Do not put all your eggs in one basket
Our range of funds provides access to different asset classes and sectors, allowing investors to
diversify their exposure for a better management of their risks.
What is investment diversification?
Diversification is the spreading of your investments across a range of
assets such as stocks, bonds, real estate, gold, etc. and across a range of sectors, geographies
and currencies, instead of putting all your money in a single asset or sector.
Diversification will not necessarily ensure gains or guarantee against
losses. However, it may help to improve returns for whatever level of risk you choose to target.
This can be achieved if you choose investments such as stocks, bonds, cash or others which are
not correlated, i.e., their performance do not move in the same direction and to the same
magnitude. In that way, even if part of your portfolio is declining, the rest of your portfolio
is more likely to be growing, or at least not declining as much.
How can the mutual funds promoted by MCB help me to achieve investment
MCB Funds is a palette of a dozen of different products investing in
different asset classes, sectors, markets and currencies. These funds are positioned across the
whole risk-return spectrum providing a solution to almost all investor profiles, from the most
conservative to the highly speculative ones. Investors are encouraged to invest in a mix of our
funds, depending on their objectives and risk tolerance, to achieve increased diversification.
Please contact our Client Relations Team to help you in choosing the most appropriate mix
corresponding to your profile.
A little amount every month can go a long way
Our Mutual Funds offer the flexibility of investing as little as Rs.500 every month with the
possibility of annual escalations, allowing a disciplined investment approach which can help you
kick-start the building of your portfolio even with the little you can set aside as from today.
What is a regular savings plan?
A regular savings plan is a direct debit payment plan which will be
collected automatically from your bank account usually every month and will be invested in the
product(s) of your choice.
Why should you have a regular investment plan?
One of the most difficult decisions in investments is “When to buy?”.
Whilst it is true that the general rule is to buy when prices are low and sell when prices are
high, in practice it is very difficult (even for professionals) to always time the low points.
Investing regular amounts every month helps take the guess work out of the process as it allows
you to catch both the high as well as the low points, with an overall lower average over the
life of the investment period (a tactic usually called “dollar-cost averaging”).
How can the mutual funds promoted by MCB help me to achieve such investment
Our Mutual Funds offer the possibility of starting a monthly savings plan
with a minimum of only Rs.500 per month. Investors also have the flexibility of opting for an
automatic annual escalation of either 5%, 10% or 15% annually. Once your bank account is
debited, the cash is directed to the mutual fund(s) of your choice. You also have the
flexibility to amend the investment amount (and the annual escalation %) at any time during your
investment term. Please contact our Client Relations Team to guide you through our escalated
monthly investment plans.
Always better when pooling with a larger community
When you invest in our Mutual Funds, you join a community of hundreds or thousands of other
investors which, pooled together, allows every single investor, however big or small, to benefit
from the services of a professional investment manager and lower costs as these are shared
between a larger pool of investors.
What is pooling of funds?
Pooling of funds refers to the process of gathering relatively small
amounts from several investors which are then put together in a legal structure generally called
a collective investment scheme which is then professionally managed to invest in different asset
classes, markets, countries and/or sectors on behalf of all investors.
How does the Mutual Funds promoted by MCB offer pooling benefits?
All our Mutual Funds are collective investment schemes which pool money
from hundreds or thousands of other investors, thereby allowing relatively smaller investors to
benefit from :
1. The services of a professional investment manager
2. Access to asset classes, markets and/or securities which require high minimums and which
would not have been
accessible to the investor on a personal basis and
3. Lower costs as all expenses particularly the fixed costs of the Funds are shared between the
hundreds or thousands of investors and
4. Better pricing as a result of bulk-buying which allows the investment manager to obtain
better terms and prices which are directly passed on to investors.
Accessibility is key
Our Mutual Funds are open-ended collective investment schemes which provide weekly liquidity (or
daily in some cases) allowing investors to buy and sell their investments on a weekly basis.
What is meant by liquidity in the context of investments?
Liquidity refers to the ease with which an investment can be bought or sold
without significantly impacting the price of the security. Investments that can be easily bought
or sold (such as large caps stocks listed on a developed market) are said to be liquid while
illiquid investments (such as a property or unlisted shares) may take time before they can be
disposed of and sometimes necessitate significant price discounting to attract potential buyers.
