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Ans- A fund house or an asset management company is the company that manages Mutual Funds. the job of a fund house is to invest pooled funds of retail and institutional investors in equity, fixed income or other such securities in line with the stated investment objective of the fund
ANS- The total value of a fund’s Cash and Securities less its liabilities and obligations.
3- what is fund portfolio?
ans- A group of securities held by the mutual fund. A portfolio could be a mixture of stock, bonds, and cash.
4- What is the Net asset value (NAV)?
The price or value of one unit of a fund. It is calculated by summing the current market values of all securities held by the fund, adding in cash and any accrued income, then subtracting liabilities and dividing the result by the number of units outstanding. Most open-ended funds companies compute NAVs once a day based on closing market prices.
6.How are mutual funds classified functionally? Functional classification of mutual funds is done on the following basis: · Open-ended scheme |
7.How are mutual funds classified geographically? Mutual funds can be classified geographically on the following basis: · Domestic funds |
8.What are the different plans that mutual funds offer? Mutual Funds in order to cater to a range of investors, have various investment plans. Some of the important investment plans include: · Growth Plan |
9.What is a 401(k) plan? A popular contribution program in the USA, available through many employers. Within these tax-sheltered plans, participants often can choose mutual funds as one or more of the investment choices. This plan (or even a variant) is yet to be introduced in India. |
10.What are the advantages of investing in a mutual fund? Mutual funds are superior to other comparable investment avenues because of the following reasons: Investors are exposed to reduced investment risk due to portfolio diversification, economies of scale in transaction cost and professional management. · Limited Risk |
11.Who is a custodian? The custodian, an independent organization, has the physical possession of all securities purchased by the mutual fund, and undertakes responsibility for its handling and safekeeping. For instance, the Stock Holding Corporation of India Ltd (SCHIL) is the custodian for most fund houses in the country. |
12.What is an Asset Management Company (AMC)? A highly regulated organization that pools money from many people into a portfolio structured to achieve certain objectives. Hence it is termed as an Asset Management Company. Typically an AMC manages several funds – open-end /closed-end across several categories – growth, income, balanced. Every mutual fund has an AMC associated with it. For instance, Alliance Capital Mutual Fund is associated with Alliance Capital Asset Management Company Ltd. |
13.What is load?It is a charge collected by a mutual fund when it sells units. It can be either front-end load (i.e., the charge is collected when an investor buys the units) or back-end load (i.e, the charge collected when the investor sells back the units). Some schemes do not charge any load and are called No Load Schemes |
14.What is an ex-dividend date?Normally, one business day after the record date. Investors purchasing unit on or after the ex-dividend date are not entitled to collect dividends or bonus units. The NAV falls by the amount of the dividend distributed and/or bonus issued. The terms ex-bonus and ex-dividend often are used synonymously. For instance, if the record date for dividend is October 15th, then investors who don’t have their names in the list of unitholders as on that day, will not receive dividend. This works very similar to dividend and bonus declarations in the case of stocks. |
15.How does one calculate the expense ratio for a fund?The expense ratio for a fund is the annual expenses of a fund (at the end of the financial year), including the management fee, administrative costs, divided by the number of units on that day. |
16.How relevant is the expense ratio?As is evident from the definition, a lower expense ratio underlines the efficiency of a fund. This is a yardstick that investors need to apply to gauge the efficiency (or lack of it) between funds. |
17.What is cheque-writing facility?A service enabling investors to write cheques against their mutual fund account balances. Cheques usually must meet a certain minimum amount and the service is restricted to money-market funds. |
18.What is a contingent deferred sales charge (or CDSC)?A back-end load imposed on an investor if he exits from the fund before a pre-determined period (say 6 months). The charges decline the longer an investor stays invested with a fund. |
19.What is a daily dividend fund?A fund (money-market or bond) that calculates dividends daily, paying out or reinvesting the same. |
