Get the Tata Capital App to apply for Loans & manage your account. Download Now

Blogs SUPPORT

Equipment Finance

Avail Digital Equipment Loans
up to Rs. 1 Crore

  • Attractive ROIs
  • Customizable Loan tenure

Equipment Leasing

Avail Leasing solutions
for all asset classes

  • Up to 100% financing
  • No additional collateral required

Tata Capital > Blog

Which Mutual funds to Invest in For Long Term Growth?

Mutual funds have garnered immense popularity in the past few years. And rightly so! They offer handsome returns on your hard-earned money, and you can find schemes that fit your risk profile and investment horizon well.

But when it comes to long-term growth and investment, you need to put in more thought and consider your investment objectives. Next, you must go through different MF schemes and compare them with their counterparts to make an informed choice.

If you’re still confused about which mutual fund schemes to invest in for long-term growth, this article can be your guide.

Why invest in long-term mutual fund schemes?

As you know, investment not only helps you grow your wealth, but it also helps instil financial discipline. And investing with a long-term horizon can fetch you higher returns on your deposit. This is where long-term mutual funds come into the picture.

These funds have excellent potential for long-term growth and can use compounding interest to generate optimum gains in the long run. However, these funds also come with higher risks as they are highly volatile in nature. Therefore, be mindful of your risk appetite before investing in long-term MFs, and thoroughly review the fund’s performance regularly.

Additional Read: Long Term Mutual Fund Strategy

Which mutual funds are best for long-term growth?

Long-term investments have a massive significance in your portfolio and help fulfil major life goals, such as retirement, purchasing a house, or financing your child’s education. Essentially, they aim to finance distant financial goals. Hence, you must choose a fund that has high growth potential. This is where equity funds can help you.

These funds invest in shares or stocks of a company and are also called ‘stock funds’ or ‘growth funds’. Like any other mutual fund, equity funds are also managed by a fund manager who studies the market and analyses the performance of the companies before investing in stocks.

Here are a few advantages of investing in equity funds:

  • Liquidity – Most equity fund units can be redeemed easily at any time by the investor, making them highly convenient.
  • Diversification – By investing in equity funds, you get exposure to various stocks. Hence, even if some stocks don’t perform well, you can still achieve capital gains from other stocks.
  • Cost-effectiveness – Equity funds are also easy on your pocket as you can invest through a Systematic Investment Plan (SIP) and make a small investment as low as Rs 500 a month.
  • Tax benefits – Lastly, you can even enjoy tax benefits by investing in equity funds known as ELSS under Section 80C of the Income Tax Act.

Additional Read: What All Needs to Take into Consideration while Investing in Mutual Funds

Over to you

A long-term investment is your best bet to yield maximum returns in the long run. Remember, starting early and staying in the market for long is the key to success in the world of investment. And equity funds can help you reach your goals by growing your wealth effectively.

Want to start investing in equity funds? Start right away by downloading Tata Capital’s Moneyfy app. You can compare and keep track of different funds from the comfort of your home and make profitable investment decisions!

What is the National Pension Scheme (NPS)? Does it Help in Saving Tax?

Creating a stable income source post-retirement is a massive concern for many. Hence, most people work extensively to secure their financial future and life after retirement. But saving for your future is not the only way to get the life you want. Instead, you must invest in financial schemes and instruments to grow your wealth with time and reap the rewards in your old age. One such scheme sponsored by the Indian government is the National Pension Scheme (NPS).

Let’s dig deeper and learn more about NPS and how it can potentially help you save tax.

National Pension Scheme – What is it?

The National Pension Scheme is a social security initiative and voluntary contribution scheme launched by the Central Government to provide retirement benefits to Indian citizens. To put it simply, NPS is a pension programme created for the employees from the public, private and unorganised sectors, except the armed forces. Essentially, the scheme encourages you to regularly invest some money in a pension account during your employment and get a monthly pension for your life after retirement.

