Investing through a bank would be under the regular plan route, as your application form would have the bank's ARN number (Amfi Registration Number) implying the bank is the distributor for the particular transaction.
I want to invest Rs 15,000 each month in an equity mutual fund through SIP. How should I go about it?
—Anuj Kumar Saxena
Follow an asset allocation-based approach as it is one of the key determ-inants of the portfolio’s performance. For equity, you may invest across large caps (75%), midcaps (15%) and smallcaps (10%). With SIP of Rs 15,000, you can consider two funds in the large-cap space, and one fund each for the midcap and small cap exposure.
I want to invest in gold ETF. How is the NAV tracked? Is there any lock-in period?
The NAV of gold ETFs as disclosed by mutual funds is based on the prices of the underlying assets and the number of units in the ETF. However, since gold ETF trades on the exchange throughout the day, its price is dependent on the demand and supply, which may lead to the price deviating from the NAV of the ETF. Gold ETFs do not have any lock-in period. They can be sold on the exchange or directly to the mutual fund. Since the minimum amount for a direct transaction with the mutual fund is high; it is best for retail investors to sell their units on the secondary market platform.
If I invest in a mutual fund through a bank, will it be a direct investment?
Investing through a bank would be under the regular plan route, as your application form would have the bank’s ARN number (Amfi Registration Number) implying the bank is the distributor for the particular transaction. You may register for online access on AMC websites or through any of the mutual fund aggregator portals and switch to a direct plan. The switch may be subject to exit load. The switch would be regarded as a redemption requiring capital gains taxes, if any, to be paid.
My SIP is not giving good returns. Should I reduce my investments?
Main benefit of SIP is rupee cost aver-aging. More units are bought when price of shares is low and less units are bought when the price is high. This is advantag-eous in volatile markets. Continue your SIP as reducing it would deprive your portfolio of buying units at lower prices.
The writer is director, Investment Advisory, Morningstar Investment Adviser (India). Send your queries to firstname.lastname@example.org