NEW TO MUTUAL FUNDS?

Get To Know the WHAT, WHY AND HOWof Investing

in Mutual Funds
Question: What is a Mutual Fund?

Answer:
1. Collects a pool of money from a large number of investors and

makes the day-to-day decisions to invest it in a portfolio of

securities or other asset.
2. Mutual Funds are regulated investment option that either invests in

equity (company shares) or debt (government securities, bonds,

and other money market instruments).
Name *

Email *

Get Instant Access

BECOME AN EXPERT MUTUAL FUND INVESTOR
Sign Up For the Free Email Course

Question: Why Invest in Equity/Debt?

Answer: For long-term investments equity gives the best returns while for
short term, debt funds provide better post-tax returns and liquidity.
Question: How can investors make money investing in equities?
Answer: If you had invested INR 100 inequities in 1984 would give a
CAGR returns of 17% post-tax. Thats almost 2X returns compared to Bank
FD pre-tax and 2.5X returns post-tax.

Heres how debt funds perform against traditional investments like

Bank FDs

The Best Way to Invest in Equities and Debt- Mutual Funds

Mutual funds provide

Professional fund management- You dont have to spend much time or effort
to grow your wealth

Portfolio diversification with small amounts

Tax efficiency- Capital gains on equity mutual funds after 1 year are tax-free
and for debt funds, after 3 years, you get indexation benefits which greatly
reduces the tax liability

How to Automate Your Mutual Fund Investments and Still Get Good
Returns?
Introducing Scripbox, built by IIM alumni with decades of experience in the financial
industry. Scripbox is designed to help you grow your money.
All it takes is 4 minutes to create your FREE investing account. Let Scripbox take care of
all the heavy lifting for you.

About Us
Bl
MeCareers
Statutory Disclosures
Contact Us
Site Search

Basics of Mutual Funds

Why Invest through Mutuals Funds?

Types of Mutual Funds
FAQs on Mutual Fund
Understanding Debt Mutual Funds
Invest the RIGHT SIP amount
What are Equity Linked Savings Schemes (ELSS)?

Why Invest through Mutual Funds?

A mutual fund is an entity that pools the money of many investors -- its unit-holders -- to invest in
different securities. Investments may be in shares, debt securities, money market securities or a
combination of these. Those securities are professionally managed on behalf of the unit-holders, and
each investor holds a pro-rata share of the portfolio i.e. entitled to any profits when the securities are
sold, but subject to any losses in value as well.

What are the benefits of investing through a mutual fund

Professional Investment Management

Mutual funds hire full-time, high-level investment professionals. Funds can afford to do so as they
manage large pools of money. The managers have real-time access to crucial market information and
are able to execute trades on the largest and most cost-effective scale.

Diversification

Mutual funds invest in a broad range of securities. This limits investment risk by reducing the effect of
a possible decline in the value of any one security. Mutual fund unit-holders can benefit from
diversification techniques usually available only to investors wealthy enough to buy significant
positions in a wide variety of securities.

Low Cost

A mutual fund let's you participate in a diversified portfolio for as little as Rs.5,000/-, and sometimes
less. And with a no-load fund, you pay little or no sales charges to own them.

Convenience and Flexibility

You own just one security rather than many, yet enjoy the benefits of a diversified portfolio and a wide
range of services. Fund managers decide what securities to trade, collect the interest payments and
see that your dividends on portfolio securities are received and your rights exercised. It also uses the
services of a high quality custodian and registrar in order to make sure that your convenience remains
at the top of our mind.

Personal Service

One call puts you in touch with a specialist who can provide you with information you can use to make
your own investment choices. They will provide you personal assistance in buying and selling your
fund units, provide fund information and answer questions about your account status. Our Customer
service centers are at your service and our Marketing team would be eager to hear your comments on
our schemes.

Liquidity

A mutual fund let's you participate in a diversified portfolio for as little as Rs.5,000/-, and sometimes
less. And with a no-load fund, you pay little or no sales charges to own them.

Transparency

You get regular information on the value of your investment in addition to disclosure on the specific
investments made by the mutual fund scheme.

Types of Mutual Funds

Based on your goals and your investment horizon, Mutual Funds give you the option to invest your
money across various asset classes like equity, debt and gold. This allows you to diversify your
investments and strive to reduce your portfolio risk.

The different types of Mutual Funds are as follows -

Equity Funds / Growth Funds

Funds that invest in equity shares are called equity funds. They carry the principal objective of capital
appreciation of the investment over a medium to long-term investment horizon. Equity Funds are high
risk funds and their returns are linked to the stock markets. They are best suited for investors who are
seeking long term growth. There are different types of equity funds such as Diversified funds, Sector
specific funds and Index based funds.

Diversified Funds
These funds provide you the benefit of diversification by investing in companies spread across sectors
and market capitalisation. They are generally meant for investors who seek exposure across the
market and do not want to be restricted to any particular sector.

Sector Funds
These funds invest primarily in equity shares of companies in a particular business sector or industry.
While these funds may give higher returns, they are riskier as compared to diversified funds. Investors
need to keep a watch on the performance of those sectors/industries and must exit at an appropriate
time.

Index Funds
These funds invest in the same pattern as popular stock market indices like CNX Nifty Index and S&P
BSE Sensex. The value of the index fund varies in proportion to the benchmark index. NAV of such
schemes rise and fall in accordance with the rise and fall in the index. This would vary as compared
with the benchmark owing to a factor known as tracking error.

Tax Saving Funds

These funds offer tax benefits to investors under the Income Tax Act, 2961. Opportunities provided
under this scheme are in the form of tax rebates under section 80 C of the Income Tax Act, 1961.
They are best suited for long investors seeking tax rebate and looking for long term growth.

Debt Fund / Fixed Income Funds

These Funds invest predominantly in rated debt / fixed income securities like corporate bonds,
debentures, government securities, commercial papers and other money market instruments. They
are best suited for the medium to long-term investors who are averse to risk and seeking regular and
steady income. They are less risky when compared with equity funds.

Liquid Funds / Money Market Funds

These funds invest in highly liquid money market instruments and provide easy liquidity. The period of
investment in these funds could be as short as a day. They are ideal for Corporates, institutional
investors and business houses who invest their funds for very short periods.

Gilt Funds
These funds invest in Central and State Government securities and are best suited for the medium to
long-term investors who are averse to risk. Government securities have no default risk.

Balanced Funds
These funds invest both in equity shares and debt (fixed income) instruments and strive to provide
both growth and regular income. They are ideal for medium- to long-term investors willing to take
moderate risks.

