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Mutual Fund Services

 
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To act as a Financial Supermarket, Bank has tied up as a corporate distributor with the following Mutual Fund Asset Management Company (AMC).

  1. 1. Birla Sun Life Asset Management Company Ltd.
  2. 2. DSP Black Rock Investment Managers Pvt. Ltd.
  3. 3. Franklin Templeton Asset Management (India) Pvt. Ltd.
  4. 4. HDFC Asset Management Company Ltd.
  5. 5. ICICI Prudential Asset Management Company Ltd.
  6. 6. IDBI Asset Management Ltd.
  7. 7. Reliance Capital Asset Management Ltd.
  8. 8. SBI Funds Management Private Ltd.
  9. 9. UTI Asset Management Company Pvt. Ltd.

Features & Benefits

 
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Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in different marketable instruments, such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared with its unit holders in proportion to the number of units owned by them.
Thus, a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.

 

Advantages

Portfolio Diversification
As the proverb goes, "Do not Keep all your eggs in one basket", diversification into number of instruments helps reduce the risk of any single holding.

Professional Investment Management
Asset Management Companies (AMC) are managed by professional fund managers who carry out the specialized investment activity.

Liquidity
Open-ended schemes offer liquidity through on-going sale and repurchase facility. Thus the investor does not have to worry about finding a buyer for their investments.

Low Transaction Cost
Given its size, we all understand that whenever we buy anything in wholesale, we get better rates as compared to the retail rates. An AMC thus enjoy greater power of bargain and is in a position to negotiate better brokerage terms for the sale and purchase of its investments.

Wide Variety of Investment products
As the objective of investment is different, ‘one-size-fits-all’ philosophy will not work.
Thus, depending on the investment objective and the time horizon, investors can choose from a bouquet of Mutual Fund schemes viz. Equity, Debt, Money Market, ELSS etc.

Flexibility
Mutual Funds offer flexibility in terms choosing a scheme that matches the investment to an investor's investment objective.

Transparency
Information available through fact sheets, offer documents, annual reports and promotional materials helps provide the investor with the knowledge about their investments.

Well Regulated
Mutual Funds in India are well regulated with SEBI monitoring the activities of the mutual funds.

Tax Benefits
For equity funds, dividends received from equity schemes of Mutual Funds (i.e. schemes with equity exposure of more than 65%) are completely tax-free. Neither does the Mutual Fund have to pay dividend distribution fee nor does the investor have to pay income tax.

 

Types of Mutual Funds

By Structure

    Open ended -
       These are schemes that do not have a fixed maturity. The mutual fund ensures liquidity by announcing sale and repurchase price for the unit of an open-ended fund.

    Close Ended -
    These are schemes that have a fixed maturity. The money of the investor is locked in for the period. Occasionally, closed-end schemes provide a re-purchase option to the investors, either for a specified period or after a specified period. Liquidity in these schemes is provided through listing in a stock market.

By Investment Objective

    Equity Schemes -
    Equity schemes primarily invest in shares. Based on the objective, investments could be in growth stocks where earnings growth is expected to be high or value stocks where the view of the fund manager is that current valuations in the markets do not reflect the intrinsic value. Various kinds of equity schemes are:

      Diversified Funds
      These funds provide you the benefit of diversification by investing in companies spread across sectors and market capitalisation. They are generally meant for investors who seek exposure across the market and do not want to be restricted to any particular sector.

      Sector Funds
      These funds invest primarily in equity shares of companies in a particular business sector or industry. While these funds may give higher returns, they are riskier as compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time.

      Index Funds
      These funds invest in the same pattern as popular stock market indices like CNX Nifty Index and S&P BSE Sensex. The value of the index fund varies in proportion to the benchmark index. NAV of such schemes rise and fall in accordance with the rise and fall in the index. This would vary as compared with the benchmark owing to a factor known as "tracking error".

      ELSS (Equity Linked Savings Scheme)
      Equity Linked Saving Scheme is an open-ended equity growth scheme that is offered by mutual funds in line with existing ELSS guidelines. The investments under this type of scheme are subject to a lock-in period of 3 years and, as per the Finance Act 2005, are allowed the benefit of income deduction up to Rs. 1,00,000. ELSS offers the benefits of tax saving and capital gains. You can now invest the entire limit of Rs. 100,000 available under Sec 80C in ELSS.

      Advantages of ELSS

      Invests in : Equity and equity related securities. 
      Section 80 C : Tax benefits on investment up to Rs. 1 Lacs.
      Lock in Period : 3 years ( Lowest in all Tax Saving Instruments)
      Returns : High Potential 
      Dividend : Tax Free
      Tax Liability : Nil as redemption happens after 3 Years.
      SIP : Flexibility to invest in small amounts through SIP

    DEBT or Income Schemes
    Such a fund invests in interest bearing securities mainly government securities and corporate bonds. This fund earns returns for its investors from interest income on its investments and profits on trading securities. In terms of risk, this type of fund is less risky.

