for the best online trading platformonline trading platform and lowest brokerage for intraday trading.

  • Everything You Need To Know About Diversified Equity Mutual Fund

    A well-diversified equity fund, which is usually just called a “diversified equity fund,” invests in companies of all sizes, no matter how big or small they are.

    Diversified Equity Mutual Fund: What is it?
    A diversified equity fund puts its money into companies of all sizes and in all industries. It spreads investments across the stock market so that investors can make the most money possible while minimising risk. Unit-linked insurance plans (ULIPs), mutual funds, and other investment firms all offer them.

    There are many different types and sizes of companies on the stock exchange.

    1)large caps
    2)mid caps,
    3)small caps.

    How does a fund with a wide range of stocks work?

    A diversified equity fund also invests in companies from different sectors and industries. So, it can take part in the growth of the whole economy and isn’t tied to any one sector or industry.

    They can choose to put their money into businesses from –
    Pharmaceuticals
    Technology
    Engineering
    Automobiles
    Power/Services
    Services for banking and finance
    Gas and oil

    Simply put, a diversified equity fund invests in companies from different sectors, industries, and sizes of the market.

    Diversified equity funds, which include both ULIPs and mutual funds, are created so that investors can profit from the financial growth of companies of all sizes and in all industries and sectors. The rules for investing in ULIPs and mutual funds are different, and investors are told this in product literature and on company websites.

    Who does it work best for?
    Diversified equity funds can be helpful for investors who like stocks and have long-term goals like planning for retirement or saving for a child’s education or wedding. They can be used on their own or as part of a portfolio with other investments.

  • Monthly vs Yearly SIP Investing: Which is Better?

    Now that you’ve learned everything there is to know about SIP investing, the big issue is: what is the ideal investment tenure? Should you make a monthly or annual SIP investment?

    Though many individuals are familiar with monthly SIPs, they are less familiar with annual SIPs.

    Assume Mr. A sets aside a portion of his monthly salary for the SIP investment before paying any other costs. He doesn’t have to worry about the investment frequency as long as his cash flow and investment frequency are both the same. It gets tough when he does not have a consistent cash flow because his investments will suffer. In such cases, he may want to explore a yearly SIP investment.

    People who are unable to make decisions based on what suits them and what does not can use basic calculations before making a decision. There are a number of SIP calculators online that can help you compare returns based on whether you invest monthly or annually. The calculations are based on the mutual fund’s NAV history, and the results can be derived for any investment period if the NAV data for that period is available.

    Are you also interested in other investment opportunities that can give you high returns? Then consider Zebu to get started, as a reputed share broker company we offer lowest brokerage options and a seamless online trading platform to help you with your investment journey.

    Which SIP Investment yields the highest returns?

    It is widely assumed that more disciplined SIP investment yields higher returns. Regular investing will help you stay on top of market volatility because you will be investing at both high and low points. The average outcome will be perfect. If the market rises on the date of the investment for a SIP investment with a large gap between investment times, you will lose out on the rewards.

    On the other hand, if you are investing on a daily basis, you do not need to be concerned with market movement or keep a close eye on it. This is because you invest on a regular basis and the market is available to you at all times.

    When it comes to returns, the longer the investment time, the less variation there will be in the return value, regardless of the tenure you choose. According to research, the difference between daily, monthly, and quarterly SIP investments is only 1 to 2 percentage points. Even while daily SIP investments have always yielded higher returns, they have always been marginal.

    Cash Flow and SIP Investment
    SIP investments should always be assigned to your cash flow and income, as we’ve said many times before. A monthly SIP should be the most convenient option for salaried folks because they receive their pay on a monthly basis and can invest on a regular basis. They can easily provide their banks an ECS command to ensure that money is deducted from their accounts on a specific date.

    It’s best to keep the debit for the first week of each month so that you can prepare for the rest of your expenses. They must ensure that they have sufficient finances to make the SIP investment on a daily basis and that the investment is not stopped.

    The key benefit of having a daily SIP investment is that it allows you to average your investment costs. However, daily SIP investments are generally not suggested for a variety of reasons.

