What is Solution Oriented Mutual Funds?
5paisa Research Team
Last Updated: 02 Jan, 2025 12:58 PM IST
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Content
- What are the Types of Solution Oriented Mutual Funds?
- Benefits of Investing in Solution-Oriented Schemes
- Limitations of a Solution-Oriented Scheme
- Who Should Invest in Solution Oriented Funds?
- When To Start Investing in Solution Oriented Funds?
People often wonder what is solution oriented mutual funds. Mutual funds with a solution-oriented approach make it easier to invest for corpus preservation or capital appreciation to cover future needs like retirement, marriage, or children's education. In order to furnish a portfolio that generates the maximum yields in line with client's expectations, fund managers of solution-oriented schemes consider investors' risk tolerance, financial objectives, and projected returns.
There are five main categories of mutual funds accessible in India, according to the Securities Exchange Board of India (SEBI). It includes debt, equity funds, balanced hybrid portfolios, solution-oriented funds, and others. Solution-oriented funds provide investors with the advantage of customising their portfolios according to the risk and investment objective.
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Frequently Asked Questions
Although the lock-in time varies for each solution-oriented fund, the majority of the better ones have a five-year lock-in period.
Mutual funds with a solution focus are made to accomplish a certain objective. These funds often charge an exit load over an extended period of time and have a 5-year lock-in period. Making a smart decision may involve selecting an alternative plan that achieves the goal of wealth generation.
Nothing can be guaranteed when it comes to mutual fund returns; they are completely dependent on the state of the market. On the other hand, investors may anticipate annualised returns of 8–12% for debt-oriented funds and 12–15% for equity-oriented funds over the long run. Depending on the state of the market, the returns might be larger or lower.
Certain solution-focused mutual funds provide tax advantages as well. These funds have a five-year lock-in term and invest in stocks. Taxable income may be decreased by up to Rs 1,50,000 under section 80C.