Why should liquidity be a key consideration when making an investment?
Even if property is believed to be a safe haven by a lot of investors, it
is not advisable to invest all our money into this asset class as it is a highly illiquid
investment which can take significant time (and potentially require high discounting) to be
disposed of which can be quite costly in case we need cash quickly. Investors need to have a
good mix of liquid and illiquid assets, depending on their investment horizon and cash
Do the MCB Mutual Funds offer liquidity?
Our Mutual Funds are open-ended collective investment schemes which offer,
for most, weekly dealings. This means that investors can come in and exit the Funds at least
once a week (usually every Friday). Once we receive the exit request from an investor, it takes
approximately 5-10 business days to credit the proceeds to the investors bank accounts. The
responsibility to ensure that there is enough cash to repay investors rests with the investment
manager and is not a concern of the investor.
Regular income for peace of mind
Investors have different needs at different stages of their lives. When we are young, we care
more about growing our capital for the older days. As we grow older and ultimately reach
retirement age, we are more focused on deriving regular income from our investments and prefer
What is the difference between growth (capital gains) and dividends (regular
There are generally two ways an investment delivers returns to the
investor. First, through regular income throughout the life of the investment (usually in the
form of annual or semi-annual dividends for stocks and mutual funds which represent a portion of
the profits/income generated by the stocks/mutual funds or in the form of coupons or interests
from fixed income instruments). The second source of return is capital gain which is the profit
realised by an investor between the price the investment was bought and the price it is sold.
Some investments provide a mix of regular income and potential for capital gains. The sum of
both returns is referred to as total return from the investment. It is important to note that
dividends and capital gains may have different tax treatments.
What should determine my requirements for dividend income?
Investors have different needs which also change as they reach different
stages of their lives. Usually, investors in retirement prefer to have regular income from their
investments to supplement their occupational pension income.
Do the MCB Mutual Funds pay dividends?
Our Mutual Funds range provide a mix of semi-annual dividend-paying as well
as non-dividend-paying products to cater for the varying needs of investors. Even if one
particular Mutual Fund does not pay regular income, an investor in such a Mutual Fund can also
partially redeem his/her investments on a regular basis (usually referred to as “systematic
redemption plan”), thereby cashing out over time to meet liquidity requirements. Investors may
also choose to reinvest their dividends (at no entry fees) in case some do not require the
interim returns and prefer to put the money back to work into the Funds. Investors can change
their dividends preference anytime and unlimitedly free of charge.
Transparency = Trust
Knowing where your money is being invested, what fees and charges you should expect and having
regular updates on the performance of your investments are key aspects of transparency when
choosing to entrust your hard-earned savings into the hands of a third party.
Why is transparency important when entrusting your money to others?
One can easily get carried away by high return figures. For example, one
can be tempted to invest in a product which has just delivered 10% over the past 6 months. But
there are a lot of important considerations which an investor needs to factor in before doing so
- What is the likelihood of the product delivering the same kind of returns in the future?
It is important to note that past performance should not be construed as a guide to
future returns. One needs to understand the underlying investments of the product in
order to assess whether such performance is sustainable.
- What is the risk an investor will be taking to generate such returns? Knowing about the
underlying investments will also help to have an idea about the risk level an investor
would be taking when investing in such a product. For example, you could have an equity
portfolio which delivers +15% in one month and then loses 20% the next month.
- Are these returns gross or net of fees? What an investor earns is actually the net
amount and it is therefore important to know what fees have to be paid. If fees are not
disclosed, investors have the right and need to query about fees. When it comes to
investment products, it is important to know the Total Expense Ratio (which is the
annual % of total fees paid by the investors) and not only Management Fees, even if the
latter is the largest component generally of fees borne by investors.
How transparent are the MCB Mutual Funds?
The documentation of our Mutual Funds (including the 2-pager monthly
factsheets) prominently discloses all the fees and charges borne by an investor. Our quarterly
and annual reports to investors provide a detailed portfolio of securities in which our Mutual
Funds are invested. Our monthly factsheets provide the net returns of the investment products
and the top 10 holdings of each Fund. Our annual statements help our investors to have a
consolidated snapshot of their holdings and valuations. Registered users of MCB Internet Banking
also have the possibility of viewing their investments (valuations are refreshed on a daily