Nippon India Commodity mutual fund

Investment Objective

Nippon India Commodity mutual fund seeks to provide investors with consistent income and capital safety in the short and medium term. These funds make investments in fixed-income securities such as government securities, Treasury bills, and other money market instruments. The fund manager chooses the debt securities according to the fund's ratings and investment objective. Over the investment horizon, an investor in a debt fund would earn the returns through income, interest, and a notable increase in the value of the fund. The Nippon India Commodity mutual fund performance does not guarantee meeting the objective of an investment.

Risks Involved in Nippon India Commodity Mutual Fund

When compared to equity funds, Nippon India Commodity mutual fund risk ranges from low to moderately high. The fund's value may fluctuate in response to changes in the rate of the underlying debt security. Government policies, interest rate levels, tax laws, and other economic developments may influence the price of debt securities. The degree of risk is also affected by the duration of the portfolio and its average maturity. Nippon India Commodity mutual fund risk of longer duration is more volatile in the market than debt funds of short-duration. Similarly, debt funds with low rates will face greater market risk than debt funds with high ratings. Before investing in a scheme, investors should consider their risk tolerance.

Return Potential of Nippon India Commodity Mutual Fund

Nippon India Commodity mutual fund returns outperform traditional investment of fixed-income. Historically, these types of funds are known to deliver returns on average of around 7%-10% over five years. Debt funds’ credit ratings and duration determine the rate of return. Credit risk funds, for example, offer higher returns so as to compensate for the involved risks. High-rated funds, on the other hand, such as corporate bond funds, offer lower returns as the risk factor is low. Similarly, long-duration funds, such as Gilt funds, outperform funds of shorter duration. However, Nippon India Commodity mutual fund returns are not guaranteed, and fund performance may vary over time.

Who Should Invest in Nippon India Commodity Mutual Fund?

Nippon India Commodity mutual fund schemes are appropriate for investors who are conservative and are seeking capital appreciation and consistent income over five years. Because these funds are more stable than equity funds, they can help stabilise a portfolio that is equity-oriented. Those looking for high liquidity from their investments would greatly benefit from liquid funds. Long-term investors in higher tax brackets may find the Nippon India Commodity mutual fund return the most tax-efficient investment option.

Things To Consider Before Investing in Nippon India Commodity Mutual Fund

The following things must be considered before investing in Nippon India commodity  mutual fund schemes.

• Assets under management, sometimes known as UM, are a reliable predictor of a fund's performance. Higher AUM funds are thought to be safer to invest in.
• The portfolio yield or current yield of a bond refers to the interest income it generates. High portfolio yield bonds are those with higher coupon rates. The running yield is shown by the metric Yield to Maturity (YTM) for debt mutual funds.
• The annual fee that fund companies charge investors is known as the expense ratio. The lower the expense ratio, the lower the returns. Choose a mutual fund that invests in debt and has a lower fee ratio.
• Investors must be aware of the dangers associated with such investments when selecting an appropriate debt fund. The two key risk categories influencing your choice are interest rate risks and credit risks.
• Prospective investors should conduct in-depth research on the various types of debt funds. This includes examining the funds' historical performance, ratings, investing goals, risk tolerance, etc.

Tax on Nippon India Commodity Mutual Fund

The investments in this fund cannot be sold for three years from the purchase date. One will be subject to long-term capital gain tax if the interests are sold after three years. If your total long-term capital gain exceeds Rs. 1 lakh in a fiscal year, the current tax rate is 10%. There are no cess or surcharges involved. Nonetheless, your investments in this fund are deductible from your taxable income under Section 80c. The current annual tax deduction cap is Rs. 1.5 lakh.