Mutual Fund FAQs

What is a Mutual Fund?
What is an Asset Management Company?
What is NAV?
How often is the NAV declared?
What are the different types of Mutual funds?
What is Entry Load?

What is Exit Load?

What is Purchase price?
What is redemption price?
What is repurchase price?
Repurchase price is the price at which a close-ended scheme repurchases its units. Repurchase can either be at
NAV or can have an exit load.

What is a Switch?
Is there any minimum lock-in period for my units?
What are the factors that influence the performance of Mutual Funds?
Which are the valid MICR locations for ECS clearing?
Which are the valid RECS(Regional ECS) location for SIP?
Which are the valid PDC locations for SIP?
What is KYC and how to get KYC verfied ?
How to add/cancel/modify nominee ?
What is the process of changing address in the folio ?
What is the process of changing bank details ?
How do i have my name corrected in the folio ?
What is the process of updating change of status from Minor to Major ?
Whats the process of lien marking/cancellation ?
How to transfer units for investment with ICICI Prudential Mutual Fund (Transmission Process)
?
What is a Mutual Fund?
A Mutual Fund is a body corporate that pools the savings of a number of investors and invests the same in a
variety of different financial instruments, or securities. The income earned through these investments and the
capital appreciation realised by the scheme are shared by its unit holders in proportion to the number of units
owned by them. Mutual funds can thus be considered as financial intermediaries in the investment business who
collect funds from the public and invest on behalf of the investors. The losses and gains accrue to the investors
only. The Investment objectives outlined by a Mutual Fund in its prospectus are binding on the Mutual Fund
scheme. The investment objectives specify the class of securities a Mutual Fund can invest in. Mutual Funds
invest in various asset classes like equity, bonds, debentures, commercial paper and government securities.

What is an Asset Management Company?

An Asset Management Company (AMC) is a highly regulated organisation that pools money from investors and
invests the same in a portfolio. They charge a small management fee, which is normally 1.5 per cent of the total
funds managed.

What is NAV?
NAV or Net Asset Value of the fund is the cumulative market value of the assets of the fund net of its liabilities.
NAV per unit is simply the net value of assets divided by the number of units outstanding. Buying and selling into
funds is done on the basis of NAV-related prices. NAV is calculated as follows:
NAV= Market value of the fund's investments+Receivables+Accrued Income- Liabilities-Accrued Expenses

How often is the NAV declared?

The NAV of a scheme has to be declared at least once a week. However many Mutual Fund declare NAV for
their schemes on a daily basis. As per SEBI Regulations, the NAV of a scheme shall be calculated and published
at least in two daily newspapers at intervals not exceeding one week. However, NAV of a close-ended scheme
targeted to a specific segment or any monthly income scheme (which are not mandatorily required to be listed on
a stock exchange) may be published at monthly or quarterly intervals.

What are the different types of Mutual funds?

Equity Funds/ Growth Funds
Funds that invest in equity shares are called equity funds. They carry the principal objective of capital
appreciation of the investment over the medium to long-term. The returns in such funds are volatile since they
are directly linked to the stock markets. They are best suited for investors who are seeking capital appreciation.
There are different types of equity funds such as Diversified funds, Sector specific funds and Index based funds.

Diversified funds
These funds invest in companies spread across sectors. These funds are generally meant for risk-taking
investors who are not bullish about any particular sector.
Sector funds
These funds invest primarily in equity shares of companies in a particular business sector or industry. These
funds are targeted at investors who are extremely bullish about a particular sector.
Index funds
These funds invest in the same pattern as popular market indices like S&P 500 and BSE Index. The value of the
index fund varies in proportion to the benchmark index.
Tax Saving Funds
These funds offer tax benefits to investors under the Income Tax Act. Opportunities provided under this scheme
are in the form of tax rebates U/s 88 as well saving in Capital Gains U/s 54EA and 54EB. They are best suited for
investors seeking tax concessions.
Debt / Income Funds
These Funds invest predominantly in high-rated fixed-income-bearing instruments like bonds, debentures,
government securities, commercial paper and other money market instruments. They are best suited for the
medium to long-term investors who are averse to risk and seek capital preservation. They provide regular income
and safety to the investor.
Liquid Funds / Money Market Funds
These funds invest in highly liquid money market instruments. The period of investment could be as short as a
day. They provide easy liquidity. They have emerged as an alternative for savings and short-term fixed deposit
accounts with comparatively higher returns. These funds are ideal for Corporates, institutional investors and
business houses who invest their funds for very short periods.
Gilt Funds
These funds invest in Central and State Government securities. Since they are Government backed bonds they
give a secured return and also ensure safety of the principal amount. They are best suited for the medium to
long-term investors who are averse to risk.
Balanced Funds
These funds invest both in equity shares and fixed-income-bearing instruments (debt) in some proportion. They
provide a steady return and reduce the volatility of the fund while providing some upside for capital appreciation.
They are ideal for medium- to long-term investors willing to take moderate risks.
Hedge Funds
These funds adopt highly speculative trading strategies. They hedge risks in order to increase the value of the
portfolio.

What is Entry Load?

The non refundable fee paid to the Asset Management Company at the time of purchase of mutual fund units is
termed as Entry Load. Entry Load is added to the NAV (purchase price) when you are purchasing Mutual Fund
units.

What is Exit Load?

The non refundable fee paid to the Asset Management Company at the time of redemption/ transfer of units
between schemes of mutual funds is termed as exit load. It is deducted from the NAV(selling price) at the time of
such redemption/ transfer.

What is Purchase price?

Purchase price is the price paid by you to purchase a unit of a mutual fund scheme. If the fund levies an entry
load, then the purchase price would be equal to the sum of the NAV and the entry load levied.

What is redemption price?

Redemption price is the price received on selling units of open-ended scheme. If the fund does not levy an exit
load, the redemption price will be same as the NAV. The redemption price will be lower than the NAV in case the
fund levies an exit load.

What is repurchase price?

Repurchase price is the price at which a close-ended scheme repurchases its units. Repurchase can either be at
NAV or can have an exit load.

What is a Switch?
Some Mutual Funds provide the investor with an option to shift his investment from one scheme to another within
that fund. For this option the fund may levy a switching fee. Switching allows the Investor to alter the allocation of
their investment among the schemes in order to meet their changed investment needs, risk profiles or changing
circumstances during their lifetime.

Is there any minimum lock-in period for my units?

There is no lock-in period in the case of open-ended funds. However in the case of tax saving funds a minimum
lock-in period is applicable. The lock-in period for different tax saving schemes are as follows:

Section

Minimum lock-in period

U/s 88

3 yrs.

U/s 54EA

3 yrs.

