Nippon India Mutual Fund is a leading mutual fund company in India. It is the fastest-growing company in India and offers a range of schemes for every type of investor. With a customer base of 133.32 lakh folios (as of 30th September 2021), the company also enjoys the trust of its investors.
Recently, the company launched a new fund – the Nippon India Flexi Cap Fund, whose objective is to deliver long-term capital growth to investors. Check the Nippon India Flexi Cap Fund NAV when investing to know the units that you can get for the invested amount.Here are five important aspects about the fund that you should know before you invest in it:
- The type of scheme
Knowing the type of scheme allows you to know what to expect from your investments. Nippon India Flexi Cap Fund is an open-ended, equity-oriented dynamic asset allocation scheme. Are you confused? Let’s simplify-
Open-ended schemes are those that allow you to buy and redeem at your discretion. There is no specific purchase period, nor is there any specified maturity period. You can invest and redeem anytime.
Equity-oriented means that at least 65% of the portfolio is invested in equity stocks and securities of companies. The remaining portfolio is invested in debt instruments that give stable returns.
Lastly, dynamic asset allocation means that the scheme invests in stocks across all market capitalisations, i.e. large-cap, mid-cap, and small-cap. The allocation to the different companies is dynamic and is managed by the fund manager as per the market movements. The fund manager can across all market caps in any proportion and change the proportion at their discretion to earn the highest possible returns while minimising risks.
- The investment required
You can start investing in Nippon India Flexi Cap Fund with as little as Rs.500 and multiples of Re.1. Rs.500 is the minimum investment amount for both the lump sum and SIP modes. There is no maximum limit of investment, and you can invest as much as you want. The Nippon India Flexi Cap Fund is, thus, quite affordable for investors.
- Entry and exit loads
An entry load is a charge that is levied when you invest in the scheme. As per SEBI’s mandate, Nippon India Flexi Cap Fund has no entry load. This means that no charge is deducted from your investment in the beginning.
Exit load, on the other hand, is a charge levied at the time of redemption. Under Nippon India Flexi Cap Fund, no exit load is applicable if you redeem up to 10% of the allotted units within 12 months of allotment. If you redeem more than 10% within the first 12 months, an exit load of 1% would be charged on the redemption proceeds.
If you redeem after 12 months, no load would be applicable whether you redeem up to 10% of the allotted units or more.
- The risks involved
Nippon India Flexi Cap Fund is an equity-oriented scheme. As such, it has a ‘very high’ risk rating on the Riskometer. You need to have a healthy risk appetite when investing in the fund.
That being said, the fund managers of Nippon India Flexi Cap Fund are pretty experienced. They actively manage the portfolio to reduce the volatility risks associated with equity. Moreover, if you opt for a long-term horizon, the volatility risks would reduce, and you could end up earning good returns.
- The tax implication
Lastly, knowledge of the tax implication is also needed so that you can do correct tax planning.
Being an equity-oriented scheme, Nippon India Flexi Cap Fund is subject to equity taxation. This means that if you redeem your investment, partially or entirely, within 12 months of investing into the fund, the returns earned would be called short-term capital gains. You would have to pay a tax of 15% on such gains.
On the other hand, if you redeem the fund after 12 months, you would be eligible to earn a tax-free return up to Rs.1 lakh. However, if the returns exceed Rs.1 lakh, the excess returns would be taxed only at a marginal rate of 10%. For instance, if you earn a return of Rs.1.5 lakhs after redeeming Nippon India Flexi Cap Fund after 12 months, you would have to pay a 10% tax only on Rs.50,000, i.e. the amount that exceeds Rs.1 lakh.
The investment that you make towards Nippon India Flexi Cap Fund does not earn any tax benefit. Moreover, if you choose the dividend option, the dividends that you receive would be taxed at your income tax slab rate.
If you are looking for hybrid schemes that combine equity and debt in their portfolio with a significant tilt towards equity, you can invest in Nippon India Flexi Cap Fund. The scheme is affordable and is expertly managed.
So, know that Nippon India Flexi Cap Fund is all about investing in it if it matches your investment strategy.