The fund manager then invests this contribution in different mutual funds such as government bonds, index-based stocks, and corporate bonds. After retirement, you can access a certain percentage of this corpus by making partial or complete withdrawals for specific purposes like sponsoring a child’s education or medical treatment.

NPS accounts are divided into 2 formats – Tier I and Tier II. If you hold a Tier I account, you cannot withdraw the entire amount until the age of 60 but can make partial withdrawals. On the other hand, Tier II account holders have the freedom to make complete withdrawals at any point of the tenure.

Additional Read: What Is NPS? How Does It Work?

What are the tax benefits of NPS?

If you are a working professional, you can get the benefit of tax deductions by investing in NPS under:

  • Section 80C – Under this section of the Income Tax Act, you are eligible for a tax exemption of up to Rs 1.5 lakhs for your NPS contribution.
  • Section 80CCD (1B) – An additional tax benefit for NPS investors allows you to claim tax deductions for an investment of up to Rs 50,000. This deduction is over and above Section 80C. Therefore, you can claim total tax deductions up to Rs 2 lakhs under Section 80C and 80 CCD (1B) simply by investing in NPS.
  • Section 80CCD (2) – Lastly, this benefit applies to the contributions made by the employer. Thus, it is only catered towards salaried individuals and not self-employed professionals. If you are a government employee, you can claim 14% of your salary tax deduction under this section. Similarly, private-sector employees can claim 10% of their salary.

Additional Read: Top Ways to Generate Regular Incomes during Your Retirement Life

In a nutshell

If you want to start planning for early retirement and have a low-risk appetite, investing in NPS makes a ton of sense! And if you are looking for a platform that can take care of your investment needs, your search ends here. Tata Capital’s Moneyfy app can help you invest in different financial avenues, including NPS.

So, don’t waste time and get on board by downloading Tata Capital’s Moneyfy app right away!

What are the “Skin in the game” Rules by SEBI Set to be Implemented from October 1st?

The Securities and Exchange Board of India (SEBI) recently announced that its skin-in-the-game rules would be effective from October 1, 2021. The market regulatory body, founded in 1992, regulates the Indian capital markets and protects the investor’s interests by enforcing specific rules and regulations. Further, the statutory body ensures that the market works systematically, providing a transparent environment for the investors.

Read further to learn about the new rules and how they can affect the industry moving forward.

What are the skin-in-the-game rules?

Skin-in-the-game is a term derived from derby racing and is used for new rules. It is also a phrase made popular by the renowned investor and the ‘Oracle of Omaha’, Warren Buffet. Now, let’s understand what the rules are about.

The fresh set of norms issued by SEBI applies to the junior employees and will be implemented in a phased manner. Junior employees are those who are below the age of 35 and are not heads of any department, fund managers and CEOs. They must invest 10% of their compensation in units of their MF schemes in the first year. The share will increase to 15% in the second year, and from October 2023, employees must invest 20% of their compensation.

On the other hand, the key employees of the asset management companies must invest a minimum of 20% of their gross annual CTC from October 1, 2021. In a nutshell, the key executives will be required to invest in their own schemes. As a result, the Rs 33-trillion domestic mutual fund industry will invest thousands of crores in its schemes.

Additional Read: With the new SEBI rules, are Multi-cap funds worth the risk?

What is the objective?

With the new set of rules, SEBI expects that getting the designated employees to invest in their schemes will lead to better accountability. And it will pave the way for improved performance and better quality of securities.

Moreover, it is believed that this change will lead to a better sense of confidence for the investors as the fund manager’s interest aligns with them. Lastly, SEBI also aims to prevent fund managers from taking unnecessary risks and discourage instances of insider trading.

Additional Read: Active Investment vs Passive Investment: What is the Difference Between Active and Passive Funds?

The way ahead

Although the move is well-intended and aims to prevent fund houses from launching high-risk investment schemes, it has mixed reactions. However, this move can prevent fund houses from launching risky schemes to an extent, mainly the ones with smaller asset sizes.

