Today, we're going to talk about something called a "Debt Fund." 

We know, we know... the word "debt" usually makes us think of credit card bills and loans, things we owe someone else. But what if we told you that in the world of investing, you could be the one who is owed money?

That’s the big secret behind debt funds. It’s a complete flip of the script. Let’s break it down with a simple story.

Let's Play a Simple Lending Game

Imagine your friend, a talented baker, wants to open a small cupcake shop. They need ₹1,00,000 to buy a fancy new oven, but they don't have the cash right now.

You trust your friend and believe in their cupcake dream. So, you decide to lend them the money. You both agree that in one year, your friend will pay you back the full ₹1,00,000, plus an extra ₹8,000 as a "thank you" for helping them out.

That extra ₹8,000 is what we call interest.

In this little story, you just did what investors do every single day. You gave someone a loan (debt) with the expectation of getting your original money back, plus some extra income.

Now, let's take this same idea and think bigger.

Instead of your friend, imagine a huge, well-known company that wants to build a new factory. Or imagine the Government of India wants to build a new highway. They also need to borrow massive amounts of money.

They do this by issuing something called a bond or a debt security. You can think of a bond as a formal, official "I Owe You" (IOU) certificate. When you buy a company's bond, you are essentially lending them money. In return, the company will  pay you regular interest and then return your original loan amount at a future date.

Simple, right? You are the lender, and they are the borrower.

So, What's the 'Fund' Part All About?

Now you might be thinking, That's great, but I can see that it's possible to buy individual bonds directly from companies or the government for as little as ₹1,000. So, why do I need a mutual fund?"

The real benefit of the "fund" comes from diversification and professional management - by a fund manager.

Just like you, a lot of other folks would have invested in the same fund and the fund manager’s job is to take the pool of money and go out and buy a variety of bonds and other debt instruments from different companies and even the government.

Okay, But Why Should This Matter to Me?

This is the most important question. Why should you, an everyday investor, care about debt funds?

1. Equity schemes can be like a roller coaster—thrilling, but with lots of ups and downs. However, debt funds tend to be less volatile than equity schemes.
2. A Potential Source of Regular Income: Remember the interest your friend paid you? Some debt funds work like that depending on the type of scheme. They collect interest from all the bonds they own and can pass a portion of that income to you, the investor. This can be appealing for people who want a relatively steady stream of income from their investments.
3. It's a Starting Point: If you are new to investing and the wild swings of the stock market seem scary, debt funds can be a more comfortable first step. They allow you to get your feet wet in the world of investing.

A Gentle Reminder: It's important to remember that "less risky" does not mean "zero risk." All mutual fund investments carry risk. The value of your investment can go up or down, and there's no guarantee of returns/return on money invested. We'll talk a lot more about these risks in a simple way in a future blog post.

What We've Learned So Far

• At its core, investing in a debt fund is like lending your money to companies or the government.
• A mutual fund simply pools money from lots of people so you can invest with a small amount.
• Debt funds are less volatile than equity funds and can be a good starting point for new investors.

I hope this has helped lift the curtain on what debt funds are all about. You've taken a wonderful first step today!

In our next blog, we'll explore the different types of debt funds out there. It’s going to be fun!

Until then, happy learning!

Next Module

Disclaimer - Please note that this article or document has been prepared on the basis of internal data/ publicly available information and other sources believed to be reliable. The information contained in this article or document is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party in any manner. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article or document.

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

Published on Sept 9th, 2025

Starting your mutual fund investment journey might seem daunting, but it doesn’t have to be. 

Over the next 10 modules, this guide will provide you with a step-by-step introduction to mutual funds, helping you go from someone unsure about how to invest to a beginner who understands the basics with some fundamental knowledge. 

The approach is simple: learn by doing. Each module is designed to be actionable, educational and easy to understand so that you gain practical knowledge by taking actionable steps.

To fully benefit from this guide, you’ll have to pick any mutual fund scheme of your choice and invest a small amount (say for example, ₹100)*. This small commitment ensures you’re not just learning but also applying what you learn. Please note that this investment will come with the associated risk.

Start Learning

*Investing in mutual funds and other financial products involves risk, including the potential loss of principal. Past performance is not indicative of future results. Before making any investment decisions, investors should conduct their own research and seek advice from qualified financial advisors to ensure that the respective products and strategies are suitable for their specific financial situation and objectives.

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

An Investor education and awareness initiative by Zerodha Mutual Fund.

Full disclaimers

The world is constantly evolving, with digital tools and apps seamlessly woven into every aspect of our daily lives. Communication is instant, commerce is at our fingertips, and most tasks are managed through our smartphones – now our most prized possessions. Life without these smart devices is simply unimaginable.

This natural evolution leads to a fundamental question: if every other part of our lives is becoming simpler and more integrated, why should investing be any different?

This very question is what drives us at Zerodha Fund House. Our core philosophy is built on the belief that investing should be for everyone, and technology should be the bridge that makes finance more accessible and intuitive. Our goal is to strip away the complexities and jargon that often make investing feel intimidating and out of reach.

