Mutual
Funds

Mutual funds offer a structured way to participate in financial markets through professionally managed portfolios. Here are some of their benefits:

• Professional management – Mutual funds are managed by qualified fund managers who take investment decisions in line with the scheme’s stated objective and regulatory framework. Their approach is supported by research, risk management systems, and internal controls.
• Diversification – By investing across multiple securities, sectors, or asset classes, Mutual Funds help reduce the impact of exposure to a single investment. This diversification may help manage risk, though it does not eliminate it.
• Liquidity – Open-ended schemes allow investors to buy or redeem units on any business day at the prevailing NAV, subject to exit load, if applicable. Redemption proceeds are processed within timelines prescribed by SEBI.
• SIP flexibility – Systematic Investment Plans enable investors to invest fixed amounts at regular intervals, helping instil financial discipline. SIPs also allow flexibility to start, stop, or modify instalments as per scheme terms. Additionally, by investing across market conditions, SIPs may help manage market timing risk.
• Transparency – AMCs disclose NAVs daily and publish portfolio holdings and Riskometer levels periodically as mandated by SEBI. Scheme-related documents clearly outline objectives, risks, and expenses.

Types of mutual funds can be broadly classified based on the asset classes they invest in. There are three types of mutual funds under this classification– equity, debt and hybrid funds. Let’s take a closer look at each to understand the differences better.

1. Equity Mutual Funds: An equity mutual fund primarily invests in shares of companies listed on the stock market. Equity mutual funds aim for long-term gains and are suitable for investors with a higher-risk appetite. Some of the funds under this category are Large Cap, Large and Mid Cap, Mid Cap, Small Cap and sectoral funds.
2. Debt Mutual Funds: A debt mutual fund invests primarily in fixed-income instruments like government securities, sectoral bonds, treasury bills and money market instruments. Debt mutual funds are comparatively lower-risk and are considered suitable for conservative investors seeking the potential for relatively stable returns over a shorter period.
3. Hybrid Mutual Funds: As the name suggests, a hybrid mutual fund invests across equity and debt mutual funds. In doing so, hybrid mutual funds aim to combine the long-term growth potential of equity funds with the relative stability of debt mutual funds. These are suitable for investors who seek a balanced approach to mutual fund investing with lower risk than pure equity funds and higher potential returns than debt funds.

You can invest in Mutual Funds independently (via the Direct Plan) or through a Registered Mutual Fund Distributor (via the Regular Plan). The Direct Plan usually has lower expense ratios, as there is no distributor commission involved. The Regular Plan has higher costs but investors receive guidance on scheme selection, investments, redemptions and portfolio management. The process to invest online is typically as follows:

1. Complete KYC – Investors must complete Know Your Customer (KYC) formalities through a SEBI-registered KRA before investing. This ensures identity verification and regulatory compliance.
2. Choose a fund – Select a scheme based on your financial goals, risk appetite, and investment horizon after reviewing the Scheme Information Document (SID) and Riskometer. Past performance should not be the sole basis for selection.
3. Select SIP or lumpsum – Decide whether to invest periodically through SIP or invest a one-time lump sum amount. The choice depends on cash flow, market conditions, and personal preference.
4. Invest online – Investments can be made via the AMC’s official website, registered distributors, or recognised investment platforms. Ensure the intermediary is duly registered with SEBI or AMFI.
5. Track performance – Monitor your investments periodically to ensure alignment with your goals and asset allocation. Avoid reacting solely to short-term market volatility.

Mutual fund returns are market-linked and vary based on asset allocation and prevailing market conditions. Understanding return measures and associated risks may help set realistic expectations.

Here are some ways in which Mutual Fund returns may be estimated.

• CAGR (Compounded Annual Growth Rate) – CAGR reflects the annualised growth rate of an investment over a specific period, smoothing out year-to-year fluctuations. It is useful for evaluating long-term performance.
• Absolute returns – Absolute return shows the total percentage gain or loss over a given time frame. It does not account for the holding period beyond the stated duration.
• XIRR: XIRR calculates the annualised return for investments made at irregular intervals, such as SIPs, by factoring in the timing and amount of each cash flow. It provides a more accurate measure of return for staggered investments.

Here are some of the types of risk that Mutual Funds are subject to:

• Market risk – Equities are subject to fluctuations due to broader market movements and economic factors. NAV may rise or fall accordingly.
• Credit risk – In debt securities, there is a risk that an issuer may delay or default on interest or principal payments. Lower-rated securities typically carry higher credit risk.
• Interest rate risk – Debt-oriented fund NAVs may also be impacted by changes in interest rates, especially in longer-duration portfolios. Bond prices generally move inversely to interest rates.

Investors should also assess scheme-specific risk factors before investing.

To invest in a mutual fund offered by Bajaj Finserv AMC, follow these steps:

1. Visit Bajaj Finserv AMC’s official website. Click on ‘Invest Now’ on the scheme page or the website home page. You will be redirected to the investor portal.
2. If you are an existing investor with Bajaj Finserv AMC, you can log in. New investors can sign up. To sign up, you will be asked to enter some basic information such as your name, date of birth, PAN details and bank account information. You may also be asked to complete your Know Your Customer (KYC) verification process if you are not KYC validated.
3. From the dropdown menu, select the scheme you wish to invest in and the mode of investment (lumpsum or SIP). Enter the investment amount and select the payment method.

You can also invest online as well as offline through financial advisors, distributors and on aggregator platforms. You can choose from among debt, equity and hybrid mutual funds and exchange traded funds (ETFs).[

Tax treatment depends on the classification of the scheme and the holding period of units. The tax rates as of February 2026 are detailed below. Since tax rules may change over time, investors should refer to current income tax provisions or consult a tax advisor for updated rules.

Equity-oriented fund taxation

• STCG – Short-term capital gains on equity funds (units held up to 12 months) are taxed at 20% plus applicable surcharge and cess.
• LTCG – Long-term capital gains on equity funds (units held over 12 months) are taxed at 12.5% (plus applicable surcharge and cess) after an exemption on gains of up to Rs. 1.25 lakh

Debt-oriented fund taxation

• Starting April 1, 2023, capital gains arising from debt funds are taxed as per an investor’s slab rate, regardless of the holding period.

ELSS tax benefits

• Investments in ELSS qualify for deduction under Section 80C of the Income Tax Act, 1961, under the old regime, subject to the overall statutory limit of Rs. 1.5 lakh. ELSS units carry a mandatory lock-in period of 3 years.

To help investors plan their investments and visualise potential outcomes, several Mutual Fund calculators are available online. These tools can support goal-based planning by offering projections under different investment scenarios.

Mutual fund calculators can help investors estimate their potential final corpus based on investment amount, tenure, and assumed rate of return. By adjusting these variables, investors can also understand how small changes may impact long-term wealth creation. However, these projections are purely illustrative, based on assumed returns, and do not assure or guarantee actual performance.

Calculators offered by Bajaj Finserv AMC include online SIP calculator, step-up SIP calculator, ELSS Calculator, lumpsum calculator, compound interest calculator, goal-based calculators, index calculator and much more.

The calculator is an aid, not a prediction tool. It may provide only an indicative picture.