At the end of the day, the responsibility of choosing a suitable scheme lies with the investor. Hence, before investing your savings in any scheme, consider the qualitative factors, the scheme’s past performance, and more. Make sure to invest in fund houses with prudent investment practices and a robust risk management system.

Finally, to make an informed decision and compare different mutual funds easily from the comfort of your home, choose Tata Capital’s Moneyfy app. It will help you pick suitable schemes based on your essential requirements and stay updated with the latest interest rates.

What are Index Funds? Are Index Funds Returns High?

The primary element of an excellent investment portfolio is diversification. If you are new to the world of investment, try to spread your funds across different asset classes to minimise risk. A common mistake made by new investors is that they strive to outperform the market, which isn’t easy or realistic. Instead, try to stay in line with the curve. And to achieve this, you should know about index funds.

Understanding index funds

An index fund is essentially a mutual fund designed to mimic the portfolio of a financial market index. They are popular with investors who intend to replicate the performance of their underlying index. You can invest in a popular index like Sensex, Nifty, Nifty Next 50, Nifty 100, etc. But you must be sure that the scheme has matched the index consistently over a long period.

Essentially, index funds are a passive investment where the fund manager copies the index and tries to maintain the portfolio in sync with the index. In addition, index funds provide you with broad market exposure, low portfolio turnover and low operating expenses. Hence, they are quickly becoming popular among investors.

Additional Read: How to Choose Mutual Funds?

Should you invest in index funds?

Now that you have a brief idea about index funds, you might be asking yourself whether you should invest in index funds or not. Another question that must have occurred to you is whether the returns offered by index funds are high. Since index funds track a market index, they offer returns similar to those offered by the index.

Therefore, investors who want predictable returns and are in search of equity markets without taking a lot of risks prefer index mutual funds. Legendary American investor Warren Buffet has said that index funds are a haven for savings in your old age. This is because these funds don’t require extensive tracking, and you get the returns matching the upside of the index.

If you do plan of investing in index funds, consider the following factors carefully:

  • Risk tolerance: Although index funds are less prone to equity-related risks and volatility, you must be aware of your risk tolerance nonetheless. This is because index funds can lose their value during a market slump.
  • Financial goals: Is your goal to retire early or pursue your passion? Before investing your wealth in any instrument, have a clear picture of your goals. Knowing your aspirations will help you determine whether the investment is performing as expected or not.
  • Investment horizon: Index funds are beneficial for investors with a long-term investment horizon. So, you must be patient enough to stick around and get the full potential of the fund.
  • Cost of investment: Index funds have a low expense ratio as compared to other actively managed funds. This is because they don’t require the extra costs of fund management.

Thus, they are capable of generating high returns on investment.

Additional Read: How Mutual Funds are Taxed

Parting thoughts

Unlike actively managed funds, index funds don’t aim to beat the benchmark. However, they perform well over the long term and are less volatile.

To start investing in index funds and other instruments with ease, download the Moneyfy app by Tata Capital. It allows you to compare various investment options, set goals and invest in the best products.

Importance of Investing in Mutual Funds for Millennials in 2021

Unlike the previous generation, millennials don’t only believe in stockpiling savings through passive investments. They want to be more proactive when it comes to growing their wealth. Part reason being that savings instruments that promise guaranteed earnings offer moderate to low returns at best.

No wonder relatively safe and possibly lucrative financial instruments like mutual funds are becoming so popular with this demographic. However, even with soaring awareness about mutual funds, several millennials are still sitting on the fence, wondering whether to invest or not.

If you’re one such individual, here is why investing in mutual funds is essential this year.

You get experts to manage your wealth

Know that what you choose in the face of mutual funds are stocks that are carefully handpicked by financial experts. They pick funds with the sole aim of providing you as high a return as possible.

With their careful vetting and years of financial experience, you more often than not get to invest in a profitable venture capable of earning excellent returns. Therefore, even if you’re a novice investor, mutual funds are a safe and profitable instrument to invest in.

