Index Fund Corner
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| Scheme Name | 1-Year Return | Invest Now | Fund Category | Expense Ratio |
|---|---|---|---|---|
| Axis Nifty 50 Index Fund | +32.80% | Invest Now | Equity: Large Cap | 0.12% |
| Axis Nifty 100 Index Fund | +38.59% | Invest Now | Equity: Large Cap | 0.21% |
| Axis Nifty Next 50 Index Fund | +71.83% | Invest Now | Equity: Large Cap | 0.25% |
| Axis Nifty 500 Index Fund | — | Invest Now | Equity: Flexi Cap | 0.10% |
| Axis Nifty Midcap 50 Index Fund | +46.03% | Invest Now | Equity: Mid Cap | 0.28% |
By investing in a mutual fund, individual investors can gain access to a professionally managed portfolio, benefit from economies of scale and spread risk across multiple investments.
Mutual funds are categorised based on the types of securities they invest in, their investment objectives and the returns they seek.
Investors can choose from a range of mutual funds depending on their financial objectives and risk tolerance. However, it is important to note that mutual funds charge annual fees, expense ratios, or commissions, which can lower their overall returns.
How do Mutual Funds Work?
A mutual fund collects money from different investors and invests in an array of assets. Here’s a step-by-step guide to how mutual funds work:
Pooling Money: Investors purchase shares or units of a mutual fund, contributing to a collective pool of money managed by professional fund managers.
Investment Strategy:
The fund manager invests the pooled money in various assets, such as stocks or bonds, according to the fund’s investment objectives and strategy.
Net Asset Value (NAV) calculation: The value of one share or unit of the mutual fund is called NAV, which changes daily based on the performance of the fund’s investments. The NAV is determined by dividing the total value of the fund’s assets minus any liabilities by the number of outstanding shares or units.
Value Changes: The NAV fluctuates as the prices of the fund’s investments change. If the investments perform well, the NAV goes up and vice-versa.
Diversification: They are invested in a diversified portfolio of securities which helps spread risk across various assets and reduce the impact of poor performance in a single investment.
Liquidity: These funds provide liquidity as investors can buy or sell their shares on any business day at the closing NAV.
Returns to Investors: Investors earn returns through capital gains and income distributions, which can be reinvested or paid out.
Buying and Selling: Investors can purchase or sell mutual fund shares at the NAV price after each trading day. This means that when you sell your shares, the value you receive is determined by the NAV at the end of the market on that day.
Fees: Mutual funds charge management fees, administrative costs and sometimes exit loads, which can affect the overall returns.
Tax Implications: Mutual fund returns are subject to capital gains tax and investors must pay taxes on distributed capital gains.