    The most typical reason is that your bank may refuse to transfer funds from your account on a daily basis. Second, there is a danger that you will miss a payment, which will jeopardise your investment. The last and most essential one is that calculating the tax due to capital gains will be a major headache.

    Because quarterly SIPs are not adept at capturing market changes, it is best to stick to monthly SIPs. Having a daily SIP investment can also result in 25-30 bank transfer entries, which might be difficult to keep track of. As a result, the best time to invest in SIPs is on a monthly basis.

    Risk Factor

    When selecting a SIP investment option, it’s important to consider the risk factor as well as the cash flow factor. The lower the SIP investment frequency, the greater the danger, because the market will vary and you will be unable to keep track of it.

    The frequency with which you invest should be determined by your willingness to incur risks. In such cases, monthly SIP investment is usually recommended because it gives you an advantage over other tenures, as well as the benefit of averaging rupee cost and assisting with cash flow management. Even if you receive a large sum, stay organised and invest wisely. At the end of the day, the decision is yours to make, and you have a greater understanding of your wealth objectives.

    As a reputed share broker company we offer lowest brokerage options and a seamless online trading platform to help you with your investment journey. Contact Zebu to know more on how to get started on your share market investment journey.

  • The What, How and Why of SIPs

    SIPs are simply the way in which you plan your investments. You can start investing little sums, one instalment at a time, over a period of years with the help of a SIP investment and develop your wealth.

    Compounding is at work here, and if you keep investing for a long time, it will pay off handsomely. It is the amount of time you spend investing that matters, and not when you start investing.

    When it comes to starting investments today, the first two things that come to mind are mutual fund investments and systematic investment plans (SIPs). Mutual funds can help you not only build wealth but also save money and achieve financial independence. SIP investments, like mutual fund investments, are becoming increasingly popular.

    SIP allows you to buy mutual fund units at your convenience and within your budget. To minimise any last-minute payment inconsistencies, investors usually strive to maintain the SIP debit date close to the salary date. The money is automatically deducted from your bank account based on the bank’s standing instructions. It also helps in the formation of financial discipline in investors.

    However if you consider investing or trading in share market, we at Zebu a share trading company offer the lowest brokerage for intraday trading and are one of top brokers in share market.

    How Do You Begin SIP Investing?

    You can purchase mutual funds directly from direct fund companies, either online or offline, or both. Depending on your option, you can open a SIP account by visiting your nearest bank or by going online. The funds can be purchased in a flat sum or over time through a systematic investment plan (SIP). Agents can also assist you in purchasing mutual funds. To begin trading, all you need to do is open a trading account and complete the mandatory KYC. And we at Zebu are here to help you with that. Please get in touch with us to know more about investing in SIPs and how you can build your wealth.

    How Do You Pick the Best Mutual Fund?

    There are so many investment options available today that deciding which one is best for you can be incredibly challenging.

    The various mutual fund plans are further classified as equity, debt, or hybrid funds. The mutual fund you’ve chosen should be a good fit for your long-term objectives. If your objective is to retire early, for example, you should choose a fund that will help you increase your money in the shortest amount of time. Make it a point to look at the fund’s long-term record, the fund manager’s performance, and the expense ratio. All of this information can be found on the fund’s website.

    Which Option Should You Pick?

    Almost all of the funds available these days provide you with the option of choosing between two options: dividend or growth. If you choose the dividend fund option, you will be paid on a regular basis according to the fund’s due date.

    The growth option, on the other hand, allows you to reinvest your dividends, resulting in higher returns and a higher net asset value. Depending on your needs and preferences, you can select one of the two possibilities.

    Which should you choose: Direct or Regular?

    Almost every fund on the market today has two options: direct or regular. There are no intermediaries in the direct one because it is sold straight by the fund houses. The traditional one has agents and mediators in the middle, resulting in a greater expense ratio and lesser profits. Direct funds are a superior option if you’re seeking long-term investment options.

    What should the quantity of investment be?