    Money Market Schemes
    These schemes invest in short term debt instruments issued by the government, corporate or banks. These are typically investments in short term papers like the CPs and CDs etc.

Hybrid Schemes

    Balanced Schemes
    Balanced schemes invest in a mix of equity and debt. The debt investments ensure a basic interest income, which the fund manager hopes to top with a capital gain from the investment in equities. However loses can eat into basic interest income and capital.

    Monthly Income Plans
    MIPs are suitable for conservative investors who along with an exposure to debt do not mind a small exposure to equities. These funds aim to provide consistency in returns by investing a major part of their portfolio in debt market instruments with a small exposure to equities. Thus an MIP would be suitable for conservative investors who along with protection of capital seek some capital appreciation as MIPs have an exposure to equities. However the monthly income is not assured.

Systematic Plan

    Systematic Investment Plan (SIP)
    SIP is a convenient way to accumulate wealth in a disciplined manner over a long-term period. It helps you to invest fixed amount regularly in small installments and thereby build wealth over a period of time.

    Systematic Withdrawal Plan (SWP)
    In this plan, the investor withdraws fixed amount of money periodically. SWP is a mirror image of SIP. Just as investors do not want to buy all their units at a market peak, they do not want all their units redeemed in a market trough. Investors can therefore opt for the safer route of offering for repurchase, a constant value of units.

    Systematic Transfer Plan (STP)
    It is a combination of SWP and SIP. It is an SWP from an existing scheme and an SIP (sweep in) into another scheme of the same Mutual Fund.

    Advantages of SIP

      Power of Compounding
      SIP helps you to start investing at an early age to meet the greater expenses of your life. Saving a small sum of money regularly makes money work with greater power of compounding with significant impact on wealth accumulation.

      Rupee Cost Averaging
      SIP minimizes the effects of investing in volatile markets. It helps you average out your cost by generating superior returns in the long run. It reduces the risk associated with lump sum investments. Since you get more units when the NAV drops and fewer when it rises, the cost averages out over time Thus, the average cost of your investment is often reduced.

      Convenience and Regularity
      SIP gives you the convenience to pay through Syndicate Bank Electronic clearance service (ECS) or Auto Debit or Standing Instructions. You can decide the amount and the mutual fund scheme. A fixed amount will automatically get debited from your account on a date specified by you.

      Disciplined approach towards investment
      Since you invest regularly, it makes you disciplined in your savings, which leads to wealth accumulation. Disciplined investing is vital to earning good returns over a longer time frame

Mutual Fund Glossary

  1. Asset Management Company (AMC) means Mutual Fund Company.

  2. Authorized Registrar - any Registrar and Share Transfer Agent with whom the AMC has/ proposes to have an arrangement for execution/confirmation of the transaction orders placed through the branch network.

  3. Offer Document/Scheme Information Document - The documents issued by the AMC, as amended from time to time (including by way of addendum or otherwise), offering Units of the respective Schemes/ plans for subscription and includes the Statement of Additional Information which is available on the website of AMFI as well as the AMC.

  4. Key Information Memorandum or KIM - An abridged version of the Scheme Information Document of the Schemes of the Fund, consisting of key information and application form of the Scheme(s).

  5. NAV - Net Asset Value per Unit of the relevant Schemes and the plans and options therein, calculated and published in accordance with the Offer Documents/Scheme Information Document of the respective Schemes or as may be prescribed by the Regulations from time to time.

  6. Purchase - Subscription to the Units of any of the Scheme of the Fund through the Distributor by the Customer.

  7. Redemption - Sale of the Units of any of the Schemes of the Fund by the Customer.

  8. Switch - A facility offered to the Customer to shift his existing investment from one Scheme of the AMC to another, i.e. redemption of a Unit in any Schemes (including the plans / options therein) of the Mutual Fund against purchase of a Unit in another Scheme (including the plans /options therein) of the Mutual Fund, subject to completion of Lock-in Period, if any.

  9. Unit - The interest of the investors in any Scheme consisting of each Unit representing one undivided share in the assets of that Scheme as evidenced by a unit certificate / account statement.

  10. Dividend Option - The option available to the Customer to choose either between the Dividend Payout or Dividend Reinvestment facility as available in the Schemes of the AMC as defined in their respective Offer Documents/Scheme Information Documents and addenda thereto.

  11. Dividend Payout - The option selected by the Customer for dividends to be paid, subject to deduction of tax at source, if any, in the manner provided in the respective Offer Document/Scheme Information Document of the respective scheme/plan and addenda thereto.

  12. Dividend Reinvestment – The option selected by the Customer for dividends to be reinvested subject to deduction of tax at source, if any, in the manner provided for in the respective Offer Document/Scheme Information Document of the respective Scheme/plan and addenda thereto.

  13. Record Date - The date on which the beneficial ownership of the Unit holders in the Fund is entered into the Register of Unit holders by the AMC.

Disclosure of Mutual Fund

Disclaimer

Mutual Fund investments are subject to market risk. Please read the offer document / Scheme Information Document carefully before investing.

 

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