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| Name of the scheme | 1-year returns | Invest now | Fund category | expense ratio |
|---|---|---|---|---|
| Axis Nifty 50 Index Fund | +32.80% | Invest now | Equity: Large Cap | 0.12% |
| Axis Nifty 100 Index Fund | +38.59% | Invest now | Equity: Large Cap | 0.21% |
| Axis Nifty Next 50 Index Fund | +71.83% | Invest now | Equity: Large Cap | 0.25% |
| Axis Nifty 500 Index Fund | , | Invest now | Equity: Flexi Cap | 0.10% |
| Axis Nifty Midcap 50 Index Fund | +46.03% | Invest now | Equity: Mid Cap | 0.28% |
What is a lock-in period?
The lock-in period refers to the minimum time limit that investors are required to maintain their investment in mutual funds. During this period, units cannot be redeemed or sold. The primary objective of setting up a lock-in period is to discourage short-term trade and promote disciplined, long-term investment behavior. The duration of the lock-in period varies depending on the type of mutual funds.
Types of mutual funds with lock-in period
Equity-Linked Savings Schemes (ELSS):
ELSS funds are popular tax-spent mutual funds with a lock-in period of three years.
During this time investors cannot sell or redeem their units.
The investment kept for more than three years is eligible as long-term capital gains (LTCG), which is taxed at a lower rate compared to regular income, causing an attractive for both ELSS tax-taxing and money-making Becomes an alternative.
Determinated maturity plans in debt funds (FMP):
In these schemes, investors need to keep their units till certain maturity date.
Lock-in ensures that the underlying loan assets mature according to the scheme, making the return maximum.
Unlike ELSS, the lock-in period in FMP is not for tax-saving purposes, but to achieve target yield on investment.
Close-ended mutual funds:
These funds come with a predetermined lock-in period, the details of which are given in the proposal document.
Investors are required to keep their units for the entire specified period.
Mutual fund without lock-in period
Unlike the above categories, most open-ended mutual funds do not have a lock-in period. Investors enjoy the flexibility of buying or selling units at any time based on their financial needs, which provides high liquidity and access.
Why does the lock-in period matters?
The lock-in period fulfills many objectives and has many benefits for both investors and fund managers:
Encourages long -term investment: They promote a disciplined approach to investment, helping investors align their choice with long -term financial goals.
Reduces impulsive decisions: By preventing premature exit during market fluctuations, the lock-in period prevents investors from hasty, emotionally motivated decision making.
Fund increases management: With low clearance, fund managers can focus better on the performance of the plan without repeated disruption due to the inner and outfit.
Reduces market instability: The lock-in period reduces speculative trade, which contributes to more stable and predicted returns.
Also read: What are systematic investment scheme (SIP) and index funds?
Lock-in period evaluating investment
Once the lock-in period ends, it is necessary to revaluate your investment to determine whether it will continue to fulfill your financial objectives. Consider the following stages:
Review performance: Analyze the alignment of the funds of the fund with historical returns, risk levels and your investment goals.
Decide the next step: If the fund has performed well and conforms to your goals, you can choose to maintain it or also invest additional money. Alternatively, if it falls from expectations, consider re -allocating your investment.
Unsign Combination: Maintaining investment even after a lock-in period can increase the return through the power of compound.
Lock-in period benefits
While open-ended mutual funds provide liquidity, select schemes can be beneficial to promote the lock-in-period long-term investment mentality. For example:
ELSS Benefits: These funds connect the profit with opportunities to create money, which makes three years of lock-in meaningful.
FMP Preduity: Fixed maturity plans ensure an estimated returns while maintaining investment until maturity, while meeting the needs of stability seekers.
Low instability: The lock-in period limits the speculative trade, resulting in the performance of the fund more consistent.
Balance the flexibility and discipline
Investors should carefully consider the advantages and disadvantages of lock-in-period schemes compared to their financial goals. While liquidity is important for emergency, locking the money for tax-saving or stability objectives can align the investment with long-term aspirations.
The lock-in period in the mutual fund is designed to discourage impulsive decisions and encourage long-term money creation by promoting stability in returns. By understanding the implications of the lock-in period and combining your investment with your financial goals, you can take maximum advantage of these plans. Whether you are investing for tax savings, stable income, or long -term development, a disciplined approach with a strategic plan can help achieve your financial aspirations.
Also read: Tata AIA Life launched ‘Shubh Muhurta’ to assist in the financial plan of marriage
(Tagstootransite) lock-in period mutual fund (T) Mutual Fund Lock-in (T) Lock-in period interpretation (T) Mutual Fund Investment Rules (T) Lock-in Duration Benefits (T) Tax Mutual Funds ( T) ELSS Lock-in period (T) Mutual Fund Equivalence Rules (T) Lock-in Duration Impact (T) Investment in Mutual Fund
