Calculators
How do Mutual Funds add value to
your Investment Portfolio?
Diversification
Mutual funds spread your investment across various assets, helping reduce the risk tied to any one investment.
Expert Fund Management
Experienced professionals manage your investments, so you benefit from expert decisions without the hassle.
Invest More for Less
By pooling money from many investors, mutual funds unlock investment opportunities and lower
costs that individuals often can’t access on their own.
Goal-Based Fund Choices
No matter your goal—retirement, a home, or growth—there’s a mutual fund to match your needs and risk level.
Frequently Asked Questions
A mutual fund is an investment vehicle that pools money from multiple investors to invest in a diversified portfolio of securities such as stocks, bonds, and other financial instruments. It is managed by professional fund managers who make investment decisions on behalf of investors. Each investor owns units/shares of the mutual fund scheme, which represents a portion of the holdings of the fund.
Mutual funds work by collecting money from many investors and pooling it together. A professional fund manager then invests this pooled money in various securities like stocks, bonds, or other assets based on the fund's investment objective. The fund's performance is reflected in its Net Asset Value (NAV), which is calculated daily. Investors can buy or sell units at the current NAV, and returns are distributed proportionally based on the number of units held.
NAV stands for Net Asset Value, which represents the per-unit value of a mutual fund scheme. It is calculated using the formula: NAV = (Total Assets - Total Liabilities) / Total Number of Outstanding Units. NAV is computed at the end of each business day based on the closing prices of all securities in the fund's portfolio. It serves as the price at which investors can buy or sell mutual fund units.
Mutual funds are broadly categorized into:
- Equity Funds - invest primarily in stocks (minimum 65% in equity),
- Debt Funds - invest in fixed-income securities like bonds and government securities,
- Hybrid Funds - invest in a mix of equity and debt instruments,
- Solution Oriented Schemes - target specific goals like retirement or children's education,
- Other Schemes - include index funds, ETFs, and Fund of Funds (FoFs).
Expense ratio, also known as Total Expense Ratio (TER), is the annual fee charged by mutual funds to cover their operating expenses. It includes fund management fees, administrative costs, marketing expenses, custodian charges, and other operational costs. It is expressed as a percentage of the fund's average assets under management (AUM). A lower expense ratio means lower costs for investors and potentially higher net returns.
Direct mutual funds are purchased directly from the Asset Management Company (AMC) without involving any intermediary or distributor. Regular mutual funds are purchased through distributors. The key differences are, Direct plans have lower expense ratios (typically 0.5-1% lower) as no distribution commission is paid, resulting in higher NAVs and better long-term returns. Regular plans involve distributor commissions but provide advisory support and guidance.
In Growth Option, the fund reinvests all profits back into the scheme, leading to capital appreciation and higher NAV over time. No regular payouts are made. In Dividend Option (now called IDCW - Income Distribution cum Capital Withdrawal), the fund distributes profits periodically to investors, reducing the NAV accordingly.
Exit load is a fee charged by mutual funds when investors redeem (sell) their units before a specified period, typically within 1 year of investment. It is usually expressed as a percentage of the redemption amount (commonly 1% for equity funds if redeemed within 1 year). The purpose is to discourage frequent buying and selling, promote long-term investing, and compensate the fund for transaction costs.
Lock-in period is the minimum duration for which an investor must remain invested in certain mutual fund schemes before they can redeem their units. ELSS (Equity Linked Savings Scheme) funds have a mandatory 3-year lock-in period. Closed-ended funds have a fixed maturity period. Open-ended funds generally don't have lock-in periods but may have exit loads for early redemption.
Open-ended funds allow investors to buy and sell units at any time at the current NAV. They don't have a fixed maturity date and offer high liquidity. The fund can issue new units and redeem existing ones continuously. Closed-ended funds have a fixed maturity period and a predetermined number of units. Investors can only buy units during the initial offer period and can exit only at maturity or by selling on stock exchanges where they are listed.