This conviction led us to think about how we could bring investing closer and make it simpler for you. That's why we're excited to introduce an easy new way to invest in mutual funds with Zerodha Fund House – right inside WhatsApp!

Now, you can effortlessly invest, start SIPs, track your portfolio, withdraw funds, and access support – all without needing any other app.

• Invest with Ease: Make one-time investments in your favorite Zerodha Mutual Fund schemes, including our New Fund Offers (NFOs), with just a few taps.
• Start SIPs on the Go: Begin your financial discipline by setting up monthly Systematic Investment Plans (SIPs) directly via WhatsApp.
• Instant Portfolio Tracking: Check your portfolio's current valuation and returns anytime, anywhere, with just a few taps.

Investing – truly just a click away. You can discover this investing journey in two ways:

1. Visit this page to select any scheme of Zerodha Mutual Fund (excluding ETFs). You'll see the option to invest via WhatsApp.
2. You can also start by sending a “Hi” to +91-98453 35486, the only official WhatsApp number used by Zerodha Fund House.

Vishal Jain, CEO Zerodha Fund House

Disclaimer - Please note that this article or document has been prepared on the basis of internal data/ publicly available information and other sources believed to be reliable. The information contained in this article or document is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party in any manner. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article or document.

Zerodha Asset Management Private Limited and/or Zerodha Mutual Fund (collectively referred to as ‘Zerodha Fund House’) operates independently of WhatsApp Inc. WhatsApp is a third-party platform, and this post and the usage of the service of WhatsApp does not imply any endorsement or partnership in any manner whatsoever with WhatsApp.

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

Published on July 26th, 2025

In November 2021, SEBI (Securities and Exchange Board of India) allowed Asset Management companies to launch silver ETFs (Exchange-Traded Funds)^[1]. Since then, silver ETFs have seen massive growth (as shown in below graph) in AUM, crossing the ₹13,500 cr mark as of Jan 2025.^[2] There are 12 Silver ETFs with more than 6 Lakh investor folios across them as of Jan 2025. 

Silver Demand has far surpassed the supply

^[3] Since 2021, the demand for silver has outpaced its supply. This versatile metal is both a valuable commodity and a crucial component in various industries, including solar energy and automotive manufacturing. Silver's diverse applications, from industrial uses to jewelry, digital photography and investment also contribute to its demand.

Industrial Demand for Silver has increased by more than 55%

According to the estimates by ‘The Silver Institute’, the overall industrial demand for Silver has increased by more than 55% driven by its applications across various industries, including automotive, technology, pharmaceuticals, and solar energy. Silver is also used in manufacturing and industrial fabrication since it does not corrode and has good thermal properties. 

In a three year period, from (Jan 2022- Jan 2025), the AUM of Silver ETFs have crossed ₹13,500 Crs! Also, as of Jan 2025, with over 6 lakh investor folios, it's clear that Indian investors are taking exposure to silver. As investors seek diversification and exposure to commodities, Silver ETFs provide a simple and hassle free way to take exposure to this precious metal.

Source:

[1] - SEBI Norms for Silver ETFs
[2] - AMFI MF Industry Data - Jan 2024 to Jan 2025 as communicated by AMFI. These figures have been rounded off for the sake of clarity.
[3] - Silver Supply and Demand

Disclaimer - Please note that this article or document has been prepared on the basis of internal data/ publicly available information and other sources believed to be reliable. The information contained in this article or document is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party in any manner. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article or document.

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

Published on 27 March 2025

Over the past year, Index funds have emerged as the fastest-growing fund in terms of Assets Under Management (AUM) flowing in through Systematic Investment Plan (SIP) route , achieving a growth close to 85% from Nov 23 - Nov 24 with the live SIP accounts increasing by about 80% over the same period.

Higher SIP ticket size growth in Index Funds vis-à-vis the industry:

It is also interesting to note that though the average ticket size of index funds is similar to that of the overall industry, the growth rate has been higher at around 14% for index funds as compared to around 8% for the overall industry. 

Individual Investors own majority of the Index Fund AUM:

Individual investors account for more than 60% of all the index fund AUM as of September 30, 2024. The rest of the AUM is held by Institutions such as corporates and banks.

Growth in the Contribution of Index Fund folios to the overall industry folios:

The Index Fund category has also seen over 12x growth in its contribution to the mutual fund industry’s folios over the past five years. Back in September 2019, index fund folios constituted a mere 0.43% of the total industry folios. Fast forward to September 2024, and they now represent around 5%.

Disclaimer - Please note that this article or document has been prepared on the basis of internal data/ publicly available information and other sources believed to be reliable. The information contained in this article or document is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party in any manner. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article or document.

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

Published on Jan 21, 2025

Gold has long been considered an investment that one should keep in their portfolio. But holding physical gold comes with challenges like storage and security. That's where gold funds step in, offering a modern way to invest in gold. But what happens behind the scenes when you invest in  gold funds? Let’s break it down in simple steps, explaining how your money transforms into a bar of gold stored securely in a vault.

Step 1: Your Investment Begins

When you invest in a Gold Fund, the first step is transferring your money from your bank account to the mutual funds’s bank account. This is where your investment journey starts.