20.What are derivatives?Financial instruments based on some primary underlying asset or index such as a stock, bond, commodity, or a benchmark of stock prices. Derivative securities fluctuate up and down in tandem with the primary security. Derivatives often are leveraged, making them more volatile. They can be used to speculate as well as to reduce or control an unwanted risk. Options and futures are standardized derivatives. Others are customized to meet specific needs. |
21.What is an Initial public offering (IPO)?The sale of a company’s shares or a fund house’s mutual fund to investors for the first time. |
22.What is an asset management fee?The fee charged by the asset management company (AMC) for portfolio management. The fee charged on an annual basis is calculated as the percentage of net assets under management. |
23.What is growth investing?A popular investment style whereby fund managers identify companies showing promise of above-average earnings. Stocks are held primarily for price appreciation as opposed to dividend income. Growth investors (or managers) are willing to pay a premium to acquire a stock if they feel it has the right prospects. Growth investing is an alternative to value investing. For instance, buying an over-valued software stock would be the part of a growth manager’s investment strategy. |
24.What is value investing?As opposed to growth investors, value investors (or managers) focus on identifying under-priced stocks. Value investors look out for stocks selling at low prices, but which have the potential to give attractive returns in future. |
25. what is hedging?A general term used to describe any of several risk-reduction strategies. A fund manager might partially hedge against a market decline simply by moving a larger fraction of the portfolio into cash. Alternatively, the manager could sell stock-index futures contracts. If the market falls, the gains on the shorted futures would more or less offset the decline in the portfolio’s value. |
26.What is passive investing?This is the investment style espoused by index fund managers who simply invest by benchmarking their portfolio to a common stock market index like the BSE-30 or the SP CNX-50. The fund manager only invests in stocks in the index in exactly the same proportion. There is no attempt to beat the benchmark index, but to simply replicate it, and therefore it is called as passive investing. The index fund will never outperform the benchmark index, nor does it attempt to. |
27.How to add/cancel/modify nominee?
Nomination Registration
The SEBI (Mutual Fund) Regulations, 1996, notifies that the mutual fund shall provide for
nomination facility to the unit holders to nominate a person in whose favor the units shall
be transmitted in the event of death of the unit holder. In accordance, with the same, the
AMC provides for the nomination facility as permitted under the Regulations.
Nomination facility:
Nomination Modification/Cancellation
28.What is the process for changing an address in the folio?
Change of Address:
In case of change of address for KYC not complied(not verified) folios, the investors shall be required to submit the below stated documents:
However, it is advisable for these investors to complete the KYC process.
For investors holding units in demat mode, the procedure for change in address would be as determined by the depository participant.
Note:
29.What is the process for changing bank details?
Change of Bank Mandate:
In case of change of bank request, the investors shall be required to submit the below stated supporting documents to effect the change:
or
In case the request for the change in bank account information and redemption request is in the same transaction slip or letter, such change of bank mandate shall not be processed.
However, the valid redemption transaction will be processed and the payout would be released as per the specified service standards and the last registered bank account shall be used for all the purposes.
Cooling Period:
If the investor submits redemption request accompanied with a standalone request for change of Bank mandate or submits a redemption request within seven days from the date submission of a request for change of Bank mandate details, the AMC will process the redemption but the release of redemption proceeds shall be deferred on account of additional verification, but will be within the regulatory limits as specified by SEBI from time to time
Change of Bank Mandate for Systematic Investment Plan (SIP)
In order to change the existing bank account for SIP, investors need to submit following documents 30 days before the next SIP debit date:
30.How do I have my name corrected in the folio?
Name Change
Documents required for effecting Name change
Name change request can be accepted from an investor, in the below-mentioned scenario(s)
OR
31.What is the process of lien marking/cancellation?
Lien registration procedure.
Lien registration- Following documents are required
Lien cancellation procedure.
32.What is the process of updating change of status from Minor to Major?
