Mutual funds are ideal for those who have a regular income and want to invest some of their income into stock market at certain intervals.
While mutual funds managers boast about their products being different from others, they are primarily the same. One has to only decide whether to go for an open-ended or a closed-ended one.
It can be safely assumed that mutual funds provide better return than fixed deposits at A-class banks.
One can also make capital gains by trading mutual funds but it’s not much on trend.
Few weeks back I heard about possible arbitrage gain in mutual fund from dr Keshav Shrestha. He talked about the gap between ltp and nav. After that I started watching the mutual fund sector. With decreasing market mutual fund were no exception except for one day when sharesansar posted news about mutual funds. After about 2 weeks I put my money on SAEF at 16.51.
There were major two things I got to see here:
1) Although the difference between nav and ltp were more than 30% people did not invest might be due to
i) same reason in bearish mode when only very less people accumulate relatively undervalued stock
ii) there is no confidence in the market.
Smart money are not willing to enter despite the difference. They might fear the market will further go down and so will the nav of these mutual funds.
2) the maturity period of mutual fund plays a major role. The closer the maturity date the lesser the difference between ltp and nav. I found a sweet spot for saef.
Which might not be the case for you.
2 comments
Mutual funds are ideal for those who have a regular income and want to invest some of their income into stock market at certain intervals.
While mutual funds managers boast about their products being different from others, they are primarily the same. One has to only decide whether to go for an open-ended or a closed-ended one.
It can be safely assumed that mutual funds provide better return than fixed deposits at A-class banks.
One can also make capital gains by trading mutual funds but it’s not much on trend.
Few weeks back I heard about possible arbitrage gain in mutual fund from dr Keshav Shrestha. He talked about the gap between ltp and nav. After that I started watching the mutual fund sector. With decreasing market mutual fund were no exception except for one day when sharesansar posted news about mutual funds. After about 2 weeks I put my money on SAEF at 16.51.
There were major two things I got to see here:
1) Although the difference between nav and ltp were more than 30% people did not invest might be due to
i) same reason in bearish mode when only very less people accumulate relatively undervalued stock
ii) there is no confidence in the market.
Smart money are not willing to enter despite the difference. They might fear the market will further go down and so will the nav of these mutual funds.
2) the maturity period of mutual fund plays a major role. The closer the maturity date the lesser the difference between ltp and nav. I found a sweet spot for saef.
Which might not be the case for you.