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What Are Mutual Funds?

Mutual Funds are one of the most popular and efficient investment options in India today. A mutual fund collects money from thousands of investors who share a common financial objective. This pooled amount is then managed by professional Asset Management Companies (AMCs), which invest the funds in equities, bonds, government securities, and other financial instruments.

Mutual funds allow everyday investors to benefit from expert fund management, diversification, and long-term wealth creation — without needing deep market knowledge or research.

The profits generated by the fund are distributed proportionately among all investors based on their unit holdings.

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 Modes of Investing in Mutual Funds

Mutual fund investments can be made through several convenient channels:

✔  Direct Plan
Buy directly from the AMC’s website or office.
Lowest expense ratio (no distributor commission).

✔  Regular Plan
Invest through financial advisors or distributors.
Includes commission-based support and guidance.

✔  Online Investment Platforms
Digital platforms/apps offer easy comparison, tracking, and portfolio management.

✔  Offline Investment
Invest through AMC branches or authorised mutual fund distributors.

✔  SIP – Systematic Investment Plan

✔  STP – Systematic Transfer Plan

✔  SWP – Systematic Withdrawal Plan

✔  DRIP – Dividend Reinvestment Plan
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 Advantages of Mutual Funds

Lower transaction charges due to economies of scale.

✔ Professional Fund Management Experienced fund managers make investment decisions on your behalf.

✔ High Liquidity 

Most funds can be easily redeemed at prevailing NAV rates.

✔ Diversification 

Investments spread across multiple assets reduce overall risk.

✔ Transparency 

Regular NAV updates, portfolio disclosures, and fact sheets.

✔ Power of Compounding 

Reinvesting earnings helps grow wealth significantly over time. 

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 How to Select the Best Mutual Fund

✔  Identify Your Financial Goal
Be clear whether your objective is:

Short-term gains

Long-term wealth creation

Retirement planning

Children’s education

Tax saving

✔  Analyze Fund Performance
Check historical returns over 3, 5, and 10 years.
Consistency matters more than short-term spikes.

✔  Understand Your Risk Appetite
High risk → Equity funds

Moderate risk → Hybrid funds

Low risk → Debt funds

✔  Check AUM (Assets Under Management)

Higher AUM indicates investor confidence and strong performance. 

Types of Mutual Funds 

Equity Mutual Funds 

Invest primarily (65%+) in equity shares of listed companies. Best for long-term growth.

Types of Equity 

Funds Large Cap Funds

Mid Cap Funds

Small Cap Funds

Multi-Cap Funds

Top Equity Mutual Funds (5-Year Returns)

Fund Name Plan 5-Year Return
Motilal Oswal Midcap Fund Direct Growth 35.27%
SBI Contra Fund Regular Plan 25.74%
Nippon India Growth Fund Direct Plan 25.63%
Edelweiss Mid Cap Fund Direct Plan 25.22%

Debt Mutual Funds 

Invest in government securities, corporate bonds, and money market instruments. Lower risk and stable returns.

Types of Debt 

Funds Money Market Funds

Corporate Bond Funds

Liquid Funds

Overnight Funds

Top Debt Funds (1-Year Returns)

Fund Name Return
Bandhan Government Securities Fund 8.56%
ICICI Prudential Constant Maturity Gilt Fund 8.49%
ICICI Prudential Short Term Fund 8.10%
HDFC Nifty G-Sec July 2031 Index Fund 8.06%
Hybrid Mutual Funds
Invest in a mix of equity + debt to balance risk and return.

Types of Hybrid Funds
Aggressive Hybrid

Multi-Asset Allocation

Dynamic Asset Allocation

Arbitrage Funds

Top Hybrid Funds (1-Year Returns)

Fund Name Return
Bank of India Mid & Small Cap Equity & Debt Fund 25.74%
ICICI Prudential Equity & Debt Fund 25.69%
HDFC Balanced Advantage Fund 25.00%
ICICI Prudential Multi Asset Fund 24.25%
FAQs – Mutual Fund Investments

1. What is NAV (Net Asset Value)?
NAV is the per-unit price of a mutual fund — calculated daily based on market value of assets minus liabilities.

2. Can I redeem mutual funds anytime?
Yes, most open-ended funds allow redemption anytime at current NAV.

3. Difference between Large-Cap, Mid-Cap and Small-Cap Funds?
Large Cap: Top 100 companies

Mid Cap: Ranked 101 to 250

Small Cap: 251 and above
Higher risk → higher return potential.

4. How are mutual fund returns taxed?
Tax depends on:

Type of fund (equity/debt)

Holding period

Applicable capital gains tax laws

5. Are mutual funds safe?
Mutual funds carry market risk. However, diversification and professional management help reduce risk.

6. What is Bharat Finserv’s commission on mutual funds?
Bharat Finserv offers 0% commission on mutual fund investments.
You can explore direct mutual fund options with no hidden fees and complete transparency.

Need Help Choosing the Right Mutual Fund?
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