Step 2: Purchasing Physical Gold

The Fund Manager then uses your money to purchase 1Kg gold bars that meet strict purity standards (99.5% purity and above). These gold bars are sourced from accredited suppliers, ensuring quality.

Step 3: Storing Gold in a Secure Vault

After purchasing the gold, it is transported to a secure vault. For a Gold Fund, these vaults are managed by some  of the world’s most trusted vault providers. This is where your gold is stored under high security, and, in addition, it is fully insured, ensuring that your investment remains protected against any unforeseen circumstances.

Step 4: Allotment of Units

The units are allocated to the investor at the applicable NAV by the AMC. These units represent your proportional ownership of the physical gold held in the vault. It’s a way to own gold, without the hassle of physically storing or managing it. 

Step 5: Redeeming Your Investment Units

When you decide to redeem your investment units from the Gold Fund, the process is just as simple. Upon placing a redemption request, the fund manager sells the corresponding amount of physical gold. Your units are processed at the applicable Net Asset Value (NAV), and the proceeds are credited to your bank account. This way, you can liquidate your investment quickly as compared to the hassle associated with selling physical gold. 

Key Takeaway

Investing in a gold fund combines the security of physical gold with the ease of digital ownership. While the above overview covers the basics, the actual process involves a more complex workflow. Authorized Participants, like bullion traders, play a role, and the fund manager’s buying and selling of physical gold depend on factors such as liquidity within the scheme. The process can also vary between a Gold ETF and a Gold ETF Fund of Fund (FoF). However, the key point is that your investment is backed by actual gold securely stored in a vault, making it a safe, convenient, and hassle-free option. With a Gold Fund, you benefit from the stability of owning real gold alongside the flexibility of digital access, giving you the best of both worlds.

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

Please note that this article or document has been prepared on the basis of internal data/ publicly available information and other sources believed to be reliable. The information contained in this article or document is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party in any manner. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article or document.

Gold Fund shall refer to Gold ETFs and Gold ETF Fund of Fund (FoF) only. It may be noted that the actual process of how Gold ETFs/Fund of Funds operate may vary significantly from fund house to fund house.

Published on Nov 18th 2024

Asset allocation is a key principle in investing, and gold has been considered as a crucial asset class for diversification for a long time. Gold has historically exhibited a low correlation to stocks, meaning it can provide a hedge against market volatility.

But a question that often arises is, how much gold should you actually add to your portfolio? Let’s explore the importance of having gold in your  portfolio and how various scenarios of asset allocation would have played out.

For this analysis, data from 1st October 2009 till 16th October 2024 has been considered for Nifty 50 TRI as an equity benchmark and  MCX Gold Spot price as the benchmark for gold. The portfolio has been rebalanced on a yearly basis. A 15 year time period has been considered for a long term analysis. Let's get into it.

Scenario 1: All Equity

Let's look at the base case scenario and see what would have happened if an investor had invested ₹1 Lakh in the Nifty 50 TRI Index in Oct 2009.

The investor would be sitting at a portfolio of about ₹5.88 Lakhs, which is a compounded annual growth rate (CAGR) of ~12.50%. However, the investor would also have experienced a maximum drawdown of -38%.

Maximum drawdown shows the largest fall your portfolio has experienced from its highest point to its lowest point, helping you gauge how resilient your portfolio is to downturns.

In this scenario, it would have been a fall from the investment value of ₹2.75L to ₹1.69L during the covid market crash that happened from January 2020 to March of that year. Let's see if adding gold changes anything.

Scenario 2 : With Equity and Gold

For the same time period had the investor invested ₹1L rupees, but with an asset allocation of  Nifty 50 TRI and Gold (rebalanced annually), here is how it would have looked:

For a 90:10 allocation into equity and gold, the investment would have grown to ₹5.76L, with a CAGR of 12.35% which is a 0.15% drop from scenario 1 and a maximum drawdown of -34.1%.

An 80:20 allocation would yield ₹5.86L, a 12.48% CAGR, with the maximum drawdown dropping further to -30.01%.

With a 70:30 ratio,  ₹1L would have turned into ₹5.91L, a CAGR of 12.54%, and the maximum drawdown further reduces to about -26%. To visualize this drawdown in terms of your portfolio value, the COVID market fall from January to March 2020  in your portfolio value would have been from ₹2.82L to ₹2.09L.

The overall picture

Historical data indicates that having Gold in a portfolio can significantly reduce the drawdown of your overall portfolio, by reducing volatility, especially during market downturns. 

Here, risk-adjusted return measures how much return an investment generates for the risk taken.

The chart demonstrates that adding Gold to a portfolio can reduce the maximum drawdown across various asset allocations, with minimal impact on overall returns.

Conclusion

In conclusion, having gold in your portfolio has historically shown potential benefits, particularly in reducing volatility and limiting drawdowns during market downturns. Gold's low correlation with equities may make it an effective diversification tool. While the exact amount of gold you should hold depends on your individual risk tolerance and financial goals, past data suggests that even a small allocation can improve a portfolio's resilience. It's advisable to consult a financial advisor who can help determine the right allocation based on your specific needs and circumstances.