U/s 54EB

3 yrs.

What are the factors that influence the performance of Mutual Funds?
The performances of Mutual funds are influenced by the performance of the stock market as well as the economy
as a whole. Equity Funds are influenced to a large extent by the stock market. The stock market in turn is
influenced by the performance of the companies as well as the economy as a whole. The performance of the
sector funds depends to a large extent on the companies within that sector. Bond-funds are influenced by interest
rates and credit quality. As interest rates rise, bond prices fall, and vice versa. Similarly, bond funds with higher
credit ratings are less influenced by changes in the economy.

Which are the valid MICR locations for ECS clearing?

SIP ECS (Electronic Clearing Service) locations.

Which are the valid RECS(Regional ECS) location for SIP?

SIP RECS (Regional ECS) locations with MICR code for Tamil Nadu.

Which are the valid PDC locations for SIP?

SIP PDC locations.

What is KYC and how to get KYC verfied ?

KNOW YOUR Client (KYC) NORMS (w.e.f January 01, 2012)
SEBI, based on feedback from investors, found that though certain basic requirements have been prescribed for
Customer Due Diligence (CDD) or Know Your Client (KYC) for various SEBI registered intermediaries such as
Mutual Funds, Portfolio Managers, Collective Investment Schemes and Venture Capital Funds, no specific KYC
format had been prescribed. As a result, these intermediaries used different KYC formats and supporting
documents. Thus, in order to bring uniformity in the Know Your Customer (KYC) process in the securities
market and develop a mechanism for centralization of the KYC records and also to avoid duplication of KYC

Process across the intermediaries in the securities market; SEBI vide Circular No. MIRSD/SE/Cir-21/2011 dated
October 5, 2011, SEBI (KYC Registration Agency) Regulations, 2011 and Circular No. MIRSD/ Cir-26/ 2011
dated December 23, 2011 introduced the concept of KYC Registration Agency (KRA) effective January 01,
2012.
Below process needs to be followed for Individuals and Non-Individuals:
1.
2.
3.

4.

Fill the new KYC application form:

Documents evidencing Proof of Identity and Proof of Address to be provided
(List of requisite KYC documents for individuals and non-individuals are mentioned in the revised KYC
Application Form)
In-Person Verification (IPV):
Complete IPV from any of the following:
Any SEBI registered intermediary (including ICICI Prudential Asset Management Company
Limited
NISM/AMFI certified distributors who are KYD compliant
Scheduled Commercial Banks (in case of any applications received directly)
CAMS (Registrar and Transfer Agents) employees.
Submit the KYC form along with necessary documents at the nearest Investor Services centre or any
other intermediaries of KRA's as mandated by SEBI. Upon receipt and verification of the above documents, a
KYC acknowledgement will be issued to each applicant.
Please Note:

Investor(s) must note that KYC compliance is mandatory at the time of submission of each subscription
request with the designated Official Points of Acceptance.
Applications by investors without valid KYC are liable to be rejected.
It is strongly recommend all our Investors to be KYC Compliant by completing the KYC formalities, in
accordance with applicable KYC rules in force from time to time, at the earliest so they can continue to invest
with us smoothly.
Completing KYC and PAN formalities:W.e.f 1 January 2012

1.

2.
3.
4.

5.

6.

ICICI Prudential Asset Management Company Limited (The AMC) shall perform the initial KYC of its
new investors and upload the details of the investors on the system of the KYC Registration Agency (KRA).
Registrar and Transfer Agent (RTA) of the Fund may also undertake the KYC of the investors on behalf of the
AMC.
KRA shall send a letter to the client within 10 working days of the receipt of the initial/update.
KYC documents from the AMC, confirming the details thereof. However, an investor can start investing
with the Fund as soon as the initial KYC is done and other necessary information is obtained while the remaining
process of KRA is in progress.
The AMC and the distributors, who comply with the certification process of National Institute of
Securities Market (NISM) or Association of Mutual Funds in India (AMFI) and have undergone the process of
'Know Your Distributor (KYD)', can perform the IPV for the investors of the Fund. However, in case of applications
received by the Fund directly from the investors (i.e. not through any distributor), the AMC may also rely upon the
IPV (on the Common KYC form) performed by the scheduled commercial banks.
Once the investor has done the KYC with a SEBI registered intermediary, the investor need not undergo
the same process again with another intermediary including Mutual Funds. However, the AMC reserves the right
to carryout fresh KYC of the investors or undertake enhanced KYC measures commensurating with the risk
profile of investor.
The existing KYC compliant investors can continue to invest as per the current practice. However,
existing investors are also urged to comply with the new KYC requirements including IPV as mandated by SEBI.
Investors are requested to take a note of the same.

How to add/cancel/modify nominee ?

Nomination Registration
The SEBI (Mutual Fund) Regulations, 1996, notifies that the mutual fund shall provide for
nomination facility to the unit holders to nominate a person in whose favor the units shall
be transmitted in the event of death of the unit holder. In accordance, with the same, the
AMC provides for the nomination facility as permitted under the Regulations.
Nomination facility:
1. Nomination is mandatory for single mode of holding along with complete details of full address of the nominee.
2. All holders in the folio need to sign the nomination form, irrespective of the mode of holding.
3. Nomination shall not be allowed in a folio held on behalf of a minor.

4. Non-individuals including society, trust, body corporate, partnership firm, Karta of Hindu Undivided Family,
holder of Power of Attorney cannot nominate.
5. The Nominee shall not be a trust (other than a religious or charitable trust), society, body corporate,
partnership firm,Karta of Hindu Undivided Family or a Power of Attorney holder.
6. Nomination form cannot be signed by Power of Attorney (PoA) holders.
7. Investors who do not wish to nominate must sign separately confirming their non-intention to nominate.
8. A non-resident Indian can be a Nominee subject to the exchange controls in force, from time to time.
9. Nomination in respect of the units stands withdrawn upon the transfer of units.
10. Investors who want to make multiple nominations need to fill the separate Multiple Nomination Form available
on www.icicipruamc.com and submit it to the AMC.
Nomination Modification/Cancellation
To modify/cancel an existing nomination, the investor is required to fill in the Modification/Cancellation
form and submit the same duly signed to the Customer Service Center.
The cancellation of nomination can be made only by those individuals who hold units on their own
behalf, single or jointly and who made the original nomination and the request has to signed by all the holders.
On cancellation of the nomination, the nomination shall stand withdrawn and the AMC shall not be under
any obligation to transfer the units in favor of the Nominee.

What is the process of changing address in the folio ?

Change of Address:

1.

2.

3.

