Mutual Funds

What Are Mutual Funds?

Mutual Funds are investment instruments that pool money from multiple investors to invest in a diversified portfolio of securities such as stocks, bonds, money market instruments, gold, silver, and real estate investment trusts (REITs). Each investor holds units in the fund, and each unit represents a proportionate share of the portfolio.

These funds are managed by professional fund managers, who make investment decisions based on the specific objectives of each scheme, aiming to generate optimal returns for investors.

What is an NFO (New Fund Offer)?

A New Fund Offer (NFO) is the first-time subscription offer for a new mutual fund scheme launched by an Asset Management Company (AMC). During the NFO period, units are typically offered at a face value of ₹10.

For example, if you invest ₹10,000 during an NFO, you would receive 1,000 units. To invest, you must be KYC-compliant and provide valid bank details. Investments can only be made from accounts held in the investor's own name. Your financial advisor at Shubh Financial Hub can assist you with the KYC process and documentation.

After the NFO closes, the pooled funds are invested as per the scheme's mandate. For open-ended funds, you can continue to invest or redeem units at the prevailing Net Asset Value (NAV). Redemption proceeds are typically credited to your bank account within T+3 working days for equity funds. Note: Exit loads may apply for redemptions made within a certain time frame.

Types of Mutual Funds

1. Equity Funds

These schemes invest primarily in equity and equity-related instruments. Sub-categories include:

  • Large Cap, Mid Cap, Small Cap
  • Multi Cap, Flexi Cap
  • Sector/Thematic Funds

Objective: Long-term capital appreciation

2. Debt Funds

These invest in fixed-income instruments like bonds and money market securities. Sub-categories are based on the maturity profile of underlying instruments, such as:

  • Liquid, Ultra Short, Short Duration
  • Medium and Long Duration

Objective: Stable income with relatively lower risk

3. Hybrid Funds

Hybrid funds invest in a mix of equity, debt, and sometimes alternative assets like gold, REITs, or InvITs. Popular types include:

  • Aggressive Hybrid Funds
  • Conservative Hybrid Funds
  • Balanced Advantage Funds
  • Equity Savings Funds

Objective: Balanced asset allocation and diversified growth

Risk & Suitability

Each category of mutual funds carries a different risk-return profile. Whether you're seeking high-growth equity funds or low-risk debt options, mutual funds cater to a wide range of investment goals and risk appetites. Let our expert advisors help you choose the right scheme that aligns with your financial goals.

Taxation of Mutual Funds

Equity-Oriented Funds (≥65% equity allocation):
  • Short-Term Capital Gains (STCG): Taxed at 20% (holding < 12 months)
  • Long-Term Capital Gains (LTCG): Tax-free up to ₹1,25,000 per financial year; taxed at 12.5% beyond that
Debt-Oriented Funds (<65% equity allocation):
  • STCG (holding < 36 months): Taxed at your income tax slab rate
  • LTCG (holding ≥ 36 months): For investments before April 1, 2023, taxed at 20% with indexation
  • For investments after April 1, 2023, taxed as per income tax slab (indexation benefit removed as per Finance Bill 2023)
Other Funds (35 - 65% equity or alternate assets like gold, international, etc.):
  • STCG (holding < 2 years): Taxed at income tax slab rate
  • LTCG (≥ 2 years): Taxed at 12.5% (without indexation)
Tax-Saving Funds (ELSS):

Investments up to ₹1,50,000 in Equity Linked Savings Schemes (ELSS) qualify for tax deduction under Section 80C of the Income Tax Act, 1961.

Why Invest Through Shubh Financial Hub?

At Shubh Financial Hub, we simplify your investment journey with user-friendly processes, paperless onboarding, and ongoing support whether you're in India or abroad. We aim to assist you in building wealth and working toward your financial goals with confidence.