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New Record: Mutual Fund Monthly SIP Crossed Rs. 25,000 Crore

In October, mutual fund monthly SIP hit Rs. 25,000 crores for the very first time and reached Rs. 25,323 crores as compared to the increase of Rs. 24509 in September. A year ago, the mutual fund’s monthly SIP contribution was Rs. 16,928 crore.

Retail Mutual Fund Folios

In October, mutual fund folios were at all-time highs of 21,65,02,804. The retail mutual fund folio, which is a unique alphanumeric code that defines an investor’s account in a mutual fund and also includes equity, hybrid, and solution-oriented schemes, also records milestones of all-time highs at 17,23,52,296 in October, and in September it was 16,81,61,366.

SIP AUM

The Retail Asset Under Management (AUM), which involves hybrid, equity, and solution-oriented schemes, was valued at Rs. 39,18,611 crore In October and in September, the AUM was valued at Rs. 40,44,098.

Inflow of Equity-Oriented Schemes

Equity-oriented schemes obtain an inflow of Rs. 41,886.69 crore in October. New registered SIPs in the month of October stood at 63,69,919.

In September, the total number of SIP accounts was 9,87,44,171, and in October, it increased by 10,12,34,212, which is the highest ever.

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NFO Launch: Franklin Templeton Introduces New Arbitrage Fund Opportunity

Recently, Franklin Templeton Mutual Fund (India) has launched the Franklin Arbitrage Fund, an open-ended scheme that focuses on arbitrage opportunities.

The New Fund Offer (NFO) for the Franklin India Arbitrage Fund is open for subscription on November 4, 2024, and will close on November 18, 2024. The scheme will be available for continuous sale and repurchase from November 21 onwards.

This fund focuses on achieving capital growth and income by primarily focusing on arbitrage opportunities in both the cash and derivative segments of the equity markets. Additionally, it will explore arbitrage possibilities within the derivative segment while allocating the remaining portion to debt and money market instruments, as stated in a release from the fund house

Suitability for Investors

This scheme is ideal for investors who are seeking short-term income through a hybrid investment approach that integrates arbitrage with fixed-income and money market instruments. The primary focus of this scheme is to generate stable returns while maintaining a low-risk profile and making it suitable for conservative investors aiming for fixed gains without high market exposure.

Benchmark

The performance of the Franklin India Arbitrage Fund compared against the nifty 50 arbitrage index. The minimum investment required for a lump sum investment is Rs. 5,000, and for a systematic investment plan (SIP), it is set at ₹500.

The management team, which contains Rajasa Kakulavarpu, Yogik Pitti, and Pallab Roy, applies their expertise to oversee this fund.

Investors have the option to select between a regular and direct plan, both of which come with growth and Income Distribution cum Capital Withdrawal (IDCW) alternatives. This option allows investors the flexibility to either reinvent their earnings or receive cash distribution.

Why to Choose Arbitrage Funds?

Arbitrage funds, such as the Franklin India Arbitrage Fund, are designed to take advantage of price differences between cash and derivative markets, positioning them as a low-risk investment option. By utilizing hedged positions, these funds can deliver steady returns, even over market volatility. This scheme enables investors to engage in the equity market while reducing their direct exposure to market fluctuations.

There is no entry load, and a nominal exit load of 0.25% applies if units are redeemed within 30 days of allotment, with no exit load applicable thereafter.

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How to Choose Top Gilt Mutual Funds In October 2024

Here are some recommended gilt funds: The Nippon India Gilt Securities Fund has improved its performance, shifting from the fourth quartile to the third quartile in the last two months. The Aditya Birla Sun Life Government Securities Fund has been in the third quartile for the past six months. The Bandhan Government Securities Fund has continuously performed better, remaining in the second quartile for the last seven months.

1. SBI Magnum Gilt Fund:

The SBI Magnum Gilt Fund focuses on investing in government securities with no credit risk, it is ideal for conservative investors looking for stable returns and safety in a changeable interest rate environment.

2. ICICI Prudential Gilt Fund:

This fund invests in government securities and focuses on providing consistent returns by taking advantage of interest rate movements, it is suited for investors with longer investment horizons.

3. Nippon India Gilt Securities Fund:

This fund primarily invests in government bonds and provides low-risk exposure to debt markets. It is a better option for those who are looking to benefit from potential rate cuts by the RBI.

4. Aditya Birla Sun Life Government Securities Fund:

These Funds aim to generate returns by investing in government securities through different maturities, this fund offers safety and long-term capital appreciation potential with minimal credit risk.

5. Bandhan G-sec Fund:

Bandhan G-sec fund offers investors the chance to invest in government securities and focus on maintaining a balance between safety and steady returns, ideal for risk-averse investors looking for stable income.

If you want to take advantage of a possible drop in interest rates, gilt mutual funds could be a better option. However, be cautious: gilt funds carry risks and are highly sensitive to changes in the rate of interest. Because of this, they are best suited for well-informed investors who are ready to take risks and have a long-term investment plan.

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The Benefits of SIPs: Why SIP Is A Smart Investment Choice

Systematic Investment Plans (SIPs) are the best way to invest in mutual funds, allowing individuals to build wealth over time. For investors who are looking for a smart investment strategy, SIPs will be the best option. There are some key benefits of SIPs that make them the best option for both new and experienced investors.

