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As they cruise along, Rahul glances at the map.
Rahul: Hey which route to take? The Highway looks amazing!
Anjali: Highway for sure! Fast and wide. That helps you reach your destination smoothly. I can call it the Equity Fund Highway! Just like a well-planned and long highway aims to takes us to our dream destination, equity mutual fund investments, when planned well and held with patience, can help you reach your financial goals-like retiring comfortably or seeking to secure for your childs future securing your child’s future.
Rahul: That makes sense. Also, a road trip feels more rewarding when you take the time to enjoy the journey.
Anjali: Exactly! The magic of a road trip lies in those steady, scenic miles that bring us closer to the destination. Equity funds can be assumed to work the same way. Over time, the power of compounding kicks in, turning small, consistent investments into potentially significant wealth. The key is to stay on course, enjoy the ride, and let time work in your favor!
Equity mutual funds are investment vehicles that pool money from investors to invest primarily in stocks, aiming for long-term capital growth by leveraging the stock market's potential. They offer a chance to participate in business growth while diversifying to manage risks. Though carrying potential for higher returns, these funds carry greater risks, making them one of the ideal investment vehicles for long term for long-term investors focused on wealth creation, retirement planning, or achieving major financial goals.
Spreads risk across various sectors and companies, seeking to reduce the impact of individual stock performance and minimizing volatility.
Relies on skilled fund managers who use research and analysis to optimize your portfolio for optimal growth.
Offers a broad spectrum of categories like large-cap, mid-cap, small-cap, flexi-cap, multi-cap, sectoral, and thematic funds to align with your financial goals.
Targets long term growth, making these funds one of the ideal ways for wealth accumulation over time, such as for retirement or education.
Leverages the power of compounding, accelerating the growth of your investments over time.
Predominantly investing in top 100 companies, offering stability and steady returns.
Focus on mid-sized companies ranked between 101st-250th with higher growth potential but moderate risk.
Target smaller companies beyond the top 251 with higher risk but higher growth potential too.
Invests in a mix of large cap and mid cap companies to seek higher growth potential with stability.
Minimum investment in equity & equity related instruments75% of total assets in the following manner: a) Minimum investment in equity & equity related instruments of large cap companies - 25% of total assets; b) Minimum investment in equity & equity related instruments of mid cap companies - 25% of total assets; c) Minimum investment in equity & equity related instruments of small cap companies - 25% of total assets.
Dynamically invest in companies across market caps based on opportunities.
Please refer Clause 2.6 of Part IV of SEBI Master Circular dated June 27, 2024 to know in detail about the categories of equity schemes.
As per clause 2.7 of Part IV of SEBI Master Circular dated June 27, 2024 large cap, mid cap and small cap are defined as follows:
i. Large Cap: 1st -100th company in terms of full market capitalization
ii. Mid Cap: 101st -250th company in terms of full market capitalization
iii. Small Cap: 251st company onwards in terms of full market capitalization
Invests primarily in dividend-yielding stocks, with at least 65% of the portfolio in equities and equity related instruments.
Follows a value investing strategy, targeting currently undervalued that are expected to perform well over time as the value is unlocked, with at least 65% in equities and equity related instruments.
Adopts a contrarian approach, investing in stocks that are out of favor, with at least 65% in equities and equity related instruments.
Concentrates on a limited number of stocks (maximum 30), with at least 65% in equities and equity related instruments.
Invest at least 80% in stocks of the total assets of a particular sector/theme of the economy such as infrastructure, banking, technology or pharmaceuticals etc.
Invests at least 80% in select stocks of companies in industries that belong to a particular theme - For example, Service industries, PSUs or MNCs.
The sector(s)/stock(s) mentioned in this document do not constitute any recommendation of the same and Baroda BNP Paribas Mutual Fund may or may not have any future position in these sector(s)/stock(s).
Invests at least 80% of total assets in accordance with equity linked savings scheme 2005 notified by Ministry of Finance
Investors with a long-term horizon seeking higher growth.