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

Please note that this article or document has been prepared on the basis of internal data/ publicly available information and other sources believed to be reliable. The information contained in this article or document is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party in any manner. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article or document.

Past performance may or may not sustain in future and should not be used as a basis for comparison with other investments. The AMC, Mutual Fund and its affiliates make no guarantees, promises, or forecasts regarding any type of return.

The Nifty Indices mentioned herein are owned by NSE Indices limited. All information provided is for informational purposes only

Published on Nov 28th 2024

The number of new investor folios coming from smaller cities has been rising on a monthly basis. As per AMFI Mutual Fund Industry data, the mutual fund industry has added 2.3 Cr investor folios from Apr till Aug 2024 out of which more than 50% of them come from smaller cities. Such trends may foster a culture of saving and investing, and ultimately contributing to long term discipline in investment and savings.

However, it’s important to recognize that smaller cities still account for only 19% of the overall Assets Under Management (AUM) of the mutual fund industry as of Aug 2024. This indicates that while we have more folios from these regions, the average investment size may still be lower compared to those from larger urban centers. These smaller cities are classified as B-30 cities (Beyond the top 30 cities) by Association of Mutual Funds of India (AMFI).

What are the factors that may have contributed to this trend in smaller cities?

1. Contribution from live SIP Accounts:
As of Aug 2024, about 54% of all the live SIP accounts in the mutual fund industry is contributed by SIPs from smaller cities. Smaller cities have a larger number of SIP accounts reflecting greater penetration in less urbanized areas.

From Apr to Aug 2024, the growth rate in the SIP accounts in smaller cities for Index Funds (18.7%) is higher than the growth rate of any other category in the industry. Altogether, about 79% of the SIP accounts from smaller cities are contributed by growth/equity oriented schemes.

The below table represents the growth rate in SIP accounts across different categories of schemes (as per MCR) for this financial year from Apr 2024 to Aug 2024.

2. Access to Direct Plans:
The rise of smartphone apps, direct investment platforms, digital payment systems, and industry initiatives has led to more than 50% of all the new investor folios in smaller towns to invest through direct plans.

Additional Information:
The average ticket size of the retail segment in smaller cities (B-30 cities) is about 1.13 lakh rupees while the combined average ticket size of the retail segment for (T30+B30) cities is about 2.04 lakh rupees. 

Conclusion:

The growth in the number of mutual fund investor folios from smaller towns may indicate a shift towards financial inclusion and investment awareness in these regions.

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

Please note that this article or document has been prepared on the basis of internal data/ publicly available information and other sources believed to be reliable. The information contained in this article or document is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party in any manner. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article or document.

Source:
AMFI Mutual Fund Industry data (Apr - Aug 2024), as communicated by AMFI 

Published on 29th Jan 2025

Systematic Investment Plan (SIP) is a convenient and a great way to get started with investing in mutual funds. Setting up an SIP offers an opportunity for investors to adopt a disciplined approach to investing. 

Steady rise in SIP Accounts and Monthly SIP Contributions:

There is a healthy trend of the total number of outstanding SIP accounts (total SIP accounts that are active) and also the SIP contribution is increasing year on year. ^[1] As of June 2024, total SIP AUM stood at around 20% of the overall Mutual Fund industry AUM.

Average SIP Amount per account:

However, it is interesting to see that average SIP amounts per account have been fairly uniform at around 2,200-2,500 INR. For investors to fully reap the benefit of SIPs over a long period of time, it may be a good idea to consider stepping up the SIP amounts in line with the rising income levels. 

Importance of stepping up your SIP Amounts:

As your income level rises, it may be a good idea to step up the SIP amount. A gradual increase in the SIP contribution may lead to an accumulation of a certain corpus in the long term as you can see below: 

Step up SIPs provide a great way to structure your investment amounts as your income levels rise. This may offer a strategic way to leverage your growing income for potentially higher returns over the long term. 

This may allow an investor to adjust the investment amount according to their financial situation. This flexibility makes it easier for you to manage your investments. 

There are ways for you to step up your SIPs. One way to manually step up the SIP amount is to think about SIP investments as a percentage of your salary. As your salary increases, the SIP amount contributed also increases proportionally.

The other way is to set the SIP with a “step up” option, offered by different investment platforms. You can just select the date, percentage by which you want the SIP amount to increase and then confirm your SIP update.

Source:[1]: AMFI Monthly Note June 2024

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

Please note that this article or document has been prepared on the basis of internal data/ publicly available information and other sources believed to be reliable. The information contained in this article or document is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party in any manner. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article or document.

Published on Sept 17, 2024

The total number of retail Index Fund folios has grown by around 12X in less than 4 years. Investors may be choosing Index Funds for their numerous benefits such as Broad Market Exposure, Diversification, and potential for long term growth. Please find the detailed breakdown below👇

Growth in the total number of Index fund retail folios by about 12x in less than 4 years:

The total number of retail folios in index funds has increased nearly 12-fold, growing from 4.96 lakh in March 2020 to 59.37 lakh by December 2023. This may be viewed as an indication of increased preference for passive investment strategies.

