What is Interval Mutual Fund and How to Invest?

The investment industry is a dynamic world with fluctuating economic conditions. In this context, interval funds can be ideal for people looking to invest for a specific period. It is allowed to purchase or redeem the units of interval funds only during the specified time period.

Are you thinking of investing in a fund that will allow you to make short-term profits? Stick with us till the end to find out all about interval funds!

An interval fund is one of the most popular mutual funds in recent times. If you are interested in funds and investments, you must be familiar with open-ended and closed-ended mutual funds. Interval funds work as a blend of both open-ended and closed-ended funds.

Interval funds in mutual funds, similar to closed-ended funds, do not permit the investors to buy or sell units frequently. Such funds might be listed on a stock exchange. The investors can receive redemption from the fund houses at the prevailing NAV (Net Asset Value) in the permitted intervals.

Moreover, interval funds are also similar to fixed maturity plans. In FMP, the fund manager follows a buy-and-hold approach, which helps to keep the expense ratio lower. Similarly, money remains invested for a fixed tenure in interval funds and cannot be redeemed before maturity.

Recently, investing in interval mutual funds has been a common trend. One can find the reasons in the following list of benefits associated with such funds.

• Investors of such funds can access institutional-grade alternative investments, including business loans and private equity.
• The interval funds investors can repurchase shares from NAV periodically.
• The risk associated with such funds is low since these are typically made in debt securities.
• Interval funds can be beneficial for investors looking for short-term returns.

You can also invest in interval funds through specific portals of banks. For this, you need to learn the best fund schemes available in different banks. You can then search for the forms for investing in such schemes. You will have to download these forms, print them, and fill them out offline. It will require the following documents.

• Government ID Proof
• Government Address Proof
• Cancelled Cheque Leaf
• Demand Draft

You can then submit them to the concerned branch or its Registrar and Transfer Agent (RTA).

Most banks and fund houses have their mobile applications, enabling the investors to use the same in the mutual fund investment process. These apps provide detailed information on all the available fund schemes, account statements, purchasing or selling units, etc.

Another type of plan in mutual fund investment is a regular plan. In such plans, investors use an intermediary in the process of investment. Brokers, advisors, or distributors help investors make the right choices and decisions in terms of their investments.

The charges of the intermediaries increase the expense ratio. For this, you will have to find a broker. You can do this by searching trading platforms or taking suggestions from peers. After charging a fee amount, the broker will guide you through the suitable interval fund scheme.

The taxation associated with interval funds in India is based on the number of assets invested in equity and debt. Note that individuals are supposed to pay taxes according to their income tax slab rate based on short-term debt funds.

If individuals invest at least 65% of their assets in equities, they will pay taxes similar to the equity fund.

On the other hand, if at least 65% of the assets are invested in debt funds, the investor must pay taxes similar to debt funds.

Mostly, interval funds are debt-oriented. Thus, long-term capital gains tax is applicable if these are held for more than 36 months. This tax is fixed at 20% with indexation benefits. On the other hand, short-term capital gains are parts of one's income and are taxed based on income tax slabs.

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