Mutual fund returns can be calculated using:
- Absolute Return = [(Current NAV - Purchase NAV) / Purchase NAV] × 100,
- Annualized Return for periods over 1 year,
- XIRR (Extended Internal Rate of Return) for SIP investments with multiple cash flows at different times. XIRR is the most accurate method for SIP returns as it considers the timing and amount of each investment.
XIRR (Extended Internal Rate of Return) is a method to calculate annualized returns for investments with multiple cash flows at irregular intervals, such as SIP investments. It considers the exact dates and amounts of each investment and redemption, providing a more accurate measure of returns compared to simple average returns. XIRR is particularly useful for SIP investors to track their actual performance.
You can track your mutual fund portfolio through Centrum GalaxC application.
Evaluation of mutual fund performance can be done by
- Comparing returns with benchmark indices,
- Analyzing risk-adjusted ratios like Sharpe ratio, Treynor ratio, and Alpha,
- Checking consistency of performance across different market cycles,
- Comparing with peer funds in the same category,
- Evaluating fund manager's track record,
- Analyzing portfolio quality and concentration,
- Considering expense ratio and other costs.
A benchmark is a standard index or market indicator against which a mutual fund's performance is measured. For example, Nifty 50 for large-cap funds, Nifty Midcap 100 for mid-cap funds, and CRISIL Composite Bond Fund Index for debt funds. The benchmark helps investors assess whether the fund manager is adding value through active management or if the fund is outperforming/underperforming the market.
SIP is a method of investing in mutual funds where you invest a fixed amount at regular intervals (monthly, quarterly, etc.) instead of investing a lump sum. SIP offers benefits like rupee cost averaging (buying more units when NAV is low and fewer when high), disciplined investing, flexibility in amount and frequency, and the power of compounding over time. Minimum SIP amount can be as low as ₹100-500 per month.
Lump sum investment involves investing a large amount of money at once in a mutual fund scheme, rather than investing smaller amounts over time through SIP. It's suitable when you have surplus funds available and want to invest immediately.
If SIP fails due to insufficient balance,
- You'll receive SMS/email notification,
- The SIP continues and will retry next month,
- Some AMCs allow up to 3 consecutive failures before auto-cancellation,
- No penalty is charged for failures,
- You can manually pay the missed installment,
- To avoid failures, maintain sufficient balance.
Yes, NRIs can invest in Indian mutual funds subject to
- Compliance with FEMA regulations,
- Valid NRI KYC with overseas address proof,
- NRE/NRO bank account in India,
- Investment limit as per RBI guidelines,
- Some schemes may have restrictions,
- Tax implications differ, TDS applicable on capital gains and dividends,
- Repatriation rules apply for fund redemptions.
A folio number is a unique identification number assigned to an investor by the mutual fund company for each scheme. It helps track your investments, transaction history, and statements. You get a separate folio number for each fund house you invest with. The folio contains details like your personal information, nomination details, and investment transactions.
Charges includes
- Expense Ratio/TER (0.1% to 2.5% annually) which covers fund management and operational costs,
- Exit Load (typically 1% if redeemed within 1 year) which applies to most equity funds,
- Transaction charges (₹100-150 for investments above ₹10,000),
- Stamp duty (0.005% on purchase),
- Securities Transaction Tax (STT) on equity funds.
TER represents the total annual cost of managing a mutual fund, expressed as a percentage of average AUM. It includes
- Management fees paid to AMC,
- Administrative expenses,
- Distribution and marketing costs,
- Registrar and custodian charges,
- Audit and legal fees. SEBI has capped TER at 2.25% for equity funds and 2.05% for debt funds. Lower TER means higher returns for investors.
Exit load calculation, If you redeem 1000 units with NAV of ₹50 and exit load is 1%, then Exit Load = 1000 × ₹50 × 1% = ₹500. Net redemption amount = (1000 × ₹50) - ₹500 = ₹49,500. For SIP investments, exit load applies individually to each installment based on its completion of holding period.