KYC Complied Folios/Investors :

In case of change of address for KYC complied (verified)folios, the investors shall be required to submit
the below stated documents to the designated intermediaries of the KYC Registration Agency:
Proof of new address (POA) and,
Any other document the KYC Registration Agency may specify from time to time.
KYC not Complied Folios/Investors :
In case of change of address for KYC not complied(not verified) folios, the investors shall be required to submit
the below stated documents:
Proof of new address and,
Proof of Identity (POI): Only PAN card copy, if PAN is updated in the folio.
In case where PAN is not updated, copy of PAN card or the other POI as may be prescribed.
However, it is advisable to these investors to complete the KYC process.
Units in Demat Mode:
For investors holding units in demat mode, the procedure for change in address would be as determined by the
depository participant.
Note:
List of admissible documents for POA and POI as mentioned in the SEBI circular no. MIRSD/SE/Cir21/2011dated October 5, 2011 shall be considered or any other or additional documents as may be required by
SEBI,AMFI or SEBI authorized KYC Registration Agency from time to time.
In case, the original of any of the aforesaid documents are not produced for verification, then the copies
should be properly attested/verified by the authorities who are authorized to attest as per SEBI circular no.
MIRSD/SE/Cir-21/2011 dated October 5, 2011.

What is the process of changing bank details ?

Change of Bank Mandate:

In case of change of bank request, the investors shall be required to submit the below stated supporting
documents to effect the change:
Change of Bank Mandate Form
Original cancelled cheque of the new bank with the investor name mentioned on the cheque.
or
Copy of the bank statement/pass book duly attested by the new Bank, evidencing the name and bank
account details of the investor (The bank statement shall not be later than 3 months old
In case the request for change in bank account information and redemption request are in the same transaction
slip or letter, such change of bank mandate shall not be processed.

However, the valid redemption transaction will be processed and the payout would be released as per the
specified service standards and the last registered bank account shall be used for all the purposes.
Cooling Period:
If the investor submits redemption request accompanied with a standalone request for change of Bank mandate
or submits a redemption request within seven days from the date submission of a request for change of Bank

mandate details, the AMC will process the redemption but the release of redemption proceeds shall be deferred
on account of additional verification, but will be within the regulatory limits as specified by SEBI from time to time
Change of Bank Mandate for Systematic Investment Plan (SIP)
In order to change the existing bank account for SIP, investors need to submit following documents 30 days
before the next SIP debit date:
A new SIP Form with change of bank details and cancelled cheque of new bank evidencing the name
and bank account details of the investor.
Letter to discontinue the existing SIP.

How do i have my name corrected in the folio ?

Name Change
Documents required for effecting Name change
Name change request can be accepted from an investor, in the below mentioned scenario(s)
1.
2.
3.
4.
5.
6.
7.

Data Entry Correction

Investor has changed his/her name
Name change consequent to marriage
Name change consequent to Divorce
Minor Correction in the name filled in the application
Major Correction in the name filled in the application
Name change of a Minor
1. Data Entry Correction
If there is an error in updating of the name in our records as compared to the name filled in the
application form same can be corrected by contacting the customer service or by providing a written request for
the same.
2. Investor has actually changed his/her name:
Request letter from the investor.
Notarized copy of Notification in Official Gazette of India
Attestation from the bank manager of the Bank whose mandate has been provided at the time of original
investment, confirming the Investors Name, Bank branch, Account number and Signature.
Any official/legal document reflecting the name change viz.:
Bank statement from the same bank of which bank mandate is on our record Passport.
Attestation from School Principal confirming the name change and registered accordingly in the school
records This is for applications made by minor investors
3. Change of name consequent to marriage:
Investors request Letter
Notarized copy of the marriage certificate OR
Certified true copy of the state Gazette OR the original copy of the state gazette in which a declaration
has been made to that effect.
4. Change of name consequent to divorce:
Investors request Letter
Notarized copy of the divorce certificate
Certified true copy of the state Gazette OR the original copy of the
State gazette in which a declaration has been made to that effect.
5. MINOR Error in the name:
There could be a minor spelling in the name like spelling mistake and when it appears to be a genuine case
should be considered for name change after doing a KYC and subject to submission of the following documents:
Investor request letter
Account statement
Void cheque copy from the investor with his/her name clearly printed on the cheque. The name should
match with the name change requested by the Investor.

In absence of such a Cheque, an attestation from the bank manager of the Bank whose mandate has
been provided at the time of original investment,confirming the Investors Name, Bank branch, Account number
and Signature.
Photo ID with Signature i.e. PAN Card (If not already available), MAPIN Card, Passport, etc.
Indemnity Bond on a plain paper, duly signed by all the holders in that folio. (Attached herewith as
(ANNEXURE 1 as below)
6. Name change of a Minor
In case of minor or major name correction and the investor being a minor, the documents will remain the
same. The Indemnity bond will be submitted by the Parent/guardian.

What is the process of updating change of status from Minor to Major ?

Investments made on behalf of Minors

1. Accounts of Minors:
a.
b.
c.
d.

e.
f.

Name of the guardian along with relationship must be mentioned, if the investments are being
made on behalf of a minor.
Guardian of the minor should either be a natural guardian (i.e. father or mother) or a court
appointed legal guardian.
Joint holding is not allowed, if the first applicant is minor.
If the first applicant is minor, date of birth along with photocopy of supporting documents as
enumerated below shall be mandatory while opening the account on behalf of minor:
Birth certificate of the minor, or
School leaving certificate / Mark sheet issued by Higher Secondary
Board of respective states, ICSE, CBSE etc., or
Passport of the minor, or (d) Any other suitable proof evidencing the date of birth of the minor.
In case of natural guardian, a document evidencing the relationship has to be submitted, if the
same is not available as part of the documents submitted as proof of date of birth of the minor applicant.
In case of court appointed legal guardian- a notorised photo copy of the court order should be
submitted alongwith the application.

2. Change in Tax Status (Minor Attaining Majority)

Upon attaining majority, a minor has to write to the fund, giving his/her specimen signature duly authenticated by
his/her banker, as well his/her new bank mandate, PAN details, KYC acknowledgement letter, in order to facilitate
the Fund to update its records and permit the erstwhile minor to operate the account in his/her own right.
List of standard documents to change account status from minor to major.

Services Request form, duly filled and containing details like name of major, folio numbers, etc.
New Bank mandate where account changed from minor to major.
Signature attestation of the major by a manager of a scheduled bank / Bank Certificate
Letter
KYC acknowledgement of the major.
In case of existing folios where date of birth may not be available, AMCs shall obtain this information
and update their records at the earliest.

Whats the process of lien marking/cancellation ?