Increase in the AUM of Index Funds by more than 85x over the past 7 years:

There is a further increase in the total Assets Under Management (AUM) of index funds. From approximately ₹8,000 crore in March 2020, the AUM of these funds has increased 25 times to about ₹2,13,500 crore by March 2024.

Increase in the number of Index Funds by nearly 10x in the past 7 years:

As we can observe, the total number of index funds has also grown significantly, with an increase from 44 in March 2021 to 207 by March 2024, marking a 370 percent rise.

AUM of Index Funds across different Broad Based Indices:

The study reveals that the Index Funds based on the top three* broad based indices i.e Nifty 50, Nifty Next 50 and Nifty Midcap 150 contribute about 90% of total AUM among broad based indices.

AUM of Index Funds hit a record high in June 2024

As of June 2024, index funds reached a record high AUM of ₹2.43 lakh crore, reflecting close to 900 percent increase over the past three years. Index funds have surpassed other mutual fund categories in AUM growth percentage.

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

Please note that this article or document has been prepared on the basis of internal data/ publicly available information and other sources believed to be reliable. The information contained in this article or document is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party in any manner. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article or document.

Published on Aug 09, 2024

Liquid Funds are funds whose investment is into debt and money market securities with a maturity of up to 91 days only.

Where will your money be invested through liquid funds?

Liquid Funds primarily invest in highly liquid money market instruments and short-term debt securities, ensuring high liquidity. These include Treasury Bills (T-bills), Commercial Paper (CP), Certificates Of Deposit (CD), and TREPS with maturities up to 91 days, aiming for stable returns at low/moderate risk. 

How Do Liquid Funds Actually Work?

The primary goal of a liquid fund is to offer capital protection and liquidity to investors. To achieve this, the fund invests in debt and money market securities with a maturity of up to 91 days that are in line with the scheme's mandate.This short maturity reduces the fund's sensitivity to interest rate changes.
*Liquid funds have historically provided better returns than regular savings accounts, however these funds are subject to market risks unlike savings accounts. Further, redemption requests in these Liquid funds are generally processed within one working (T+1) day.While returns may not be the primary focus, safeguarding capital is paramount. Key aspects like maintaining a low expense ratio, ensuring high credit quality across the portfolio, and adopting a disciplined investment approach are critical components of a quality liquid fund.

How can you Invest in a Liquid Mutual Fund?

Investing in liquid funds can be done directly through the fund house or via intermediaries such as MF Central, MF Utilities and other direct Mutual Fund platforms. These platforms facilitate easy investment and tracking of your funds. 

Why Should You Invest in Liquid Funds?

Investing in liquid funds offer advantages like:
1. High Liquidity: Liquid funds provide easy access to your money, allowing you to redeem your investment quickly, usually within one business day.

2. Capital Protection: They invest in short-term debt securities, which helps in protecting your capital.

3. Better Returns than Savings Accounts: *Liquid funds may offer higher returns compared to regular savings accounts.

4. Low Risk: Due to their short maturity period (usually less than 91 days), liquid funds are less sensitive to interest rate changes and market fluctuations.

5. Convenient Parking for Surplus Funds: They are an ideal option for temporarily parking surplus funds while earning returns.

6. No Lock-in Period: Unlike fixed deposits or some other investment options, liquid funds do not have a lock-in period, offering greater flexibility.

7. Tax Efficiency: Although the returns from liquid funds are taxable, they may still be more tax-efficient compared to some other short-term investment options, especially if held for a longer period.

Taxation Rules of Liquid Mutual Funds

Short-term and Long-term Capital Gains tax:
Irrespective of the holding period, if an investor sells or redeems liquid fund units, the gains are taxed as per the investors’s tax slab rate.

Tax Implications of Dividends from Liquid Funds:
Dividends are added to an investor's taxable income and taxed according to their income tax slab rate. A 10% TDS (Tax Deducted at Source) is applicable on dividend amounts exceeding Rs. 5,000 in a financial year.

What are the factors to consider before investing?

Before investing or figuring out which liquid fund is best, it is essential to consider the following factors:

• Risk and Returns: Assess the fund’s risk and return profile to ensure it aligns with your investment options and risk tolerance. Liquid funds generally present low-risk investment opportunities.
• Expense Ratio and Other Costs: Evaluate the expense ratio and any additional costs associated with the liquid schemes such as exit loads. Liquid Funds have a graded exit load of up to 6 days and no exit load from the 7th day. as these factors can influence your overall returns. 
• Credit Quality of Underlying Securities: Investigate the credit quality of the underlying securities within the fund’s portfolio. While these funds typically invest in high-quality debt instruments with low credit risk, it is essential to check their credit ratings.
• Liquidity of the Fund: Assess the liquidity of the liquid fund to ensure it can meet your redemption needs effectively. 
• Investment Horizon: Liquid funds are categorized under debt mutual funds and having investment horizon of security which have maturity of ninety-one days. Because they have such a short investment horizon, liquid funds might be a good investment option for someone who wishes to invest in funds that come with a short maturity period.