Taxation depends on fund type and holding period, For EQUITY FUNDS: Short-term (less than 1 year), its 15% tax, Long-term (more than 1 year), its 10% tax on gains above ₹1 lakh. For DEBT FUNDS, All gains taxed as per income tax slab rates. For HYBRID FUNDS, Equity-oriented (>65% equity) taxed like equity funds, others like debt funds. Tax deducted at source (TDS) applicable in certain cases.
ELSS (Equity Linked Savings Scheme) are tax-saving mutual funds that invest primarily in equities. It’s Benefits are
- Tax deduction up to ₹1.5 lakh under Section 80C,
- Shortest lock-in period of 3 years among 80C options,
- Potential for higher returns being equity-oriented,
- Long-term capital gains taxed at 10% on gains above ₹1 lakh,
- Can save up to ₹46,800 in tax annually (30% tax bracket).
NAV application depends on
- Time of order placement and fund realization,
- Type of fund (equity/debt/liquid),
- Amount of investment. For orders placed before cut-off time with funds realized before cut-off, same day's NAV applies. For orders after cut-off or funds realized after cut-off, next business day's NAV applies.
Yes, you can place multiple purchase or redemption orders in the same mutual fund scheme on the same day. Each order will be processed separately and you will get units based on the applicable NAV for each transaction.
Settlement times depends on the fund type
- For Liquid funds - 1 business day (T+1),
- For Debt funds - 2 business days (T+2),
- For Equity funds - 3 business days (T+3). 'T' refers to the transaction date.
SWP allows you to withdraw a fixed amount regularly from your mutual fund investment. Benefits of SWP are
- Regular cash flow for expenses,
- Rupee cost averaging while selling,
- Tax efficiency - only capital gains portion is taxed,
- Flexibility to change amount or frequency,
- Ideal for retirees or those needing regular income from investments.
EQUITY FUNDS, Invest primarily in stocks (minimum 65% equity allocation), suitable for long-term wealth creation, higher risk-return profile, market-linked returns. DEBT FUNDS, Invest in fixed-income securities like government bonds, corporate bonds, treasury bills, lower risk than equity, provide steady returns. HYBRID FUNDS, Invest in both equity and debt instruments in varying proportions, offer balanced risk-return profile, different sub-categories based on equity-debt allocation.
Index funds are passively managed mutual funds that replicate the performance of a specific market index like Nifty 50, Sensex, or Nifty Midcap. They buy the same stocks in the same proportion as the index. Its benefits are
- Low expense ratio (0.1-0.5%),
- Broad market exposure,
- No fund manager risk,
- Transparent portfolio,
- Suitable for beginners and long-term investors.
ETFs are mutual fund units that trade on stock exchanges like individual stocks. They track an index, commodity, bonds, or basket of assets. It has a key features like
- Real-time trading during market hours,
- High liquidity,
- Lower expense ratios,
- Transparency in holdings,
- Can be bought/sold through demat account,
- No minimum investment amount beyond one unit.
Minimum investment varies by fund type, Lump sum typically has ₹1,000 to ₹5,000, SIP as low as ₹100-500 per month.
Asset allocation is the strategy of dividing investments among different asset classes (equity, debt, gold, real estate) to balance risk and returns. Importance of asset allocation are
- Reduces overall portfolio risk through diversification,
- Helps achieve financial goals,
- Manages volatility,
- Should match your age, risk profile, and goals,
- Requires periodic rebalancing.
Yes, switching involves redeeming units from one scheme and investing in another. Process:
- Submit switch request online through our Centrum GalaxC app,
- Units redeemed at current NAV of source scheme,
- Amount invested in target scheme at its NAV,
- May attract exit load and tax implications.
Fund manager responsibilities are
- Making investment decisions based on scheme's mandate,
- Conducting research and analysis of securities,
- Managing portfolio allocation and rebalancing,
- Monitoring market conditions and opportunities,
- Ensuring compliance with regulations,
- Communicating with investors through reports,
- Experiencing and tracking record significantly impacting fund performance.