Lien registration procedure.

Lien registration- Following documents are required

Request letter from Investor clearly specifying the folio number, scheme, units and the person/ institution
in whose favor the lien has to be marked.
Consent letter from the person/institution in whose favor the lien has to be marked/

The letters should clearly mention whether the future dividend (if any) will be in paid to the investor
(normal lien) or will be paid to the person/bank/institution in whose favour the lien is marked (dynamic lien)
constitution (in whose favor the lien is marked)
Bank name and its account details from the financier on their lien marking request for Lien invocation
process.
Lien cancellation procedure.
Consent letter from the person/institution in whose favor the lien has to be removed.
Request letter from Investor clearly specifying the folio number, scheme, units and the person/ institution
in whose favor the lien has to be removed (Not Mandatory)
ASL of the constitution. (Required if the authorized signatory has changed )

How to transfer units for investment with ICICI Prudential Mutual Fund (Transmission Process)
?
1. Transmission
For transmission of units the Applicants/Claimants shall be required to submit the prescribed documents under
various situations as stipulated below. The transmission process is specific to mode of holding.
Kindly note :

As per addendum dated May 29, 2009, the redemption request given with transmission will not be
processed and will have to submit a redemption request after the transmission is completed.
New folios for transmission cases (Communication Reference No. 1013 dt. 18.11.2010) There has been
a process change in transmissions and we are creating new folios for all transmissions. New folio will be created
even in case of transmissions to Nominee or legal heir.
For Death Certificate (DC) issued outside India :The DC should be attested by Indian Embassy located
in the country issuing the DC or embassy of the country issuing DC located in India.
Transmission process for tax status Individual
1.1 Transmission to surviving unit holders in case of death of one or more unit holders For mode of
holding as Anyone/Survivor incase of death of any of the joint holders the Units shall stand transferred
to the survivor in case. Accordingly below documents to be submitted by the surviving holder:

Letter from surviving unit holders to the Fund / AMC / RTA requesting for transmission of units,
Death Certificate in original or photocopy duly notarized or attested by gazette officer or a bank
manager,
Bank Account Details of the new first unit holder as per Annexure 1 along with attestation by a bank
branch manager or cancelled cheque bearing the account details and account holders name.
KYC of the surviving unit holders, if not already available.
1.2 Transmission to registered nominee/s in case of death of Sole or All unit holders: For mode of
holding as Single of Anyone/Survivor in case of death of single or all the joint holders where nominee is
registered the Units shall get transferred to registered nominee. Accordingly below documents to be
submitted by the nominee:

Letter from claimant nominee/s to the Fund / AMC / RTA requesting for transmission of units,
Death Certificate/s in original or photocopy duly notarized or attested by gazette officer or a bank
manager,

Bank Account Details of the new first unit holder as per Annexure 1 along with attestation by a bank
branch manager or cancelled cheque bearing the account details and account holders name.
KYC of the claimant/s,
If the transmission amount is Rs One Lakh or more Indemnity duly signed and executed by the
nominee/s - Annexure II.
1.3 Transmission to claimant/s, where nominee is not registered, in case of death of Sole or All unit
holders:
For mode of holding as Single or Anyone/Survivor in case of death of single or all the joint holders howhere no
nominee is not registered below documents to be submitted by the claimant:

Letter from claimant/s to the Fund / AMC / RTA requesting for transmission of units,
Death Certificate/s in original or photocopy duly notarized or attested by gazette officer or a bank
manager,
Bank Account Details of the new first unit holder as per Annexure 1 along with
Attestation by a bank branch manager or cancelled cheque bearing the account details and account
holders name.
KYC of the claimant/s,
Indemnity Bond from legal heir/s - Annexure III.
Individual affidavits from legal heir/s - Annexure IV.
If the transmission amount is below Rs One Lakh: any appropriate document evidencing relationship of
the claimant/s with the deceased unitholder/s.
If the transmission amount is Rs One Lakh or more: Any one of the documents mentioned below:
1. Notarised copy of Probated Will, or
2. Legal Heir Certificate or Succession Certificate or Claimants Certificate issued by a competent court, or
3. Letter of Administration, in case of Intestate Succession.

1.4 Transmission in case of HUF, due to death of Karta: HUF, being a Hindu Undivided Family,

Letter Requesting for change of Karta,

Death Certificate in original or photocopy duly notarized or attested by gazette officer or a bank
manager,
Duly certified Bank certificate stating that the signature and details of new Karta have been appended in
the bank account of the HUF - Annexure I
KYC of the new Karta and KYC of HUF, if not already available.
Indemnity bond signed by all the surviving coparceners and new Karta on Rs.300 stamp paperAnnexure V.
In case of no surviving co-parceners and the transmission amount is Rs 5 Lakh or more OR where there
is an objection from any surviving members of the HUF, transmission should be effected only on the basis of any
of the following mandatory documents:
1. Notarized copy of Settlement Deed, or
2. Notarized copy of Deed of Partition, or
3. Notarized copy of Decree of the relevant competent Court

Please note that in case the claimant submits any of 3 documents i.e a to c, then the Indemnity Bond as
mentioned would not be required.

Annexure I
Annexure II
Annexure III
Annexure IV
Annexure V
Please write to us at enquiry@icicipruamc.com or call us at kindly contact us on our customer care
helpline at 1800 222 999 (BSNL/MTNL lines) or 1800 200 6666 (non MTNL/BSNL lines) from 9 am to 7 pm,
Monday to Saturday

Understanding Debt Mutual Funds

What are Debt Mutual Funds?

Different types of Debt Mutual Funds
Benefits of investing in Debt Mutual Funds
How to choose a Debt Mutual Fund
How to evaluate a Debt Mutual Fund

What are Debt Mutual Funds?

There are different types of Mutual Funds that invest in various securities, depending on their
investment strategy.
Debt Mutual Funds mainly invest in a mix of debt or fixed income securities such as Treasury Bills,
Government Securities, Corporate Bonds, Money Market instruments and other debt securities of
different time horizons. Generally, debt securities have a fixed maturity date & pay a fixed rate of
interest.
The returns of a debt mutual fund comprises of

Interest income
Capital appreciation / depreciation in the value of the security due to changes in market
dynamics
Debt securities are also assigned a 'credit rating', which helps assess the ability of the issuer of the
securities / bonds to pay back their debt, over a certain period of time. These ratings are issued by
independent rating organisations such as CARE, CRISIL, FITCH, Brickwork and ICRA. Ratings are
one amongst various criteria used by Fund houses to evaluate the credit worthiness of issuers of fixed
income securities.
There is a wide range of fixed income or Debt Mutual Funds available to suit the needs of different
investors, based on their:

Investment horizon
Ability to bear risk

Different types of Debt Mutual Funds

There are different types of Debt Mutual Funds that invest in various fixed income securities of
different time horizons. Some of the debt based & blended category products (which have both debt
and equity allocation) are as follows -

Liquid Funds / Money Market Funds

These funds invest in highly liquid money market instruments and provide easy liquidity. The period of
investment in these funds could be as short as a day. They aim to earn money market rates and could
serve as an alternative to corporate and individual investors, for parking their surplus cash for short
periods. Returns on these funds tend to fluctuate less when compared with other funds.