    The biggest advantage of SIP investing is that you can invest any amount you like, even as little as INR500 every month. Minimum values vary depending on the scheme. You can use a SIP calculator to figure out how much to invest in order to get the desired end result.

    For example, if you require Rs 1 crore in the next 20 years, you should invest INR.10000 every month in a scheme that will provide you with 12% annual returns.

    Returns

    All of the funds’ returns are calculated according to the specified dates, and they are also available on the fund’s website. Take your time to learn about the fund’s short and long-term returns to gain a clear picture of its performance.

    Risks

    There’s an old adage that great risks lead to great rewards. SIP investments work in a similar way. You can easily earn some decent profits if you are ready to take chances. The returns are primarily determined by the market’s volatility and how it operates.

    The equity funds are invested in stocks, and the returns are entirely contingent on the stock’s market success. Debt funds are low-risk investments that often invest in government bonds and treasury bills, among other things. However, due to the microeconomics involved, even these cannot be considered risk-free.

    Tax

    When you try to redeem your investment after the fund’s duration has ended, the units you invested are redeemed on a first-in, first-out basis. The units you bought, in the beginning, will be redeemed first, followed by the units you bought afterwards.

    Long-term capital gains tax exemption is available for equity funds that are considered long-term investments. If you opt to redeem stock units before the one-year period is through, you will be subject to a 14.5 per cent short-term capital gain tax. For an amount up to Rs 10 lakh each year, equity returns are tax-free.

    Debt fund investments are only deemed long-term investments until they have been successfully completed for three years, at which point you will be eligible for tax benefits. This money is taxed at a 38.45 per cent rate.

    How do you keep track of your SIP?

    SIPs, like any other investment, must be tracked. You just cannot leave them unattended, despite the fact that they are considered safe and reliable. The performance of mutual funds can be tracked using their statements. If you notice any discrepancies and the fund’s performance falls short of your expectations, you can switch it at any time or redeem the units you deposited.

    As we mentioned earlier if you are planning to invest or trade, we at Zebu a share trading company offer the lowest brokerage for intraday trading and are one of top brokers in share market.

  • The Difference Between Large-Cap Stocks And Blue Chip Stocks

    The market capitalization of a company helps in determining its worth. It’s computed by multiplying the number of existing shares by each share unit.

    The market capitalization of large-cap firms exceeds Rs.20,000 crores. The NIFTY 50 index contains the top 50 large-cap firms in India. This index includes the most actively traded companies on the stock market.

    Large-cap firms’ stock prices cannot appreciate as much as mid-cap and small-cap companies’ stock prices. This is due to the fact that large-cap company valuations have attained financial maturity. Dividend payouts account for the majority of such equities’ returns. Because there is always someone willing to purchase such well-known and popular stocks, large-cap businesses provide significant liquidity to their investors.

    On the stock exchange, blue-chip stocks are highly valued. They have a strong market reputation and a solid financial track record. Blue-chip stocks are frequently referred to as the stocks of the largest corporations in the economy. However, before you start investing, it is important that you do so with one of the best share brokers in the country. At Zebu, we have the lowest brokerage for investments and also support you with a highly advanced online trading platform to help you analyse stocks and execute your trades.


    The primary distinction between large-cap and blue-chip firms is that the latter is the market leader. Blue-chip stocks are well-known in addition to having a significant market capitalization. Large-cap corporations can be well-known or not, whereas blue-chip companies must be well-known. Blue-chip enterprises are well-known in the marketplace and hence have a high brand value. A blue-chip company’s stock has reached its maximum growth potential. As a result, blue-chip investors see a slow but consistent increase in their invested capital over time.

    Because the firms that issue these stocks have many sources of income and have spread their operations to multiple industries, blue-chip stocks can help you diversify your portfolio rather well. As a result, they are less vulnerable to market volatility, making them a low-risk investment alternative. By diversifying your investments even more, you can further lower your risk exposure.

