SIPs help in investing a fixed amount at specified periods in various mutual funds scheme. It is a great
way to bring discipline in investment habits and helps investors plan for their future. 3 prime benefits of
investing in SIP:
1. Disciplined investment: SIPs ensures that investments are done at a pre-determined schedule,
regularly
2. Smaller investments: SIP lets investors invest in small amounts. Thus, investments are not burdensome
yet rewarding in the long run with its returns.
3. Average investment cost: In an equity mutual fund, investors can earn more units when prices are
falling and fewer units when the prices are rising, which helps them in averaging the investment cost.

Asset Management Company (AMC) is essentially a Mutual Fund company that invests the funds
collected by its mutual fund schemes into securities as specified in the investment objective of each
particular scheme. They provide the investors with more diversification and investing options than they would have by themselves.

NAV or Net Asset Value is the per unit market value of the mutual fund. It is the price at which investors purchase or
sell fund units. It is calculated by dividing the total value of all the assets in a portfolio, minus the liabilities by the total
number of units of the scheme. Since market value of underlying holdings changes every day, the NAV of a scheme
also varies on a day to day basis. For example, if the market value of securities of a mutual fund scheme is Rs 100
lakhs and the mutual fund has issued 10 lakhs units of Rs. 10 each to the investors, then the NAV per unit of the fund
is Rs.10. NAV is required to be disclosed by the mutual funds on a regular basis – daily or weekly – depending on the type of scheme.

NAV (in Rs terms) = Market or Fair Value of Scheme's investments + Current Assets – Current Liabilities and
Provision / Number of Units outstanding under Scheme on the Valuation Date.

Schemes are defined as per the Maturity Period:
1. Open-ended Fund/ Scheme: An open ended fund or scheme is available for subscription and repurchase
on a continuous basis and does not have a fixed maturity period. Investors can buy and sell units at Net
Asset Value (NAV) related prices which are declared on a daily basis. One of the key features of open-end
schemes is liquidity.
2. Close-ended Fund/ Scheme: With a stipulated maturity period e.g. 5-7 years, the fund is open for
subscription only during a specified period at the time of launch of the scheme. It is open for investments at
the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock
exchanges where the units are listed. An option of selling back the units to the mutual fund through periodic
repurchase at NAV related prices, gives an exit route to the investors. SEBI Regulations stipulate that exit
routes are offered either through repurchase facility or through listing on stock exchanges. NAV is disclosed
on weekly basis.
3. Interval Funds / Scheme: Interval funds include features of both open-ended and close-ended funds. The
funds are close-ended for the first couple of years and open-ended thereafter. Some funds do allow fresh
subscriptions and redemption at fixed times every year (for e.g. every six months) so that the administrative
aspects of daily entry or exit can be saved while providing reasonable liquidity.
4. Growth / Equity Funds: Growth funds provide capital appreciation over medium to long-term periods.
These schemes have comparatively high risks as major part of the capital is invested in equities. The
investors are given options like dividend option, capital appreciation, etc in their application form to choose
their preferences from. The investors can also opt to change their options at a later date. Growth schemes
benefit investors that have a long-term outlook and are seeking appreciation over a period of time.
5. Income / Debt Funds: Income funds invest in fixed income securities such as bonds, corporate debentures,
Government securities and money market instruments and provide regular and steady income to investors.
Such funds are less risky as compared to equity schemes. The equity market fluctuations don’t affect these
schemes, however, opportunities of capital appreciation are also limited. The NAVs of such funds are
affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are

likely to increase in the short run and vice versa. However, long term investors may not bother about these
fluctuations.
6. Balanced Fund: These schemes are aimed at providing growth and regular income. These schemes invest
in both equities and fixed income securities as per the proportion indicated in the offer documents. These
funds match the needs of investors looking for moderate growth. They generally invest 40-60% in equity and
debt instruments. These funds are also affected by stock market price fluctuations. However, NAVs of such
funds are likely to be less volatile compared to pure equity funds.
7. Money Market or Liquid Fund: Money market or liquid funds are aimed at providing easy liquidity. They
also provide preservation of capital and moderate income. They are appropriate for corporate and individual
investors as a means to park their surplus funds for short periods. These schemes invest exclusively in safer
short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call
money, government securities, etc. The returns on these schemes fluctuate much less as as compared to other
funds.
8. Gilt Fund: These funds invest exclusively in government securities, which have no default risks. Like
income or debt oriented schemes, NAVs of these schemes fluctuate with changes in interest rates and other
economic factors.
9. Index Funds: These schemes invest in the securities in the same weightage comprising of an index. Index
Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index
(Nifty), etc. NAVs of such schemes change with the rise or fall in the index though not exactly by the same
percentage due to some factors known in technical terms as compared to other funds. All the necessary disclosures in this regard are made in the offer document of the mutual fund scheme.