You can invest small and grow big

It’s a fallacy that, as a millennial, you need a significant amount of money to build your mutual fund portfolio. In reality, it’s the opposite! You can test the waters with only a few thousand rupees. What’s more, you can indirectly invest in mutual funds through SIPs.

A SIP stands for a Systematic Investment Plan, where you invest a small amount every month. The SIP then invests pooled funds from several investors into assorted mutual funds. The good news is that SIPs start at just Rs. 500 per month and have the potential to earn considerable returns.

Additional Read: Long Term Mutual Fund Strategy

Allows you to diversify your financial portfolio

We understand if you strongly believe in investing in fixed deposits, PPFs, NPS, etc. These instruments are a great way to secure your future. But, all of them offer you low guaranteed returns. Supplement these investments by diversifying your finances into mutual funds.

Doing this will provide you with a mixed bag of investments. Some with a static earning potential, while others like different mutual funds, with a dynamic earning potential. The latter can reap double the rewards depending on market conditions and the category you invested in.

Ensure you stay liquid

Unlike certain savings instruments, most mutual funds come with nominal or zero lock-in requirements. Therefore, you can redeem your mutual fund units at any time of day and usually at no penalty. This helps you stay liquid as you can quickly encash your mutual funds in case emergency strikes.

Additional Read: Important Tips to Pick Top-Trending Mutual Funds

The final word

As a millennial, you likely require both short-term and long-term investment instruments, and mutual funds offer both. What’s more, this instrument is highly transparent and strictly regulated by SEBI.

So, if you’re looking to start or diversify your financial journey, invest in mutual funds. Compare and apply for some of the top-rated funds online through Tata Capital’s Moneyfy app. We offer an easy-to-use portal through which you can invest in mutual funds, SIPs, insurance, and other such instruments.

Learn more by visiting our website right away!

Top 5 Tax Saving Investment Products

Remember what Benjamin Franklin said, “A penny saved is two pennies earned”! And, you end up saving several pennies when you invest in tax saving instruments. In fact, including tax saving instruments into your investment portfolio ends up increasing your annual income by quite a bit.

Besides, why shouldn’t you reap the benefits of saving tax when the government itself provides you multiple avenues to do so? So, look for financial instruments that fall under the purview of Section 80C of the ITA as usually, only those are tax exempt.

To further aid your search, we have discussed the top 5 tax saving investment products below.

1. Equity-Linked Savings Scheme (ELSS)

ELSS mutual funds qualify for tax benefits under Section 80C and offer moderate to high returns. While anyone can easily apply for these funds, they are especially loved by investors who have a medium to long investment horizon.

These mutual funds predominantly invest in stock markets with a minority stake among other asset classes. Earnings up to Rs 1.5 lakhs on ELSS funds are entirely tax-deductible. The only thing to remember is that these funds have a short lock-in period of three years.

2. National Pension Scheme (NPS)

NPS makes for a very prudent investment as it offers guaranteed returns on maturity. More importantly, contributions to this instrument are tax-deductible under different sections. Sure, you can claim a deduction of up to Rs. 1.5 lakhs under Section 80C of the ITA, but that’s not it.

You can also avail of an additional tax deduction of up to Rs. 50,000 under Section 80CCD (1B) of the ITA. Lastly, an additional 10% of an employee’s basic salary is not taxed in the NPS if paid by their employer. The triad of these three deductions is what makes NPS a very tempting tax saving investment product.

Additional Read: What Are Tax Saving Mutual Funds?

3. Public Provident Fund (PPF)

Here is a long-term investment cum savings instrument, PPF, which is also a great tax-saving vehicle. It offers moderate interest returns that are guaranteed on maturity. You can also make partial withdrawals after completing the 5-year lock-in period while staying invested in the PPF scheme.

Much like other tax savings instruments under Section 80C, you can claim an annual tax deduction of up to Rs. 1.5 lakhs on PPF.

4. Unit Linked Insurance Plan (ULIP)

ULIPs are an excellent long-term investment. The returns on this insurance plan depend on the performance of the equity and debt mutual funds it invests in. Usually, ULIPs are a relatively safe instrument, and you can claim a tax deduction of up to Rs. 1.5 lakhs on them under Section 80C.

