The Art of Money Making Through Mutual Funds

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Nothing gives more pleasure to a Banker than speaking about making money, on behalf of clients, for clients. Such is the joy of making money even when you are making profits for others. Mutual Funds have always been my favorite investment avenue for money making, perhaps also because I made tonnes of money through them. Making money at a personal level also gave the Banker in me enough and more confidence to suggest Mutual Funds to my clients without the guilt of having suggested an investment avenue, which could turn detrimental for the client’s portfolio and investment goals in the long run. People in the finance industry will be able to totally relate with what I am saying.

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For the uninitiated, a Mutual Fund is an investment vehicle that allows you to pool your money together with other investors to purchase a collection of stocks, bonds, or other securities that might be otherwise difficult to recreate on your own. This mix is referred to as a portfolio and the price of the mutual fund is known as its net asset value (NAV). It is important to note that mutual fund investors do not actually own the securities in which the fund invests; they only own shares in the fund itself.

As one would know, there are many types of Mutual Funds out there. But I have a clear favorite amidst those several types too – the Dynamic Asset Allocation Fund. It is a beautiful portfolio management strategy that involves rebalancing a portfolio such that it brings the asset mix back to its long-term target, thus ensuring focus on the long term goals. Generally this kind of rebalancing involves crucial changes like – decreasing positions in the best-performing asset class, while adding to positions in the underperforming assets. The general premise of the dynamic asset allocation is to reduce the fluctuation risks and achieve returns that exceed the target benchmark. Moral of the story – the fund aims to beat the benchmark by mitigating risks.

I was going through a few funds in the Dynamic Asset Allocation Fund category, currently, to decide upon some new investments and I was lucky to hit upon the ICICI Prudential Balanced Advantage Fund. It is an open-ended equity oriented fund that brings multiple benefits to your investments. It strives for growth by investing in equity markets, while providing relative safety through investments in debt instruments. I was immensely pleased with the performance of this fund also because it also aims to gain from market volatility over the long term. The Fund Manager – Manish Gunwani has been managing this scheme since Jan 2012 and has 20 years of experience. I was actually surprised how I missed this one for such a long time, but now I am happy that I spotted a winner that is doing so well in the current markets, and will continue to do so in the future as well, due to its strong fundamentals. It is a fund not just for the seasoned investors but for the novice ones as well. It is highly beneficial because it provides tax-free returns, aims to provide month-on-month tax-free dividends and helps you manage your monthly cash flow with its Automatic Withdrawal Plan & Monthly Dividend Feature. A highly recommended Fund if you ask me.

Standard Disclaimer: Mutual Fund investments are subject to market risks, read all scheme related documents carefully. 

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