Ultra Short Term Funds

Earlier known as Liquid Plus Funds, they invest in very short term debt securities with a small
portion in longer term debt securities. Most ultra short term funds do not invest in securities with a
residual maturity of more than 1 year. Also referred to as Cash or Treasury Management Funds, Ultra
Short Term Funds are preferred by investors who are willing to marginally increase their risk with an
aim to earn commensurate returns. Investors who have short term surplus for a time period of
approximately 1 to 9 months should consider these funds.

Floating Rate Funds

These funds primarily invest in floating rate debt securities, where the interest paid changes in line
with the changing interest rate scenario in the debt markets. The periodic interest rate of the securities
held by these products is reset with reference to a market benchmark. This makes these funds
suitable for investments when interest rates in the markets are increasing.

Short Term & Medium Term Income Funds

These funds invest predominantly in debt securities with a maturity of upto 3 years in comparison to a
Regular Income Fund. These funds tend to have a average maturity that is longer than Liquid and
Ultra Short Term Funds but shorter than pure Income Funds. These funds tend to perform when short
term interest rates are high and could potentially benefit from capital gains as liquidity comes back to
the market and interest rates go down. These funds are suitable for conservative investors who have
low to moderate risk taking appetite and an investment horizon of 9 to 12 months.

Income Funds, Gilt Funds and other dynamically managed debt funds
These funds comprise of investments made in a basket of debt instruments of various maturities &
issuers. These funds are suitable for investors who willing to take a relatively higher risk as compared
to corporate bond funds,and have longer investment horizon. These funds tend to work when entry
and exit are timed properly; investors can consider entering these funds when interest rates have
moved up significantly to benefit from higher accrual and when the outlook is that interest rates would
decrease. As interest rates go down, investors can potentially benefit from capital gains as well. A few
types of dynamically managed debt funds are mentioned below -

Income funds invest in corporate bonds, government bonds and money market instruments.
However,they are highly vulnerable to the changes in interest rates and are suitable for investors who
have a long term investment horizon and higher risk taking ability. Entry and exit from these funds
needs to be timed appropriately. The correct time to invest in these funds is when the market view is
that interest rates have touched their peak and are poised to reduce.
Gilt Funds invest in government securities of medium and long term maturities issued by
central and state governments. These funds do not have the risk of default since the issuer of the
instruments is the government. Net Asset Values (NAVs) of the schemes fluctuate due to change in
interest rates and other economic factors. These funds have a high degree of interest rate risk,
depending on their maturity profile. The higher the maturity profile of the instrument, higher the
interest rate risk.
Dynamic Bond Funds invest in debt securities of different maturity profiles. These funds are
actively managed and the portfolio varies dynamically according to the interest rate view of the fund
managers. These funds Invest across all classes of debt and money market instruments with no cap
or floor on maturity, duration or instrument type concentration.
Corporate Bond Funds
These funds invest predominantly in corporate bonds and debentures of varying maturities that offer
relatively higher interest, and are exposed to higher volatility and credit risk. They seek to provide
regular income and growth and are suitable for investors with a moderate risk appetite with a medium
to long term investment horizon.

Close Ended Debt Funds

Fixed Maturity Plans (FMPs) are closed ended Debt Mutual Funds that invest in debt
instruments with a specific date of maturity that is less than or equal to the maturity date of the
scheme. Securities are redeemed on or before maturity and proceeds are paid to the investors.

FMPs are similar to passive debt funds, where the portfolio manager buys and holds the debt
securities for the entire duration of the product. FMPs are a good option for conservative investors, as
they do not carry any interest rate risk provided the investor stays invested until the maturity of the
product. They are also a tax efficient investment option.

Hybrid Funds
They bridge the gap between equity and debt schemes by investing in a mix of equity and debt
securities. This adds a considerable amount of risk to the product and will suit investors looking for
commensurate returns with higher levels of risk than regular debt funds.

Monthly Income Plans (MIPs) strive to offer the benefit of diversification across asset
classes by investing a proportion of the portfolio in debt securities (70% to 95%) with a smaller
allocation in equity securities (5 % to 30 %).

As the correlation between prices of equity and debt is low, this product endeavors to give an investor
returns that are relatively higher than debt market returns. MIPs can be classified as debt oriented
hybrids that seek to o
o
o

generate income from the debt securities

maximise the benefits of long term growth from equity securities
aim for periodic distribution of dividends

However, an important point to be noted is that monthly income is not assured and it is subject to the
availability of distributable surplus in the fund.

Capital Protection Oriented Funds are closed ended funds that are hybrid in nature; they
allocate money to debt and equity securities. The allocation to debt securities is done in such a way
that at the end of the term of the product, the value of debt investment is equal to the original
investment in the fund. The equity portion aims to add to the returns of the product at maturity. These
funds are oriented towards protection of capital and do not offer guaranteed returns.

Say, for example, AAA bonds are quoting at interest rate of 10% p.a. for a 5 year term.
o
o

This means that at the end of 5 years, the investment of Rs. 100 in such bonds would
be worth Rs. 161.05, assuming reinvestment of the interest.
On the other hand, if one invests Rs. 62.09 in such bonds, the value of the bonds at
the end of 5 years would be Rs. 100.

In such a case, the allocation between equity and debt would be 38 : 62 respectively. So, if the
equity value reduces to zero, the investor gets back the original amount invested.

The asset allocation is a function of prevailing interest rates on high quality (AAA rated) bonds. It is
mandatory for the fund to be rated by at least one rating agency in order to be called a capital
protection oriented fund. Debt securities held in the portfolio must be of highest rating.

Multiple Yield Funds are close ended income funds that aim to optimize income from debt
securities and potential growth from equity. They aim to limit the downside by investing in rated debt
instruments of reputed issuers. Through a limited equity exposure, they aim to provide capital
appreciation by investing in shares of companies without any sector or market capitalization bias. This
exposure will help to participate in the growth of these companies thus seeking to provide the portfolio
with an element of potential long term capital appreciation.