5. Fixed Deposits (FDs)

Invest in tax saver FDs to fetch yourself a tax deduction of Rs. 1.5 lakhs under Section 80C of the ITA. Typically, these FDs have a lock-in period of 5 years, are entirely risk-averse, and offer guaranteed returns at a fixed interest rate.

Additional Read: 5 Tips to grow your wealth while saving taxes

The bottom line

Now that you know of the most popular tax saving investment instruments, it’s time to diversify your funds across them. If you want to begin with ELSS mutual funds, apply for the top-rated ones on Tata Capital’s Moneyfy app. Our digital portal lets you compare and apply for different categories of mutual funds and SIPs, all recognized by SEBI and rated by credible agencies like Morning Star and Value Research.

So, why wait? Apply today!

SGB Vs Gold Fund: Which is a Better Investment?

There’s no doubt that gold holds immense value for Indian households and is more than a precious metal. In fact, it is considered auspicious to buy gold on occasions such as Dhanteras and Akshaya Tritiya. However, from an investment point of view, investing in physical gold may not fetch you the best returns. But that doesn’t mean investing in gold is not fruitful anymore. Instead, you can pick alternate forms of investing in gold, such as – SGBs and Gold funds.

These investment instruments allow you to invest in gold without having to purchase it in physical form. Read this article to learn more about the two options and determine which one is a better investment.

What is an SGB?

Sovereign Gold Bonds (SGBs) are government securities that are issued by the Reserve Bank of India. Essentially, they are the substitutes for physical gold and are thus, denominated in grams. By investing in SGBs, you can own gold but not in a physical form and earn steady interest on it.

Furthermore, with SGBs, the quantity of gold you purchase remains protected because you get the current market price at the time of redemption. If you invest in SGBs, you must pay and redeem the price in cash. What’s more, these bonds can be converted into Demat form and traded on the stock exchange, which is pretty convenient.

What is a gold fund?

Gold funds are a variant of mutual funds that directly or indirectly invest in gold reserves. The investment is made on stocks of mining companies, gold distributing and producing syndicates, and physical gold.

Moreover, these are open-ended investments that invest in units of a Gold Exchange Traded Fund (ETF). You can diversify your investment portfolio by investing in gold funds and create a safety cushion against market fluctuations and collapse.

Additional Read: What is Digital Gold? Why Should One Invest in It?

Which is the better investment option?

Now that you have a brief idea about SGBs and gold funds, let’s compare the two investment options on similar parameters.

Security

Since SGBs are issued by RBI on behalf of the government, you get a sovereign guarantee on the principal repayment and payment of interests. Therefore, you can be assured that you will get your dues back on maturity. This is why SGBs are one of the safest methods to invest in gold.

Further, gold funds are also a safe investment option as they are regulated by the Securities and Exchange Board of India.

Liquidity

Gold funds can be liquidated without much hassle and are easier to trade. Hence, they are ideal as a financial cushion against financial contingencies. On the contrary, SGBs are not as liquid as gold funds and are beneficial if the investment is held until maturity.

Tax benefit

SGBs are an excellent tax-saving option and will fetch you maximum benefit if you hold your bonds till maturity. However, the interest you earn on the bonds is taxable under the Income Tax Act, 1961.

Additional Read: The relationship between economic downturns and gold

Your turn

Needless to say, both investment options are safer than investing in the physical form of the precious metal. However, there is no clear winner. Consider your financial goals to determine which option is better for you.

And when you are ready to begin your investment journey, make sure to download Tata Capital’s Moneyfy app to manage your wealth seamlessly!

Life insurance – Calculate your Expected Term Insurance Coverage Requirement

If you are the sole breadwinner of your family or have someone dependent on you financially, the thought of getting life insurance must have occurred to you. After all, you can never predict which curve ball life will throw at you next, and it is critical to always stay prepared.