Those willing to accept market volatility for potentially risk adjusted high returns.
Anyone aiming to achieve big financial goals like retirement or wealth creation.
Disclaimer - Please refer Clause 2.6 of Part IV of SEBI Master Circular dated June 27, 2024 to know in detail about the categories of equity schemes.
Anjali: Hey, what’s this place about? Car care, energy station or a pit stop?
Rahul: Yes, it’s all in one. Welcome to the Hybrid Charging Station! This station that fuels your journey, charges both EVs and traditional cars, a cup of coffee or car care. It’s basically a Hybrid fund of a road trip. Hybrid Funds offer a mix of equity, debt, REITs/InvITs and commodities like Gold, Oil, etc. as per the asset allocation mentioned in the Scheme Information Document, aiming to provide potential growth opportunities while managing risk.
Rahul: You know, I’ve been exploring investment options because I want to buy an SUV in the next five years. For medium-term goals like mine, Hybrid Funds may be considered ideal.
Anjali: That’s interesting. Are they a low-risk option?
Rahul: Not exactly “low risk,” but Hybrid Funds are designed to strike a balance between risk and return. They’re ideal for goals like buying a house or starting a business. You get the growth potential of equities with the of debt, making them a good choice for investors seeking a middle ground.
Hybrid mutual funds combine the growth potential of equity (stocks) with the potential stability of debt (bonds). They aim to create a balance between risk and return by diversifying across asset classes, making them suitable for medium-term financial goals. The allocation between equity and debt varies depending on the type of Hybrid Fund, offering flexibility to cater to different risk appetites and goals
Combines equity for growth and debt for potential stability.
Reduces overall portfolio risk by spreading investments across asset classes.
Offers a range of equity-debt allocation options to suit varied risk preferences.
Fund managers actively adjust allocations based on market conditions.
Ideal for financial goals with a 3-5 year horizon but Investors should consult their financial advisors before investing.
Aims to keep the portfolio stay aligned with your financial objectives.
Predominantly invests 75% to 90% in debt instruments, offering potential returns. A smaller allocation of 10% to 25% in equity adds a touch of growth potential, making it suitable for risk-averse investors
Aims to strike an even balance with 40% to 60% allocation in both equity and debt instruments. Ideal for those seeking moderate growth and controlled risk
Geared towards higher growth potential, it allocates 65% to 80% to equity and equity related instruments and 20% to 35% to debt instruments of total assets. Ideal for investors with a higher risk appetite aiming for long-term wealth creation.
Seeks to adapts dynamically to market conditions, with equity and debt allocations ranging from 0% to 100%. This flexibility aims to allow the balance between risk and return.
Diversifies across at least three asset classes like equity, debt, and commodities like gold—ensuring a minimum 10% allocation in each. A suitable choice for well-rounded portfolio diversification.
Aims to capitalize on price differences in cash and futures markets to generate returns. With at least 65% allocation to equity and equity related instrumentys , offering tax efficiency.
Blends equity (minimum 65%), debt (minimum 10%), and derivatives for hedging. This approach seeks to offers a balance of growth and risk mitigation, catering to investors seeking consistent returns.
Investors seeking Medium-term goals like buying a house or starting a business in 3–5 years.
Investors with moderate risk appetite, seeking a balance of growth and stability.
Investors seeking diversification across asset classes in one solution.
Disclaimer - Please refer Clause 2.6 of Part IV of SEBI Master Circular dated June 27, 2024 to know in detail about the categories of Hybrid schemes.
Anjali: What’s the buzz about this dhaba? It’s famous for itsParathas, isn’t it? I’m already tempted!
Rahul: Absolutely! My dad, who’s retired, loves this place. He says it’s like comfort food-just like debt funds for him. They’re simple , and fulfilling, making them one of the ideal avenues for regular income for his need for regular income.
Anjali: So, debt funds are like his comfort food?
Rahul: Spot on! They aim to offer relative stability, risk-adjusted returns, and peace of mind too. Let me walk you through how they work.
