Mutual Fund: Nimesh Shah

Nimesh Shah, managing director & chief executive officer, ICICI Prudential Asset Management Company, answers your questions

Every time I invest in a new fund, will I get a new folio number? Can I invest using the same folio number I have for my earlier funds?

You can invest across schemes with a single folio number in mutual funds (MFs). Many investors file fresh applications even while investing in the same fund house, which creates multiple folios. It becomes tedious to maintain and keep records of MF investments in such cases. All schemes under a consolidated folio will allow you to track and transact in one folio and view all your MF investments in a single statement.

I want to invest for my child's higher education and I have five years before she starts college. What kind of mutual funds (MFs) will be suitable?

There are child care plans, designed to help you give your child a head start in life by leveraging the opportunities and dynamism of equity and relative stability of the debt markets. Child care plans come with aggressive and conservative variants; you can invest in either, depending on your investment horizon. In your case, you could invest in child care schemes with a balanced asset allocation to equities and debt.

What should I look for while choosing an exchange-traded fund (ETF) to invest in? If they are passive funds, how do I differentiate between them?

Before investing, it is important to examine the expense ratio, tracking error and liquidity as key parameters. Pick those ETFs that closely track the underlying indexes, with minimal tracking error. Among those, choose funds with lower expense ratios. In the event an investor needs to liquidate the investment, ETFs can be sold through a stock exchange, therefore, liquidity/trading volume is another important factor to evaluate before investing.

The views expressed are expert's own. Send your queries to yourmoney@bsmail.in