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Guide to Mutual Funds

Fundamental Attributes of Mutual Fund Scheme

Let’s explore the fundamental attributes of a mutual fund scheme. Here, you will understand the meaning of fundamental attributes, their key elements, and the change process in fundamental attributes of a mutual fund scheme.

What are Fundamental Attributes of a Mutual Fund Scheme

Suppose when you are ready to invest in a Mutual Fund Scheme, what will you do first? 

Obviously, you have to read an offer document that covers all the relevant information to help an investor make his/her investment decision. These essential elements are known as fundamental attributes of a mutual fund scheme. 

In simple words, we can say that the fundamental attributes of a mutual fund scheme are its basic features that can affect one’s decision to stay invested in a scheme or make fresh investments in a scheme.

Key elements of Fundamental attributes are:

  • Mutual Fund Scheme Types: This refers to the category or classification of the mutual fund, such as equity, debt, hybrid, or solution-oriented schemes.

  • Investment Objective: This describes the goal or purpose of the mutual fund scheme, such as capital appreciation, income generation, or achieving specific financial targets like retirement planning or education expenses.

  • Liquidity Terms: These are the conditions related to buying and selling units of the mutual fund scheme, including the lock-in period (if any) and any associated exit loads or penalties.

  • Terms of Issuance of Units: This covers the terms and conditions regarding the issuance of units of the mutual fund scheme, such as minimum investment amount, frequency of purchases, and procedures for buying or redeeming units.

Process of Change in Fundamental Attributes

Let’s assume that the mutual fund wants to change a fundamental attribute, then a written communication about the proposed change is sent to each investor and newspaper advertisements to that effect are published. 

On the other hand, investors have the option to exit the fund at the net asset value, without any exit load, within 30 days. Please note that the fund house needs to ensure that communication to investors is sent either by post or by email before the 30-day period starts.

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