Conclusion

In conclusion, Liquid Funds provide a highly liquid and safe investment option by focusing on short-term debt and money market instruments. *They may offer superior post-tax returns compared to traditional savings bank accounts and are ideal for parking surplus cash for short periods, typically ranging from one day to three months. Liquid Funds serve as an effective short-term investment vehicle, especially for those awaiting other investment opportunities in equities or long-term fixed income instruments. 

* Past performance is not indicative of future results. Before making any investment decisions, investors should conduct their own research and seek advice from qualified financial advisors to ensure that the respective products and strategies are suitable for their specific financial situation and objectives.

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

Please note that this article or document has been prepared on the basis of internal data/ publicly available information and other sources believed to be reliable. The information contained in this article or document is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party in any manner. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article or document.

Gold represents a versatile investment proposition due to its dual nature as both a consumer good and an investment asset. This dual role allows it to provide effective diversification during times of financial turmoil while also benefiting from growth in jewellery and technology demand during periods of economic growth.

Brief Overview of Gold as an metal

^{[1] “}The estimates currently available suggest that around 216,265 tonnes of gold has been mined throughout history, of which around two-thirds has been mined since 1950. And since gold is virtually indestructible, this means that almost all of this metal is still around in one form or another.

Total above-ground stock (end-2024): 216,265 tonnes

1. Jewellery ~97,149t, 45%
2. Bars and coins (including gold backed ETFs) ~48,634t, 22%
3. Central banks ~37,755t, 17%
4. Other ~32,727t, 15%
5. Reserves ~54,770t*
6. Resources ~132,110t*"

Why invest in Gold

Gold holds a special place as a culturally significant metal in the hearts and homes of countless Indians. It is considered a store of value, a symbol of wealth and status and a fundamental part of many rituals. Gold is often considered to act as a hedge against market volatility as it has low correlation with Equity. Thus introducing gold into your portfolio can potentially reduce overall volatility, providing a more stable path towards achieving your financial objectives.

What are the different Gold Investment Options?

Let’s understand the different types of Gold products that are available: 

Physical Gold →

1. Bullion bars
   Bullion bars and coins could be a potential choice for investment. They are stamped with their weight, purity, and a serial number for identification purposes.
2. Coins & other collectibles
   Gold coins and collector items, such as medals, typically hold additional worth beyond their gold content because of their design or scarcity.
3. Investment jewellery
   Jewellery made of pure gold qualifies as an investment in many markets. Pieces are often sold by the gram, but luxury brands can hold additional value.

Digital Gold →
Digital Gold represents a digital representation of physical gold, backed by actual gold reserves. It enables investors to own gold without the need for physical possession.
Avenues to buy Digital Gold:
MMTC-PAMP’s digital gold in India bears the 24K 999.9 purity mark and is backed by stringent authenticity verification and transparent pricing. Through MMTC-PAMP’s partners one can transact in digital gold with a few clicks.

Gold ETFs, Gold Funds & similar products →
Physically-backed gold exchange-traded funds (ETFs) invest in gold bullions. Gold ETFs allow investors to gain exposure to gold as an asset class through the convenience of a modern digital investment. Investors who buy units of ETFs do not have to trade physical gold directly or manage the safekeeping of their holdings; they can buy units of an ETF as easily and quickly as they would buy equity shares of listed companies. Gold might act as a hedge against equity. Having gold along with equity may help bring down the portfolio volatility.

At Zerodha Fund House we offer a Gold ETF viz., Zerodha Gold ETF. You can read more about the scheme on our website here.  

Sovereign Gold Bonds (SGBs) →
SGBs are government securities denominated in grams of gold. They may be regarded as substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by the Reserve Bank of India on behalf of the Government of India. The SGB offers a superior alternative to holding gold in physical form. The risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity and periodical interest.

Comparison of Gold ETFs, SGBs & Physical Gold

Conclusion

Gold is accepted the world over. Due to its low correlation with asset classes such as equity, gold may be useful to diversify a portfolio. Hence, when used in the construction of diversified portfolios, gold potentially helps reduce overall risk to a portfolio; however, as with all investments investing in gold is not without risk. Investors are requested to carefully evaluate their financial goals and investment horizons before making any investment decisions.

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

Please note that this article or document has been prepared on the basis of internal data/ publicly available information and other sources believed to be reliable. The information contained in this article or document is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party in any manner. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article or document.

Source:
[1]: Brief over view of Gold as a Metal

Published on Dec 19 2025

There are many different investment avenues available to investors. Mutual funds are one of them that may offer good investment opportunities. These are a type of financial instrument made up of a pool of money collected from many investors. They then invest in securities such as shares, bonds, money market instruments and other assets. 

Advantages of Investing in Mutual Funds

A few advantages of investing in mutual funds are highlighted below:

1. Professional Fund Management:
   Mutual Funds are well regulated and professionally managed. A fund manager continuously monitors and rebalances the portfolio accordingly to meet the scheme’s objectives. Portfolio management by professional fund managers is one of the most important advantages of investing in a mutual fund.
   