Benefits of investing in Debt Mutual Funds

The various benefits of investing in Debt Mutual Funds are listed below -

Your investments are not affected by equity market volatility

Debt Mutual Funds invest in a range of interest bearing instruments such as Treasury Bills,
Government Securities, Corporate Bonds, Money Market Instruments and other debt securities.

Add stability to your investment portfolio

As Debt Mutual Funds mainly invest in debt securities, they are relatively more stable than equity
investments. They can also lend stability to your equity portfolio by reducing the risk associated with
your complete investment portfolio.

Freedom to withdraw your money when required

All open ended mutual funds give you the freedom to withdraw your money as and when required,
although your investments may be subject to an exit load. Close ended mutual funds have a defined
maturity date. Such funds are listed and can be traded on the stock exchange.

You can aim for better post tax returns

Earnings from debt instruments can come in two forms:

Dividend or interest payments

Capital gains based on the difference between the purchase price and the sale price of the
debt security
Tax on dividend / interest income : Dividend distribution Tax (DDT) is broken up into the following

Dividend for individual v/s non-individual investors and

Dividend from liquid v/s non-liquid funds

The tax rates proposed in the Union Budget FY 2013-14 are as per the table below -

Liquid Funds

Non-Liquid Funds

Individual
Investor / HUF

25% + 10% Surcharge*+ 12.5%** /25%# + 10% Surcharge*

3% Cess
+ 3% Cess

Non-individual
Investor

30% + 10% Surcharge* + 30% + 10% Surcharge* + 3%

3% Cess
Cess

* With effect from 01st April 2013

** Existing rate applicable till 31st May 2013
# With effect from 01st June 2013

Tax on capital gains: Capital gains tax are broken up and taxed as follows

Short term capital gains (not exceeding 12 months) Marginal Tax Rate
Long term capital gains (exceeding 12 months) Indexed Tax Rate (Except for NRIs / QFIs
incase of Unlisted Mutual Fund units, where indexation benefit will not be available)

Indexation Benefit
Indexation adjust the purchase value of your investment to indicate the impact of inflation, while
calculating long term capital gains tax for investments held for over 1 year.

How to choose a Debt Mutual Fund

1.

Ask yourself the following questions

Before deciding in which Debt mutual fund product to invest, it's important that you answer the
following questions o
What is my investment objective?
o
What is my investment horizon?
o
How much risk am I willing to take?
2.
Understand the Market Environment
Keep in mind that you must also consider various market factors such as -

o
o

Would interest rates rise in the near term?

How are the interest rates likely to move over the next few years?

As you may not be able to answer these questions yourself, you should seek advice from your
distributor or keep yourself abreast with information available on the Market Reports section on our
website.
3.
Assess you current Asset Allocation
It is also important for you to consider your overall asset allocation, the ratio of equity to debt in your
complete investment portfolio, while deciding where to invest. Maintaining a good balance between
equity and debt investments is essential to provide stability and the potential for growth in the long
run.
4.
Identify the Type of fund that suits your needs
Depending on how you answer the questions above, you could seek assistance from your distributor
to select an appropriate fund to match your needs. Click on the link below to understand what points
you need to consider before investing in a Debt Mutual Fund.

How to evaluate Debt Mutual Funds

It's important for you to consider the following while choosing an appropriate Debt Mutual Fund -

Stated investment horizon

Maturity profile
Credit rating profile
Asset allocation in Fund Portfolio
Other quantitative indicators

This information is available in Mutual Fund Factsheet's that are uploaded every month on the
websites of Asset Management Companies.

Stated Investment Horizon

Debt Mutual Fund generally specify an investment horizon, for which investors should consider
investing. This is an important parameter that is sometimes overlooked by investors, who remain
invested for long periods without considering the market factors. The specific investment horizon
should be looked at to aim for optimum risk adjusted returns in the debt fund.

Maturity Profile
It is a graphical representation of the maturity of all holdings of the funds portfolio. It gives an over all
picture as to what percentage of the funds net assets fall under different time frames, ranging from 6
months to 1 year to 3 years and so on. This helps understand what percentage of the funds assets
invest in which maturity bonds, and to what extent the fund is exposed to the interest rate risk. In a
falling interest rate scenario, debt funds maintain relatively higher portfolio maturities and vice versa.

The image above is representational of the maturity profile of a debt fund, as presented in a mutual
fund fact sheet.

Credit Risk and Credit Rating Profile

Debt Mutual Funds can invest in securities with different credit ratings, as per the schemes investment
strategy. The credit rating of the security is listed alongside its name in the mutual fund factsheet.
These ratings are assigned by different rating agencies and indicate the credit worthiness of the
borrower. Higher the rating, high is the creditworthiness of the borrower, although the returns may be
lower as compared to a bond issued by an entity that has a lower rating. The Credit profile of the debt
portfolio indicates the level of credit risk that the debt fund has assumed. A large chunk in sovereign
papers or highest rating papers implies that the fund is taking lower credit risk.

The image above is representational of the rating profile of a debt fund, as presented in a mutual fund
fact sheet.

Asset Allocation in Fund portfolio

This helps investors understand the investment approach of the fund manager. Debt funds invest in
bonds issued by different entities and investors can identify the percentage of the fund's portfolio that
is invested in the various debt instruments like government of India bonds, state government bonds,
corporate debt, public sector undertaking (PSU) bonds, treasury bills, cash etc.

In a fund portfolio, one can see list of instruments that the fund has invested in. While this will vary
continually with the buying or selling calls taken by the fund manager, the portfolio can be indicative of
the strategy employed by the fund.

A larger exposure to Government of India securities would imply a potential for greater returns in a
falling interest rate scenario (as bond prices and interest rates are inversely related). Investments in
good Corporate and PSU bonds have the potential to earn higher interest income than the
investments in pure government of India bonds. A certain percentage of the portfolio is also held in
cash and net current assets. This is done to ensure availability of funds to meet the day-to-day
redemptions of investors without having to sell securities which might affect the portfolio's
performance.

Other Quantitative Indicators of debt Mutual Funds

Average maturity of the portfolio: This figure, represented in day or years, gives the average
maturity of all the instruments held in the portfolio.

Duration of portfolio: The duration (not to be confused with maturity) is the measure of the price
sensitivity of the portfolio to a change in interest rates. Funds with a longer duration would be more
sensitive to a given change in interest rates. For example, if interest rates were to go down (or up) by
1% in a month, the Net Asset Value (NAV) of Bond fund is likely to go up (or down) by 5 per cent if
modified duration of portfolio is mentioned as 5 years.

