The truth about mutual funds and how to select right scheme  

November 22, 2011

Moneylife Foundation conducted its 94th seminar – this time on mutual funds.

Moneylife Digital Team

In an interactive and lively session on mutual funds (MFs), Debashis Basu, Founder-Trustee of Moneylife Foundation and Editor & Publisher of Moneylife provided a perspective on how one should invest money in equity mutual funds, apart from explaining the different types of mutual funds and how to choose the best schemes.

Mr Basu conducted the workshop, revealing several hidden aspects about mutual funds. This was the 94th workshop organised by the Foundation over the past 21 months that drew and engaged the audience.

Mr Basu also analysed on the benefits and personal risks associated with different types of mutual funds available in the market and investment strategies for each individual. He said that concepts like asking a person to aim at his/her risk-taking ability through a set of questions unrelated to finance were misleading. In reality, everybody invest for returns and nobody wants to lose money. So where to invest is important but how to and how much to invest is even more critical, he added.
He explained that capital protection fund or monthly income plans are a misnomer. They invest 80% in fixed income securities and 20% in equity; how would capital be protected when the equities market crash or bond prices don’t go up? It would make more sense for the investor to put his money in a fixed deposit if he seeks no risk and wishes to protect his capital.