2. Option to take exposure to a range of asset classes:
   Mutual Funds (MFs) offer various schemes like those investing only in equity, debt or gold etc to cater to the risk appetite of various investors. Even with very small amounts, investors can invest in MF schemes through monthly systematic investment plans (SIP).
   
3. Well Regulated and Transparent:
   As far as mutual funds are concerned, The Securities and Exchange Board of India (SEBI) formulates policies, regulates and supervises mutual funds with an aim to protect the interest of the investors. It has laid down strict rules and regulations to ensure transparency, fairness, and investor protection in the mutual fund industry.
   
4. Flexibility to transfer and options to invest and withdraw:
   There are various systematic options available for investors to transact in mutual funds. A few of these options are highlighted below:
   1. Systematic Transfer Plan (STP):
   Investors may opt for a Systematic Transfer Plan. It is a mechanism by which an investor is able to transfer a fixed or variable amount or only the gains made from one mutual fund scheme to another. An STP may actually be used as a hedge against market volatility. Money may be first invested completely in a debt-oriented fund and periodic transfers may be made into an equity-oriented fund as a protection against immediate market volatility. This may ensure a slow exposure to a slightly more risky asset class. Hence, there will be regular transfers to the equity fund while a certain amount of the corpus is invested in the debt-oriented fund and is preserved.
   2. Systematic Investment Plan (SIP):
   It is an investment option which provides a structured way to invest regularly in mutual funds by contributing a fixed amount monthly, quarterly, annually etc. Investors can learn more about SIPs here. 
   3. Lumpsum Investing: 
   Unlike SIPs, lumpsum investing involves investing a sum of money in one go into the mutual fund scheme. 
   4. Systematic Withdrawal Plan (SWP):
   A Systematic Withdrawal Plan (SWP) allows investors to withdraw a fixed amount from a mutual fund scheme regularly. Investors can choose the amount and frequency of withdrawal. They may also choose to just withdraw the gains on your investment keeping your invested capital intact. At the set date, units from your portfolio are sold and the funds are transferred to the investor’s account.
5. May suit your Financial Goals:
   Mutual funds in India offer a diverse range of options across different risk profiles. Whether you are a beginner or a seasoned investor, you may be able to find a mutual fund that aligns with your income, investment goals, time horizon, and risk appetite. 

Conclusion:

Mutual funds (MFs) may be considered an investment option for those looking to invest in the capital markets without taking direct exposure to the capital market securities. MFs may have the potential to offer wealth creation opportunities in the long term. However, like all investments, they also carry certain risks. Hence, investors should compare the risks and expected returns after adjustment of tax before making any investment decisions.

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

Please note that this article or document has been prepared on the basis of internal data/ publicly available information and other sources believed to be reliable. The information contained in this article or document is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party in any manner. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article or document.

Published on July 5 2024

Over the past few years, Exchange Traded Funds (ETFs) seem to have been adopted by many Indian investors since they provide exposure to broad segments and sub-segments of Indian markets. 

ETFs are the funds that trade on exchanges, generally tracking a specific index. ETFs provide investors with exposure to broad segments and sub-segments of the equity markets, commodities and debt thus enabling efficient asset allocation consistent with the investor’s financial needs, risk tolerance, and investment horizon.

Presenting a few key data points around ETF adoption in India.

1. ETF share of the overall AUM of the Mutual Fund Industry as on March 2024:
   ETFs constitute close to 13% of the overall mutual fund industry AUM. ^[1] ETFs occupy a share of ₹6.95 lakh crore out of ₹53.40 lakh crore of the total AUM of the mutual fund industry. 

2. Growth in retail investor folios in ETF Schemes:
   ^[2] The rise from 5.33 lakh accounts (across equity and debt ETFs) in 2017 to 1.25 crore in 2023 reflects a broader acceptance and understanding of ETFs among retail investors.

3. Trading Volume of ETFs:
   Trading Volume is a measure of the market’s activity and liquidity over a set period of time. ^[3] The trading volume has surged from ₹26,139 crore in FY 2016-17 to ₹1,83,676 crore in FY 2023-24. This is an increase of about 600%.

4. AUM of ETF schemes across different asset classes:

Equity ETFs:

• ^[4] The AUM for Equity ETFs has consistently increased, going from ₹43,234 crores in March 2017 to ₹5,63,176 crores in March 2024.
• This category has shown the most substantial growth, compared to the other asset classes such as Debt and Gold

Debt ETFs:

Debt ETFs have also seen significant growth, from ₹1,497 crores in March 2017 to ₹96,163 crores in March 2024.

Gold ETFs:

• Gold ETFs have grown steadily, from ₹5,480 crores in March 2017 to ₹31,224 crores in March 2024.
• Between 2017 and 2024, AUM of Gold ETFs has increased by about 470%.

5. Number and AUM of Equity ETF Schemes across Broad Based Indices:
^[5] The study reveals that the ETFs based on the top three broad based indices i.e Nifty 50, Nifty Next 50 and Nifty Midcap 150 alone contribute more than 99% of total AUM among broad based indices in the Equity ETF schemes.