Yield: The yield is a measure of the interest income generated by the bonds in the portfolio. Funds
that invest in bonds that have a higher coupon rate would have a higher portfolio yield. In a stable
interest rate scenario, this can be considered as an approximate measure of the returns the fund can
generate. However, in a falling interest rate scenario, this is not a true measure of the returns, as it
does not account for trading gains that can accrue from the active buying and selling of bonds. The
yield to maturity of a debt fund indicates the running yield of the fund. Debt funds are total return
products returning both accrual of interest and mark to market gain or losses.

Other than above, investors must also look at the stated investment objective of the debt fund,
its positioning in the style box, other fund features section and its performance record over a
period of time vis-a vis its benchmark.

The points listed below, provide a snapshot of the parameters to consider while deciding in which
Debt Mutual Fund to invest.

The debtfund Portfolio gives a list of the instruments the fund has currently invested in,
indicative of its investment strategy.
Average portfolio maturity indicates the length of time until the principal amount of the bond
is repaid.
Duration of the portfolio indicates the price sensitivity of the portfolio to a given change in
interest rates; a measure of the fund's volatility.
Average maturity and duration fluctuate depending on the view of the fund manager for
flexible and dynamic debt funds. A fund with higher maturity and duration is expected to yield better
results in a falling interest rate scenario and vice versa. This is because interest rates and bond prices
are inversely related and longer the tenure of the bond, the more sensitive it is to changes in interest
rates.
The yield is a measure of the interest income earned on the bonds held in the portfolio.
The maturity profile of the portfolio can be used to understand the composition of the
portfolio.
Returns can potentially enhanced by lowering credit quality of the portfolio, which enhances
the credit risk. The rating profile can be used to understand the credit risk.

WHAT ARE EQUITY LINKED SAVINGS

SCHEMES (ELSS)?
While tax planning may seem to be a difficult process, Mutual Funds offer you
a simple way to get tax benefits, while aiming to make the most of the
potential of the equity markets.
An Equity Linked Savings Scheme (ELSS) is an open-ended Equity Mutual
Fund that doesn't just help you save tax, but also gives you an opportunity to

grow your money. It qualifies for tax exemptions under section (u/s) 80C of
the Indian Income Tax Act,1961

How do deduction
u/s 80C work ?

When you invest in certain schemes like ELSS, Public Provident

Fund, certain Bank Fixed Deposits etc. you can claim up to Rs.1,50,000
as a deduction from your gross total income in a financial year under
Section 80C of Income Tax Act, 1961. The Table below will help further
explain how this works
Particulars

Without Tax Saving

Investments u/s 80C

With Tax Saving Investments u/s 80C

Gross Total
Income

Rs.7,50,000

Rs.7,50,000

Exemption
u/s 80C

Nil

Rs.1,50,000

Total
Income

Rs.7,50,000

Rs.6,00,000

Tax on
Total
Income

Rs.75,000

Rs.45,000

Tax saved

Nil

Rs.30,000

Illustration of Tax exemption for an individual less than 60 years

in receipt of salary income for the assessment year 2015-16 (FY 20142015). Along with the tax deductions, an ELSS offers you the
opportunity to grow your money by investing in the equity market.
Long-term capital gains from these funds are tax free in your hands
and the lock-in period is only 3 years. Furthermore, you can also opt for
a Dividend Payout option, thereby realizing some potential gain during
the lock-in period, and also choose to invest through a Systematic
Investment Plan and bring discipline to your tax planning.

Mutual Fund investments are subject to market risks, read all scheme related
documents carefully

WHAT ARE EQUITY LINKED SAVINGS

SCHEMES (ELSS)?

While tax planning may seem to be a difficult process, Mutual Funds offer you
a simple way to get tax benefits, while aiming to make the most of the
potential of the equity markets.
An Equity Linked Savings Scheme (ELSS) is an open-ended Equity Mutual
Fund that doesn't just help you save tax, but also gives you an opportunity to
grow your money. It qualifies for tax exemptions under section (u/s) 80C of
the Indian Income Tax Act,1961

Why should you invest in an

Equity Linked Savings Schemes ?

Along with the tax deductions, an ELSS offers you the following
benefits:
An opportunity to grow your money by investing in the equity
market.

Long-term capital gains from these funds are tax free in your hands.

The lock-in period is only 3 years.

You can also opt for a Dividend Payout option, thereby realizing
some potential gain during the lock-in period.#

You can invest through a Systematic Investment Plan and bring

discipline to your tax planning

# However, it must be noted that any dividend payment will be from

the NAV of the Scheme and therefore the NAV of the scheme will fall to
the extent of dividend payment. Also dividend payment is subject to
availability of distributable surplus and approval from Trustees.

WHAT ARE EQUITY LINKED SAVINGS

SCHEMES (ELSS)?
While tax planning may seem to be a difficult process, Mutual Funds offer you
a simple way to get tax benefits, while aiming to make the most of the
potential of the equity markets.
An Equity Linked Savings Scheme (ELSS) is an open-ended Equity Mutual
Fund that doesn't just help you save tax, but also gives you an opportunity to

grow your money. It qualifies for tax exemptions under section (u/s) 80C of
the Indian Income Tax Act,1961

Features of ELSS and

other Tax Saving instruments
u/s 80C of income Tax Act, 1961?

Particulars

PPF

NSC

ELSS

Tenure

15 years

6 years

3 years

Returns

8.70 % *
(Compounde
d Annually)

8.50 to 8.80 % *
(Compounded
half-yearly)

Returns / Dividends are

Market
linked and not assured

Minimum
Investment

Rs.500

Rs.100

Rs.500

Maximum
Investment

Rs.150,000

No limit^

No limit^

Amount
eligible for
deduction
u/s 80C

Rs.150,000

Rs.150,000

Rs.150,000

Taxation for
interest

Tax free

Taxable

Dividends and capital gain

tax free

Safety/ Risk

Highest
Safety

Highest Safety

High Risk

Lock-in
Period

15 Years Partial
Withdrawal
after 6 years
is permitted

6 Years

3 years

*Source: http://finmin.nic.in - All rates shown above have been

compounded wherever applicable. *There is no upper limit on
investments. However, investments of only upto Rs.150,000 per year
are allowed to be claimed as deductions under Section 80C of Income
Tax Act, 1961.

Points to remember while choosing an appropriate ELSS

You must always remember to do thorough research when you invest in
an ELSS fund. You must look at the long term performance of the fund

before putting your money in it. Also remember to look at the fund
details like the fund managers investment approach, portfolio of the
fund, the expense ratio of the fund and how volatile the fund has been
in the past.
Mutual Fund investments are subject to market risks, read all scheme related
documents carefully.