    During peak business cycles, large-cap corporations are often blue-chip companies because they generate consistent revenue. When compared to blue-chip corporations, large-cap companies are a riskier investment alternative. Despite having a huge market capitalization and good revenue, large-cap corporations have yet to stabilise on such business peaks and maintain them in the long run.
    Two of the most important checklists for first-time traders and investors are the right online trading platform and the lowest brokerage for investments. As one of the best share brokers in the country, we at Zebu will give you all of this and more. To know more about our services and products, please get in touch with us now.

  • Things You Should Do To Keep Track OF Your Mid-Cap Portfolio

    Large Cap vs Mid Cap vs Small Cap: Key Differences That Actually Matter

    When the government announced a lockdown in March 2020, the stock markets in India plummeted. However, thanks to investors adding a healthy dose of mid-cap stocks to their portfolio holdings, the markets recovered quickly and spectacularly. Mid-cap equities, unlike large-cap stocks, have a double-edged sword of stronger growth potential but higher risks. Before investing in them, an investor must first understand the company’s fundamentals, as well as the present status of the markets and the macro-economy. Before you start investing, always consider going with one of the best brokerage firms in the country like Zebu. As a top broker in share market we have created one of the best stock trading platforms, for you to use and invest. Before you add more shares to your mid-cap portfolio, keep the following 10 things in mind: 1. Availability of liquid assets When it comes to mid-cap investing, liquidity is the most important factor. You must make sure that you can get out of the stock before it loses too much value. Stocks, where mutual funds or proprietary traders have purchased large quantities, should be avoided by retail investors. These stocks are vulnerable to a quick selloff and significant, surprise price loss. 2. Previous performance A steady track record of good performance over the last 4-5 years is an important indicator of a company’s stability. A shaky track record, as well as a P&L statement rife with losses and declining sales, is a red flag. 3. Exposure to macroeconomic forces Examine the company’s pressure areas before investing. When demand for automobiles falls, mid-cap stocks in auto-ancillaries suffer. Mid-cap metal equities are vulnerable to global oversupply and fluctuating raw material prices. To understand the dangers that your stocks face, look at the macro variables. 4. Mid-cap stocks’ returns Mid-cap stocks should be viewed through a different lens than Nifty and Sensex stocks. Benchmark indexes should not be compared to mid-cap stocks in the first place. Mid-cap stocks come with greater rewards but also a greater risk. If you are able to identify under-valued mid-cap stocks, your portfolio’s value will drastically increase. 5. Pay attention to mid-cap exposure. Find the total exposure you want to have to mid-cap companies based on your risk tolerance levels and keep to it. Let’s say you decide to invest 30% of your portfolio in mid-cap equities, and you adhere to it. If you go over the limit, take profits and limit your exposure. 6. Examine the leadership and business governance Mid-cap companies have received a lot of bad press due to poor corporate governance and mismanagement. Make sure the companies you invest in have strong internal controls and a high level of corporate accountability. A well-oiled, well-managed corporation will have a strong management team. 7. Risks must be monitored before returns can be managed When it comes to mid-cap equities, the risk is measured in terms of volatility. Concentrate on stocks that have higher risk-adjusted returns. The investor can expect a good return if he handles the risk. Increasing risks in the pursuit of a high return, on the other hand, is equivalent to risking hard-earned money. 8. Stay away from stocks that have a lot of pledges. Rather than being enticed by large gains, retail investors should keep an eye out for stocks that have more than 50% promoter pledges. When the promoter fails to bring in additional margin and the lenders begin to dump the shares, these shares are extremely exposed to price fluctuations. 9. Be aware of regulatory circulars. The market regulator SEBI has had a significant impact on mid-cap equities in the past. Three SEBI circulars released in 2018 sparked a free-fall in mid-cap stocks. When buying in mid-cap stocks, investors should be aware of SEBI’s regulars. 10. Bullish vs bearish time periods During optimistic periods, investors flood the market with liquidity, drowning out the company’s fundamentals. Only during difficult times is a company’s resilience truly tested. As one of the top brokers in share market, we have created the best stock trading platform for you to invest in wisely. Our tool is designed to help investors and traders like to analyse a company with a wide range of indicators and screeners as per your strategy. As one of the best brokerage firms in the country, we invite you to open a trading and investment account with us.