Moreover, the COVID-19 pandemic has truly driven home the point as the need to buy life insurance has grown considerably. So, if you are considering getting term insurance, keep reading.

Parameters to consider

Some of the parameters to consider before you select your life insurance cover include:

  • Age

Your age when buying life insurance is a significant parameter that can determine the amount you require. This is because, at different life stages, your financial liabilities can change drastically.

  • Income level

Naturally, your income level is a critical aspect in determining how much insurance you can afford. After buying the insurance, you should pay the premium regularly to keep the policy in force. Thus, your income should support the expense, and the coverage should be enough to support your family.

  • Financial goals

As you know, fulfilling life goals like buying a house or sponsoring your child’s education requires adequate financial assistance. And when buying life insurance, you must ensure that these goals are fulfilled even after your unexpected demise.

Additional Read: The relevance of insurance in your financial plan

How to calculate expected term insurance coverage

There are multiple methods to calculate how much life insurance coverage you require. Here are the 4 most effective strategies:

Human life value

According to this method, the life insurance coverage you need is based on your economic value to your family. Simply put, the amount of income that they can expect you to earn in the future. The inflation rate is also considered in this method, and it is a common strategy used by insurance companies. In fact, you can use a human life value calculator online to calculate the amount in seconds.

Income replacement value

This method concentrates on replacing your lost income after your demise so that your family can continue the same lifestyle that they follow currently. The most straightforward way to calculate the income replacement value is:

Current annual income X number of years left for retirement.

Expense replacement

As the term suggests, this approach considers your daily expenses, outstanding loans, and the critical milestones in your family like wedding, retirement and your child’s education. Next, you deduct the existing investments such as mutual funds and assets to get the amount of life insurance coverage required.

Many experts recommend this method as it can give you an accurate picture of the insurance coverage amount that can cover your expenses.

Additional Read: All You Need to Know about Different Types of Insurance and Their Uses

Underwriter’s thumb rule

According to the Underwriter’s thumb rule method, your life insurance coverage must be 10 times your annual income. So, for example, if your annual income is Rs 10 lakhs, you should have a life cover of at least Rs 1 crore.

However, many investment advisors don’t entirely agree with this approach and suggest that your insurance cover be 15-20 times your annual income.

Parting words

The amount of life insurance you need differs from person to person and can even change with your age and lifestyle. To manage your investments and insurance needs from the comfort of your home, download the Moneyfy app by Tata Capital. You can do thorough research and pick the ideal investment products based on your lifestyle and goals!

Know all about MF Central – Newly Launched Service from CAMS and Kfintech

Have you recently entered the mutual fund industry and are struggling with the different procedures? If yes, this article will resonate with you.

Undoubtedly, investing in mutual funds has become easier than before due to more awareness and technological advancement. However, it can be tricky to register complaints and get them resolved as different fund houses follow different procedures. Therefore, the mutual fund industry has come together to launch a new mutual fund platform called MF Central to deliver an elevated experience to the investors. Let’s dive deeper to learn more about this new service.

What is MF Central?

MF Central is a collaborative initiative by KFin Technologies (KFintech) and Computer Age Management Services (CAMS) to enhance MF investors’ service experience. This one-of-a-kind digital platform is a mutual fund transaction portal that can fetch all your investments in a consolidated list. Simply put, it brings the entire mutual fund industry under one roof for the investor.

Here are a few features of MF Central:

  • Unlike a regular online portal, MF Central doesn’t require you to open an account or fill up forms and perform KYC formalities.
  • All you have to do is enter your Permanent Account Number (PAN) and mobile number to get your investment details.
  • You can update your email address or phone number in any existing MF folio.
  • You can initiate a transmission request in case a loved one has passed away and bequeathed mutual fund units to you.
  • MF Central will be gradually launched in 3 different phases.
  • Currently, the first phase has been launched that will allow you to make non-financial transactions and provide a single view of your investment portfolio, a consolidated account statement (CAS), and unclaimed dividends.
  • Phase 2 will introduce a mobile application, and phase 3 will allow you to buy and sell mutual fund units.
  • Later, the distributors will also be able to log in and execute your transactions for you.

