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SBI mutual fund: History, Investment tips and Information

Updated: Feb 03, 2020 11:22:40am
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SBI mutual fund: History, Investment tips and Information

The financial objective should not only be driven by savings, but it also has to embrace wealth appreciation across the time horizon. Over some years, mutual funds have emerged as one of the popular instruments of investment. The fundamental reason behind its popularity is the flexibility this fund provides. The provision of small investments like INR 500 through SIP and a wide range of features in the market products renders it as a lucrative pick for the investors. The State Bank of India Mutual Funds with more than 30 years of experience in fund management is one of the leading concerns in the country. Analyzing this fact, SBI MF can be a suitable option for investors willing to start their venture in the money market. Let us take a quick insight into its history, information and investment tips.

SBI mutual fund: History

The SBI Mutual Fund is a joint project between the State Bank of India and AMUNDI (a French international fund management company) which is a subsidiary collectively formed by Crédit Agricole and Société Générale. It is widely known as the SBI Mutual Fund Trustee Company Private Limited and was established as a Trust under the provisions of the Indian Trust Act 1882. This is one of India’s largest bank sponsored mutual funds with its corporate headquarter in Mumbai. This mutual fund has also launched an offshore fund, the Resurgent India Opportunity Fund. Besides, it is being listed with the Securities and Exchange Board of India (SEBI). The fund has a diverse profile of investors parking their money across 38 active schemes with the management of over INR 42,000 crore assets.

SBI mutual fund: Information

Investment in SBI mutual funds have to be carried on through the four major types of funds which are Equity Mutual Funds, Debt Mutual Funds, Tax Saving Mutual Funds and Hybrid Mutual Funds.

Equity Mutual Funds: In the equity mutual funds, the investments are largely made on large-cap, mid-cap and small-cap stocks. Over a longer duration, these funds provide a stellar performance.

Debt Mutual Funds: The Debt mutual funds of SBI has a combination of both debt and fixed income securities. The fixed-income securities comprise of the Government Securities, Treasury Bills, and Corporate Bonds and money market instruments. These securities come with a fixed rate of interest and a fixed maturity date.

Tax Saving Mutual Funds: SBI also has tax saving mutual funds that offer tax relief under Section 80C of the Income-tax Act. These equity-based funds come with a lock-in period of three years.

Hybrid Mutual Funds: Based on the investment objectives of the individuals, these hybrid funds by SBI offers investment in a mixture of debt and equity in various proportion. These have a high rate of interest and are less risky when compared to other categories of funds.

How to invest in SBI mutual funds

Investors need to login on the official website and create an account. Then they can select their prefered mutual fund scheme and evaluate certain factors like risk, NAV, performance and others. After choosing the appropriate funds, investments can be made in SIP or lumpsum via net banking mode. For the offline process, investors need to visit the branch in person. The SBI mutual fund units will be allotted to the investor within five working days. In case, the KYC has not been submitted; it needs to be carried out separately.

SBI mutual funds: Investment Tips

Know your risk tolerance: In mutual funds, there are various investments that incorporate some amount of risk. The equity funds like mid and small-cap have the highest risk, along with the highest potential returns. Debt funds in comparison offer lower risk with lower returns. The hybrid fund is a mix of both equity and debt funds, and thus it provides a balance in risk and returns. After analysing the risk and return equation, investors can pick up the best mutual funds that meet their expectations.

Be clear about your financial objective: After analysing the risk factor, the next vital thing is to determine how long you want to stay invested and how much you can invest. Mutual funds being a highly flexible tool can offer you various routes to deliver your goal.

Prefer long-term growth strategy: There is no means by which mutual funds can provide you with a short-cut route to become prosperous. There are a few short-term schemes in which you get the chance to earn — however, investments over a time horizon help in getting the highest rewards.

Monitor the funds timely to ensure success: By monitoring the funds timely, the investors can detect which scheme is working properly and which wasn’t able to perform. This will help the investor to make an informed decision and reallocate the funds in more lucrative plans.

Diversify the investments over time: In mutual funds, investors also get opportunities to diversify the funds based on the market scenario. Equity-based schemes help in wealth appreciation in long-term, while debt funds are relatively safer but offer lower returns. Diversifying the portfolio with a balanced mix of both of these sounds a much prudent choice.   

The NAV does not imply much: The NAV of the mutual funds has no implications that how the funds will perform in future. This is the main reason why mutual funds are represented by percentage growth figures.

These are some of the important information facts about SBI Mutual Funds and investors can implement these tips at the time of investment.

DISCLAIMER: This story has not been edited by KNN India staff. The view and opinion expressed in the article are of the author Prajakta Pingulkar, Zip Infosolutions Pvt Ltd.

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