Frequently Asked Questions
Find clear answers on mutual fund concepts, NAV calculation, SIP/SWP, scheme types, Direct vs Regular plans, and KYC.
Investor Hub FAQs
Clear answers to your investment questions.
A mutual fund pools money from many investors and invests it in securities — shares, bonds, money-market instruments — through a professional manager. You hold units, and the value of each unit (the NAV) moves with the portfolio. Every mutual fund in India must be registered with SEBI before it can collect money from the public.
Your money joins a common pool (the corpus). The fund manager invests it per the scheme's stated objective, the portfolio is valued every day, and gains or losses flow to all unitholders in proportion to their holding. You can see exactly what the scheme holds in its published portfolio.
Mutual funds are among the most tightly regulated investment vehicles in India — governed by the SEBI (Mutual Funds) Regulations, 2026, supervised by an independent trustee, with daily valuation and prescribed disclosure. Regulation controls conduct, not outcomes: returns are not guaranteed, and the value of your investment can go down as well as up.
The main one is that returns differ from what you expected — prices move, interest rates move, borrowers can default, and in stressed markets it can take longer to sell holdings. Different scheme types carry different levels of these risks; the Riskometer on each scheme tells you where it sits.
The Riskometer is SEBI's standard risk label — from Low to Very High — evaluated monthly against the scheme's actual portfolio. Debt schemes additionally carry a Potential Risk Class (PRC) matrix, which states the maximum interest-rate risk and credit risk the scheme is allowed to take. Both appear on the fund page and in scheme documents.
NAV (Net Asset Value) is the per-unit value of the scheme: total assets minus liabilities, divided by units outstanding. It is computed and published every business day on the fund house's website and AMFI's portal.
By structure: open-ended (buy/sell any business day at NAV) and close-ended (fixed maturity, listed on exchanges). By assets: equity, debt, hybrid, solution-oriented, and others such as index funds and ETFs. Within debt, categories differ by how long they lend and to whom — an overnight fund lends for one day at a time.
A New Fund Offer is the first subscription window for a new scheme, at the face value stated in the offer document. After allotment, an open-ended scheme reopens for ongoing purchases and redemptions at NAV.
Same portfolio, same manager. A Direct Plan has no distributor in the transaction, so no commission is embedded, its expense ratio is lower and its NAV is slightly higher. A Regular Plan includes your distributor's commission and comes with their service and advice. Which suits you depends on whether you want that intermediation.
Under Growth, all gains stay invested and show up in the NAV. Under IDCW (Income Distribution cum Capital Withdrawal), the scheme may periodically pay out from the distributable surplus — and the NAV falls to that extent, because the payout is your own capital and gains being returned, not a bonus. Growth is the default if you don't choose.
A Systematic Investment Plan invests a fixed amount on a fixed date at regular intervals. Its value is behavioural — it makes investing a habit and removes the temptation to time the market. Over time, buying at many price points averages your cost.
A Systematic Withdrawal Plan is the reverse of a SIP: a fixed amount redeemed at regular intervals, useful when you want a steady cash flow from an accumulated investment.
A Systematic Transfer Plan moves a fixed amount from one scheme to another at regular intervals — commonly from a debt scheme into an equity scheme, so a lump sum enters the market gradually instead of on one day.
Moving your investment from one scheme (or plan) to another within the same fund house. Note: a switch is a redemption from one scheme and a purchase into the other (For tax purposes).
A charge some schemes deduct from redemption proceeds if you exit within a stated period — it exists to protect long-term investors from the costs of short-term churn. Each scheme's exit load (or 'Nil') is stated in its SID and on the fund page.
KYC (Know Your Customer) verifies your identity and address once, through a SEBI-registered KYC Registration Agency, using PAN and address proof. Done once, it works across all fund houses. Check that your status shows 'Validated' — that status transacts everywhere without re-verification.
No — units can be held in a normal folio (statement form) or in demat; both are available. Demat is mandatory only for ETFs. Choose demat if you want everything with your other securities; the folio route is simpler for most investors.
Yes, NRIs can invest on a repatriable or non-repatriable basis through NRE/NRO accounts, subject to the eligibility conditions in the scheme documents. Tax on income payable to non-residents may be deducted at source.