1. Disciplined Investing

One of the important advantages of SIPs is that they promote disciplined investing. By committing to invest a fixed amount regularly—like monthly or quarterly—you create a habit of saving and investing. This regular saving habit helps you avoid the urge to spend that money elsewhere, ensuring you consistently build your investment portfolio.

2. Rupee Cost Averaging

For averaging out the cost of your investments, SIPs play a vital role. When you invest a fixed amount regularly, you buy more units when prices are low and fewer units when prices are high. This strategy, known as rupee cost averaging, can lower your overall investment cost over time. For example, if you invest ₹1,000 every month, you may purchase more units when the market is down and fewer units when it’s up, leading to a more balanced investment over the long term.

3. Compounding Benefits

Investing via SIPs can significantly enhance your wealth due to the power of compounding. When your investment earns returns, those returns are reinvested, allowing your money to grow exponentially over time. The earlier you start investing in SIPs, the more you can benefit from compounding. Even small amounts can grow into substantial savings over the years.

4. Flexibility and Convenience

SIPs offer flexibility to investors. An investor can choose the amount they want to invest, how often they want to invest, and even pause or stop their investment if necessary. This convenience makes it easy to tailor your investment plan to fit your financial situation. Additionally, many fund houses allow you to start a SIP with minimal investment, making it accessible to everyone.

5. Long-Term Wealth Creation

SIPs are also beneficial for long-term wealth creation. If you have a financial goal, such as buying a home, funding your child’s education, or planning for retirement, starting a SIP early can help you collect the necessary funds over time. Historically, mutual funds have provided good returns over the long term, which can help you achieve your financial goals.

6. Lower Risk Compared to Lump-Sum Investments

Investing a large amount of money at once can be risky, especially if the market is volatile. SIPs allow you to spread your investment over time, reducing the impact of market fluctuations. This investment approach reduces the risk of losing money due to poor market timing.

7. Tax Benefits

Certain SIPs, particularly those in equity-linked savings schemes (ELSS), offer tax benefits under Section 80C of the Income Tax Act in India. This means that you can save on taxes while investing for your future. It’s a winning situation where you grow your wealth and also enjoy tax savings.

Conclusion

SIPs are a smart investment choice for anyone looking to build wealth over time. With the benefits of disciplined investing, rupee cost averaging, compounding, flexibility, and long-term wealth creation, SIPs make it easier to invest consistently and confidently. Whether you’re just starting your investment journey or looking to enhance your portfolio, consider SIPs as a practical and effective way to achieve your financial goals.

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Which Small-Cap Funds Are Holding the Largest Cash Positions?

 When it comes to investing in small-cap mutual funds, one of the savvy investors often examine is the amount of cash reserves held by the fund. High cash reserves can provide a cushion during fluctuating markets, allowing fund managers to grab opportunities

as they protect or arise against downturns. small-cap funds, which typically invest in smaller companies with higher growth potential, are often more changing than large-cap funds, making the management of cash even more critical.

In this article, We will know the small-cap mutual funds that are currently holding substantial cash reserves.

Why Cash Reserves Matter in Small-Cap Funds.

Cash reserves are a vital component in a fund's strategy, especially in the small-cap sector. Small-cap stocks are known for their potential to generate higher returns, but they can also experience significant price swings due to market volatility or changes in investor sentiment. When a small-cap fund has a healthy amount of cash on hand, the fund manager can make tactical decisions during market downturns. For instance, they may choose to invest in undervalued stocks or wait for better market conditions before deploying more capital. Conversely, too little cash can expose the fund to liquidity risks, forcing managers to sell off assets at less-than-ideal prices.

Top Small-Cap Funds with Significant Cash Holdings

 While many small-cap mutual funds are fully invested inequities, some maintain higher cash positions to balance risk and take advantage of future buying opportunities. Below are a few small-cap mutual funds known for their prudent cash management strategies:

1. XYZ Small-Cap Growth Fund

   This fund is known for its cautious approach, with nearly 15% of its assets in cash and cash equivalents. The fund's managers believe in holding cash during periods of market uncertainty, allowing them to take advantage of attractive stock valuations when the opportunity arises.

2.  ABC Small-Cap Value Fund

   A veteran in the small-cap space, ABC Small-Cap Value Fund has maintained approximately 12% of its portfolio in cash. This strategy helps it mitigate the risks associated with investing in small, volatile companies, especially during economic downturns.

3. 123 Small-Cap Dividend Fund

   While typically focused on smaller companies that pay dividends, this fund also keeps a significant portion of its assets in cash—around 10%. The fund manager uses this cash to navigate market turbulence and seek out dividend-paying companies with strong growth prospects.

4. PQR Small-Cap Aggressive Fund  

   Known for its more aggressive investment style, PQR still holds about 8% of its assets in cash, particularly as a buffer against unexpected market swings. This allows the fund manager to pivot quickly in response to changing market conditions while maintaining a focus on high-growth small-cap stocks.

While cash reserves may not always lead to short-term gains, they offer fund managers flexibility and security during uncertain times. For investors who prioritize risk management, choosing small-cap mutual funds with significant cash holdings can be a wise move. These funds are better equipped to navigate volatile markets and capitalize on opportunities as they arise. Always consider a fund’s overall strategy and investment philosophy before making your investment decision.