Debt Funds invest in fixed-income instruments like corporate bonds, government securities, and treasury bills as per the Scheme’s asset allocation and investment strategy. They aim to provide steady returns with relatively low risk, making them a preferred choice for investors seeking stability and income.
Focus on fixed-income securities, making them less volatile compared to equity funds.
Offer regular potential income through interest pay-outs, ideal for retirees or conservative investors.
Can be redeemed easily, offering flexibility for financial needs.
Generally have lower expense ratios compared to other funds.
Invests in overnight securities with a maturity of 1 day, ideal for highly liquid and low-risk taking investors.
Focuses on debt and money market securities maturing within 91 days, may be considered ideal for surplus cash management.
Targets instruments with a Macaulay duration of 3 to 6 months, offering slightly better potential returns than liquid investments.
Invests in securities with a Macaulay duration of 6 to 12 months, aiming to balancing low risk with returns.
Designed for portfolios with a Macaulay duration of 1 to 3 years, ideal for short-term investors seeking potential returns.
Invests in portfolios with a Macaulay duration of 3 to 4 years, offering better returns for medium-term horizons.
Targets instruments with a Macaulay duration of 4 to 7 years, balancing risk and return over a medium to longer investment horizon.
Focuses on portfolios with a Macaulay duration of more than 7 years, suitable for long-term goals with potential for higher returns.
Investments across duration
Invests a minimum of 80% in high-rated corporate bonds (AA+ and above), ensuring quality and reliability.
Allocates at least 65% to lower-rated corporate bonds ((excluding AA+ rated corporate bonds)), targeting higher returns with added risk.
Requires a minimum of 80% investment in debt instruments issued by banks, PSUs, public financial institutions, and municipal bonds, seeking and diversification.
Invests at least 80% in government securities across various maturities, seeking to offer low credit risk.
Focuses on maintaining a portfolio Macaulay duration of 10 years, investing primarily in government securities.
Focuses on money market instruments maturing within 1 year, suitable for your short-term needs.
Allocates a minimum of 65% to floating rate instruments or fixed-rate instruments converted to floating rates using swap/derivatives, offering returns aligned with changing interest rates.
Ideal for those wanting a steady income with low risk.
Suitable for those prioritizing capital preservation over high returns.
Great for goals like saving for a wedding, education, or emergency fund.
Disclaimer - Please refer Clause 2.6 of Part IV of SEBI Master Circular dated June 27, 2024 to know in detail about the categories of debt schemes.
Anjali: Wow, this place is so scenic and relaxing! It feels like the beauty of this spot is unspoiled by human ”development”. Let’s stop here for a while.
Rahul: Great idea. You know, this spot reminds me of passive funds. Just like this beautiful, tranquil spot is perfect for a break, passive funds are for stress-free investing, especially for long-term goals like your kids’ education.
Anjali: That’s true! With low costs and minimal effort, it seems like a smart choice.
Rahul: Exactly! Passive funds like index funds and ETFs require minimal monitoring compared to active funds as they track the index/benchmark, and they align with the overall market's growth. They may be considered for building wealth over time without the emotional ups and downs of active investing. We should not be claiming this. An investor should be monitoring even passive funds in the portfolio done
Passive Mutual Funds are investment vehicles designed to mirror the performance of a specific market index, such as the Nifty 50 etc depending on the investment strategy/investment objective. Instead of relying on active fund management, these funds track an index and aim to match its returns, offering a cost-effective, hands-free approach to investing.
With lower expense ratios compared to active funds, passive funds are easy on your wallet.
No need for complex research or constant portfolio adjustments-just track the index.
Provides exposure to a broad market or sector aiming to reduce, reducing the impact of individual stock volatility.
Clear visibility of holdings as they replicate the index composition.
Reduces the risk of impulsive decisions as investments are guided by the index.
Tracks the market's overall performance, making it one of the ideal investments avenue for long-term growth.