Investments made on behalf of Minors
Upon attaining majority, a minor has to write to the fund, giving his/her specimen signature duly authenticated by his/her banker, as well his/her new bank mandate, PAN details, KYC acknowledgement letter, in order to facilitate the Fund to update its records and permit the erstwhile minor to operate the account in his/her own right.
List of standard documents to change account status from minor to major.
Q-1 Why should I buy term life insurance?
ANS-Term insurance offers one of the most affordable ways to protect your family’s finances if something were to happen to you. It offers a death benefit and some plans even have permanent disability riders. Many insurance companies offer Term insurance for a period of 5, 10, 15, 20 and 30 years thus offering relatively long Term of coverage. You should choose a term that at least covers you for the earning years of your life, i.e. 58 – {your current age}.
Q-2 What are term life insurance disadvantages?
ANS-Although the premium of term insurance is very low at the younger age, once the policy term expires after the maximum duration, premiums increase as they are primarily age-related. Generally, the policy doesn’t offer cash value or paid-up insurance so nothing is paid to the insured if he survives the policy duration
Q-3 When is term life insurance the right choice?
ANS-If you wish to have a life insurance with good coverage without having to pay the large amount as premium, for a fixed duration, term insurance is an ideal option. It is most suitable to cover your fixed goals that may disappear over time.
Q-4 How much term life insurance do I need?
ANS-Your coverage need will depend on your individual circumstances. Factors you should consider include anticipated final expenses, living expenses for your surviving family members, any outstanding loans (e.g. auto and credit cards), the outstanding balance on your mortgage, anticipated education costs for your children, estate taxes, and business continuation expenses.
Q-5 What affects the premium rates of my term life insurance?
Ans-Factors affecting the premium of term life insurance are:
• Age of the insured – Life insurance premiums are age-linked. Younger the person lesser the premium. Life insurance premiums vary for different age brackets.
• Smokers or non-smokers – For many insurance companies, premiums are different for smokers and non-smokers. Smokers or tobacco users may have to pay higher premiums depending on the insurance company norms.
• Sex of the insured– term insurance for males will cost more than that for females for the same sum assured.
• Medical conditions – Medical condition of the person being insured is important and medical check-up compulsory for term life insurance. The premium may vary as per the individual medical condition.
• Dangerous hobbies – If you indulge in dangerous hobbies like parachute jumping, race car driving etc. you might either be declined insurance or may have to pay the higher premium based on the insurance company policy.
Q-6 Can the premium of my term insurance change?
ANS- Premium of a term insurance remains the same throughout the term of the policy provided all other factors remain the same.
Q-7 Is medical examination necessary for the term insurance?
ans-medical examination is necessary for all term insurance.
Q-8 Is my term life insurance policy convertible?
ans-Many term life insurance policies are convertible to other traditional plans like endowment plans or money back plans etc. Convertible policies can generally be converted to permanent policies within a specified period of time from policy issue, without providing new evidence of insurability (unless you increase your benefits). It needs to be identified at the time of buying the policy for the convertibility feature.
Q-9 What is the Accidental Death Benefit rider?
ANS-The accidental death benefit rider is an optional policy provision where in event of death due to an accident, an additional amount is paid by the insurance company. This amount is over and above the basic sum insured that the beneficiary will get for your term insurance.
Q-10 What is the Waiver of Premium rider?
ANS-The waiver of premium rider is an optional provision that protects your life insurance policy to be cancelled even when you are not able to pay the premiums in event of your total disability. The payment of life insurance policy’s premium is waived off.
Q-11 What is a p re-medical exam and how do I schedule one?
ANS-To take the term life insurance, you need to undergo a medical examination called the pre-medical. A basic pre-medical exam includes the following:
• Height/weight measurements
• Blood pressure readings
• Heart rate readings
• Urine sample
• Blood sample
• Medical history questionnaire
After receiving your completed application form, the insurance company representative contacts you to arrange your exam at a time and location most convenient to you.
Q-12 can I take more than one term plan?
ans-Yes, you can take more than one term insurance plan. It needs to be declared to the insurance companies regarding the same
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