Conclusion:

The study reveals that ETFs constitute close to 13% of the overall AUM of the mutual fund industry. Similarly, a data driven analysis has been done on the growth of retail investor folios in ETF schemes, trading volume of ETFs, AUM of ETF schemes across different asset classes, and the number and AUM of different ETF schemes across broad based indices.

Source:
[1]: AMFI Annual Report
[2],[3],[4],[5]: Nifty Passive Insights

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

Please note that this article or document has been prepared on the basis of internal data/ publicly available information and other sources believed to be reliable. The information contained in this article or document is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party in any manner. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article or document.

Published on July 5 2024

Large cap, Mid cap, and Small cap are categories used to classify companies based on their market capitalization. Market capitalization (market cap) can be defined as the market value of all the company's shares, calculated by multiplying the total number of Company’s outstanding shares by the current market price of one share.

What is Large Cap, Mid Cap and Small Cap?

Securities Exchange Board of India (SEBI) has defined Large cap, Mid cap and Small cap as follows:

1. Large-cap stocks – 1st to 100th company in terms of full market capitalisation
2. Mid-cap stocks – 101st to 250th company in terms of full market capitalisation
3. Small-cap stocks – 251st company onwards in terms of full market capitalisation

^[1] AMFI in consultation with SEBI and the stock exchanges has prepared a list of companies under each market capitalization viz., Large cap, Mid cap and Small cap based on the data provided by Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and Metropolitan Stock Exchange of India (MSEI). The list can be found here.

Difference between Large Cap, Mid Cap and Small Cap Funds 

Primarily, the schemes of mutual funds are broadly classified into the following categories  and each of these categories  have multiple sub-categories of schemes: 

• Equity Schemes
• Debt Schemes
• Hybrid Schemes
• Solution-oriented Schemes
• Other Schemes 

Individual investors primarily hold equity-oriented schemes. As of Nov 2024, ^[2] 87% of individual investor assets were held in equity oriented schemes. As the name suggests, the schemes under the equity category majorly invest in equity and equity related instruments.

The Large-cap, Mid-cap and Small cap funds, all the three categories fall under the Equity scheme. 

1. Large cap fund: The Large-cap equity fund indicates the funds that invests predominantly in equity and equity related instruments of large cap companies. These are the top 100 companies in India, with the largest market capitalisation.
2. Mid cap fund: Mid cap funds invest in equity and equity-related instruments of Mid cap companies that are ranked between 101 and 250 in the list of companies according to full market capitalization. 
3. Small cap fund: Small cap funds invest in equity and equity-related instruments of Small cap companies that are ranked from 251st company and onwards according to full market capitalization. 

Characteristics of Large Cap, Mid Cap and Small Cap Funds:

1. What is a Large Cap Fund?
   Large cap funds  invest  in  equity   & equity  related  instruments  of  large cap companies - a minimum of 80% of total assets.
   
   ^[3] Large caps are usually characterized by lower volatility in the long term and tend to tide over phases of economic downturn relatively better than Mid-caps and Small cap stocks. From the data below we can look at the performance of Large caps during the global financial crisis of 2008, followed by other calendar years such as 2011, and 2018, where Large caps (represented through Nifty100) have delivered better returns as compared to the Mid-caps (represented through Nifty Midcap 150) and Small caps (represented through Nifty Smallcap 250). 

2. What is a Mid Cap Fund?
   Mid cap funds  investment  in   equity   & equity  related  instruments  of  Mid cap companies - a minimum of 65% of total assets. 
3. What is a Small Cap Fund?
   Small cap funds  investment  in   equity   & equity  related  instruments  of  Small cap companies - a minimum of 65% of total assets. 

Gaining exposure to large cap, mid cap and small cap market segments:

Investors can take exposure to Large cap, Mid cap and Small cap market segments by purchasing individual shares of stock; or in a mutual fund format, that tracks an index based on Large-cap/Mid-cap/Small-cap benchmark; or through available index funds/ other mutual funds that are focused on Large-cap/Mid-cap/Small-cap investments.

*At Zerodha Fund House, we offer mutual fund schemes that track benchmarks across different market capitalizations viz., Large cap and Mid cap. To read more about them, you may visit the homepage of Zerodha Fund House. 

Conclusion:

Each category (Large cap/Mid cap/Small cap) offers different investing opportunities and challenges. Please keep in mind that investing requires in-depth research and analysis. So, kindly stay informed and make decisions that align with your long-term financial objectives. By understanding the above factors, you can build a diversified portfolio that suits your individual needs and maximizes your potential for investment success. 

Disclaimer:
* Please note that the details provided here represent current offerings and are subject to change. This information should not be viewed as financial advice or a recommendation to invest in Zerodha Mutual Fund schemes. Investors are encouraged to consult with their financial advisor for personalized investment advice.

The Nifty and SENSEX indices mentioned hereinabove are owned by NSE Indices Limited and AIPL, a wholly owned subsidiary of BSE Limited respectively. All information provided is for informational purposes only.

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

Please note that this article or document has been prepared on the basis of internal data/ publicly available information and other sources believed to be reliable. The information contained in this article or document is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party in any manner. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article or document.

Published on Jan 26 2025