Mimic the performance of a specific market index like Nifty 50 or Nifty 500. The stocks included in the portfolio and their weights assigned are the same as that in the index.
Traded on stock exchanges, ETFs combine the features of stocks and mutual funds, offering flexibility and transparency. They track an index, a commodity, bonds, or a basket of assets like an index fund
(FoF): Invests in other mutual funds instead of directly buying stocks or bonds or commodity. For example, a FoF of Gold ETFs will invest in ETFs that hold gold as their underlying asset. Its goal is to give investors broad diversification across different funds or asset classes.
Smart Beta Funds: They focus on specific factors or rules to construct a portfolio. These factors could include value, quality, low volatility, alpha or momentum. The goal of Smart Beta is to achieve better risk-adjusted returns compared to traditional indexes while maintaining the benefits of diversification and lower costs associated with passive investing.
Those looking for lower expense ratios.
People focusing on goals like retirement, children’s education, or wealth accumulation.
Those who prefer minimal active management and emotional decision-making.
Those who wish to start their mutual fund journey with a simple, easy-to-understand investment strategy.
If you’re looking for a simple, cost-effective way to build wealth over time with minimal effort, passive funds could be your ideal choice!
Start investing today!
Rahul and Anjali enter an exciting and vibrant Wonder-theme park.
Anjali: Hey, what’s this new place? It looks so thrilling!
Rahul: Welcome to the Wonder-theme park! It's an perfect example of thematic investing, where you focus on trends like technology or sustainability. Just like how this park is built around unique themes and experiences, thematic investing allows you to align with specific growth areas. It’s exactly what my sister Priya’s entrepreneurial dreams are all about.
Anjali: Wow, so she can ride the wave of innovation?
Rahul: Exactly! Thematic funds seek to offer high potential if those trends take off, much like her entrepreneurial venture.
They walk further, exploring the park and coming across thematic attractions.
Anjali: Wow, this one sector seems so specific!
Rahul: You know, sectoral funds are similar. They focus on specific industries-like this one focuses on science and that one on art. If you're confident that a particular sector, like healthcare or IT, will perform well, sectoral funds can help you capitalize on that.
Anjali: So, a calculated risk for potentially higher returns?
Rahul:Exactly! Both thematic and sectoral funds seek to offer opportunities in a sector, but the key is knowing your vision and believing in the growth trends or sectors that align with your goals.
Invest in a collection of industries linked by a common theme, such as technology, ESG (environmental, social, governance), or urbanization etc. These funds seeks to offer opportunities to tap into broader, innovative growth trends. Though these funds come with a higher risk with limited diversification.
Focus on a single sector, like healthcare or banking, enabling investors to capitalize on specific industry expertise and growth potential. While potential for returns could be significant, these funds come with higher risks due to limited diversification.
Focuses on long-term societal, economic, or technological themes.
Covers multiple industries linked by a single theme, reducing single-sector dependence.
Potential for High returns if the chosen theme gains traction globally or locally.
Provides targeted exposure to a specific sector, enabling investors to capitalize on the growth potential of industries they believe in.
Invests in high-growth industries, offering potential for robust returns in booming sectors.
Complements diversified investments by adding a layer of sector-specific focus, enhancing portfolio performance in favorable market conditions.
Innovation Funds Energy Themed Funds
ESG Funds
Services Industries
Infrastructure Development Funds
Pharma & Healthcare Funds
Banking & Finance Sector Funds
IT Sector Funds
The sector(s)/stock(s) mentioned in this document do not constitute any recommendation of the same and Baroda BNP Paribas Mutual Fund may or may not have any future position in these sector(s)/stock(s).
Investors with a strong conviction in specific trends or sectors.
Those with a high-risk appetite and a long-term investment horizon.
Individuals aiming to diversify their portfolio with focused or theme-based strategies.
If you're a visionary investor looking to capitalize on emerging trends or sectoral growth, this is one park you may explore!
Disclaimer - Please consult your financial advisor before investing
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