Page 132 - DMGT515_PERSONAL_FINANCIAL_PLANNING

Unit 7: Investment Strategies-II

2. By Investment Objective Notes
(i) Growth schemes
(ii) Income schemes
(iii) Balanced schemes

(iv) Money market schemes
3. Other Schemes
(i) Tax saving schemes
(ii) Special schemes

(a) Index schemes
(b) Sector-specific schemes
Mutual funds are grouped as under
(i) Open-ended Funds: In open-ended funds, there is no limit to the size of the funds. Investors
can invest as and when they like. The purchase price is determined on the basis of Net
Asset Value (NAV). NAV is the market value of the fund’s assets divided by the number of
outstanding shares/units of the fund.
(ii) Close-ended Funds: These funds are fixed in size as regards the corpus of the fund and the
number of shares.
(iii) Income-oriented Funds: These funds offer a return much higher than the bank deposits but
with less capital appreciation.

(iv) Growth-oriented Funds: These funds do not offer fixed regular returns but provide
substantial capital appreciation in the long run.
(v) Balanced Funds or Income and Growth-oriented Funds: These offer a blend of immediate
average returns and reasonable capital appreciation in the long run.
(vi) Area Funds: These are funds that are raised in other countries for providing access to
foreign investors.
(vii) Specialised Funds Or Industry Funds: These funds are invested in a particular industry
like cement, steel, jute, power or textile, etc. These funds carry high risks with them as the
entire fund is exposed to a particular industry.
(viii) Tax Relief Funds: These funds are raised for providing tax relief to those investors whose
income comes under taxable limits. Equity Linked Savings Scheme, under Section 80 CCB
of the Income Tax Act, 1961, floated by SBI Mutual Fund, PNB Mutual Fund, LIC Mutual
Fund and Canbank Mutual Fund in the month of February 1991 are such kinds of
funds. These funds provide direct deductions from taxable income up to a certain limit
(` 10, 000/- under Sec.80).

7.7 Investment in Commodities

You may have your debt and equity funds in place, but investing in commodities could just be
the one element to improve your portfolio. Commodity trading provides an ideal asset allocation,
also helps you hedge against inflation and buy a piece of global demand growth.

LOVELY PROFESSIONAL UNIVERSITY 127