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How Funds Can Earn Money for You

You can earn money from your investment in three ways:

  • Dividend Payments ? A fund may earn income in the form of dividends and interest on the securities in its portfolio. The fund then pays its shareholders nearly all of the income (minus disclosed expenses) it has earned in the form of dividends.
  • Capital Gains Distributions ? The price of the securities a fund owns may increase. When a fund sells a security that has increased in price, the fund has a capital gain. At the end of the year, most funds distribute these capital gains (minus any capital losses) to investors.
  • Increased NAV ? If the market value of a fund's portfolio increases after deduction of expenses and liabilities, then the value (NAV) of the fund and its shares increases. The higher NAV reflects the higher value of your investment.

With respect to dividend payments and capital gains distributions, funds usually will give you a choice: the fund can send you a check or other form of payment, or you can have your dividends or distributions reinvested in the fund to buy more shares (often without paying an additional sales load).

Risk Profile

Different types of Equity Fundsss

  Reliance Growth Fund Reliance Vision Fund Franklin Prima Fund Birla Advantage Fund
Invested Amount on 23/03/1996 100,000 100,000 100,000 100,000
Value of Investment on 23/03/2006 1,387,213 ?? ?? Yes
No of Years of Investment 10 10 10 10
Compounded Annualised Return in % 30.08 35.31 30.22 26.58
  • Classification based on Market Capitalisation
    • Large Cap Funds - Invest in Large Cap Stocks
    • Mid Cap Fund - Invests primarily in Mid Cap Stocks
    • Small Cap Funds - Invests in Small Cap Stocks
  • Classification based on Style
    • Growth Funds ? Invests in high/fast growing companies
    • Value Funds ? Invests in out of favor stocks where the
    • market price has fallen below its intrinsic value
      - Prudential ICICI Discovery Funds
      - Templeton India Growth Funds
    • Blend Funds - No restriction based on style
      - UTI Growth & Value Fund
  • Other Classification
    • Index Funds ? Mirrors an index/benchmark returns inline of the index
    • ELSS ( Equity Linked Saving Scheme) ? An equity fund with the lock in period of 3 years with the Tax Benefit of section 80C upto an investment of Rs 100000/-
    • Sector Funds ? Invests in stocks of a particular sector
      - Pru Technolgy Fund, Franklin Pharma Fund
    • Select Sector Funds ? Invests in Multiple Sectors
      - Tata Select Sector Fund, Principal Focused Advantage Fund
  • Consistent Performance over a period
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