Additional Read: How to Change Your Bank Account Linked to Your Folio Through MFCentral

What is the objective of the platform?

In July 2021, the Securities and Exchange Board of India (SEBI) asked the Mutual fund Registrar and Transfer Agents (RTAs) to develop a common user-friendly platform for mutual fund transactions. Cut to 23rd September 2021, RTAs, KFintech and CAMS launched the MF Central platform. The aim was to make mutual fund transactions more convenient and simplify the experience for investors.

Moreover, MF Central can help investors file complaints or initiate service requests with any fund house, transfer agent or SEBI easily. The platform will also keep a record of your pending complaints that are not resolved yet.

Once all the phases are complete, you will be able to make all financial and non-financial transactions from a single platform and save time, effort, and paperwork!

Additional Read: What Are the Advantages of Investing in Mutual Funds?

In a nutshell

Ultimately, SEBI expects that MF Central will help achieve better growth and penetration of the mutual fund industry. If you are ready to invest your hard-earned money in mutual funds, download the Moneyfy app by Tata Capital. With Moneyfy, your MF journey will become hassle-free and rewarding as you can compare and invest in different funds from the comfort of your home!

Know All About Business Cycle Funds

While it may sound novel to many investors, a business cycle fund has been around for a few years now. Through this scheme of funds, you can create wealth in the long-term as it predominantly invests in equity and equity-related instruments.

Have these relatively new funds been successful? For the most part, yes! In fact, year-on-year trends clearly show that these funds outperformed broader indices, especially when put to test when the market was especially volatile.

What are Business Cycle Funds?

Decoding this type of mutual fund is not that challenging if you know what instruments it bets on. While creating business cycle funds, fund managers identify certain sectors expected to see positive growth or a quick turnaround within their business cycle and invest in them.

Typically, stocks of industries like oil, gas, metal, and such form a robust base for business cycle funds. These funds take a top-down approach, wherein the fund manager first looks at a particular sector or theme, evaluates it growth, and invests in it.

Such an approach is novel because most Indian investors follow a bottom-up approach, meaning they pick stocks of sectors that have completed an entire business cycle and are hopefully doing well. However, investing in business cycle mutual funds comes with its own share of benefits. Let’s ponder upon them in the next section.

Additional Read: Is it Advisable to Switch Mutual Funds for Better Results?

Who Should Invest in Business Cycle Funds?

One thing is for certain that these funds require a substantial amount of foresight on the fund manager’s part, as they are betting on sectors expected to do well. But, mostly experienced fund managers who have spent a significant amount of time within the mutual fund economy ready these funds for investment.

Moreover, even though these funds are new to the market, they promise exceptional returns, provided the sector completes a successful business cycle. Therefore, it is best suited for investors who can stomach moderate to high risks and have a relatively long investment horizon to enjoy substantial returns.

Business cycle funds are also a great addition to your financial portfolio if you wish to diversify it. Filling up your mutual fund kitty with only debt-linked funds might greatly mitigate risk but will provide low to moderate returns.

Supplement these with equity-linked mutual funds like business cycle funds to bump your returns capacity. With both types of mutual funds adorning your financial portfolio, your chances of growing your wealth go up tenfold.

Additional Read: How to Manage Your Mutual Funds Smartly/Wisely

The bottom line

If you’re wondering how to begin your investment journey in business cycle funds, Tata Capital Moneyfy is an excellent place to start. We launched the Tata Business Cycle Fund not too long ago. This thematic/sectoral open-ended equity product invests in businesses that are expected to grow.

To know more or invest in this type of mutual fund, visit our website, and create your account. You can also select from an assortment of different types of debt and equity mutual funds to further expand your mutual fund portfolio through Moneyfy app.

If you wish to invest in mutual funds indirectly, start a monthly SIP with us for as low as Rs. 500. So, why wait? Log on to Tata Capital Moneyfy and manage your wealth the best way you can.