grok discussion on Features and options: 6th july 2025

 

 

which mutualfunds schemes invest in f & o, increase nav value, top 10 list in both?, seller and/or buyer? Why?

### Mutual Fund Schemes Investing in Futures and Options (F&O) in India

 

In India, mutual funds are regulated by the **Securities and Exchange Board of India (SEBI)**, which permits the use of derivatives like futures and options (F&O) primarily for **hedging** and **portfolio rebalancing**, and in some cases, for **income generation** through strategies like covered call writing. However, mutual funds are not allowed to engage in speculative F&O trading. The use of derivatives is most common in specific categories like **arbitrage funds** and **equity savings funds**, where F&O is used to hedge equity exposure or exploit price differences between cash and derivatives markets.

 

### Key Points on F&O in Mutual Funds

- **Purpose**: SEBI allows mutual funds to use derivatives for hedging, portfolio rebalancing, or income generation (e.g., writing covered call options on index constituents like NIFTY 50 or SENSEX). Speculative trading is prohibited.[](https://www.angelone.in/knowledge-center/mutual-funds/can-mutual-funds-invest-in-options-and-futures)[](https://indiafa.org/which-indian-mutual-funds-employ-options-in-their-portfolios/)

- **Categories Using F&O**:

  - **Arbitrage Funds**: These funds exploit price differences between the cash and futures markets, often taking long positions in equities and short positions in futures to lock in risk-free profits. They are considered low-risk and tax-efficient (treated as equity funds for taxation).

  - **Equity Savings Funds**: These funds combine equity, debt, and derivatives (F&O) to balance risk and returns. They use derivatives to hedge part of the equity exposure, capping upside but reducing volatility.

  - **Other Funds**: Some equity or hybrid funds may use F&O sparingly for hedging, but this is less common.

- **NAV Growth**: The Net Asset Value (NAV) of mutual funds increases when the underlying portfolio (equities, debt, or derivatives) appreciates, after accounting for expenses. In F&O-heavy funds, NAV growth depends on the success of arbitrage opportunities or hedging strategies, though returns are typically more stable than pure equity funds.[](https://www.investor.gov/introduction-investing/investing-basics/investment-products/mutual-funds-and-exchange-traded-funds-etfs/mutual-funds)

- **Buyer vs. Seller in F&O**:

  - **Buyer**: Buying futures or options (e.g., long calls or puts) is typically used for hedging or gaining exposure to specific stocks or indices without owning the underlying asset.

  - **Seller**: Selling (writing) options, particularly covered calls, is used for income generation. SEBI allows mutual funds to write call options under strict conditions, such as holding the underlying stock (covered call strategy).[](https://www.angelone.in/knowledge-center/mutual-funds/can-mutual-funds-invest-in-options-and-futures)[](https://indiafa.org/which-indian-mutual-funds-employ-options-in-their-portfolios/)

  - Funds may act as both buyers and sellers depending on the strategy. For example, arbitrage funds may buy stocks in the cash market and sell equivalent futures, while equity savings funds may buy puts for protection or sell calls for income.

 

### Top 10 Mutual Fund Schemes Investing in F&O

Below is a curated list of mutual fund schemes in India known to use F&O, focusing on **arbitrage funds** and **equity savings funds**, as these categories most commonly employ derivatives. The list is based on their use of F&O and consistent performance in increasing NAV value, derived from recent data and industry insights. Note that exact rankings may vary based on performance metrics (e.g., 1-year, 3-year, or 5-year returns), and investors should check the latest NAV and performance data before investing. The following funds are selected based on their reputation, consistency, and use of derivatives, as of available data up to July 2025.[](https://www.valueresearchonline.com/funds/best-mutual-funds/)[](https://www.etmoney.com/mutual-funds/featured/best-mutual-funds/29)[](https://www.advisorkhoj.com/mutual-funds-research/top-performing-mutual-funds)

 

#### Top Arbitrage Funds (Using F&O for Arbitrage)

Arbitrage funds use F&O to exploit price differences between cash and futures markets, offering low-risk returns with equity taxation benefits.

 

1. **ICICI Prudential Equity Arbitrage Fund**

   - **Why**: Uses arbitrage opportunities by buying equities and selling futures, ensuring low volatility. Consistent performer with a strong track record.

   - **NAV Growth**: Historically delivers 5-7% annualized returns, suitable for short-term parking of funds.

   - **F&O Role**: Actively buys stocks and sells futures to lock in price differences. Acts as both buyer (cash market) and seller (futures).

   - **AUM**: ~₹22,000 crore (as of recent data).

 

2. **Kotak Equity Arbitrage Fund**

   - **Why**: One of the largest arbitrage funds, known for efficient use of F&O to generate stable returns.

   - **NAV Growth**: Around 5-6% annualized returns, with low risk.

   - **F&O Role**: Buys equities and sells futures, focusing on NIFTY 50 and other liquid stocks.

   - **AUM**: ~₹43,000 crore.

 

3. **Nippon India Arbitrage Fund**

   - **Why**: Strong fund management with a focus on arbitrage opportunities in equity derivatives.

   - **NAV Growth**: Consistent 5-7% returns, appealing for conservative investors.

   - **F&O Role**: Engages in cash-futures arbitrage, acting as both buyer and seller.

   - **AUM**: ~₹15,000 crore.

 

4. **SBI Arbitrage Opportunities Fund**

   - **Why**: Backed by SBI’s robust management, this fund uses F&O to deliver steady returns.

   - **NAV Growth**: Around 5-6% annualized, with high liquidity.

   - **F&O Role**: Primarily buys in cash market and sells futures.

   - **AUM**: ~₹29,000 crore.

 

5. **Aditya Birla Sun Life Arbitrage Fund**

   - **Why**: Balances arbitrage and debt instruments for stable returns.

   - **NAV Growth**: ~5-6% annualized, low-risk profile.

   - **F&O Role**: Uses futures for arbitrage, acting as buyer in cash and seller in derivatives.

   - **AUM**: ~₹10,000 crore.

 

#### Top Equity Savings Funds (Using F&O for Hedging and Income)

Equity savings funds use F&O to hedge equity exposure and generate income through option writing, offering moderate risk and returns.

 

6. **HDFC Equity Savings Fund**

   - **Why**: Combines equity, debt, and derivatives for balanced returns. Popular for its consistent performance.

   - **NAV Growth**: ~8-10% annualized returns over 3-5 years.

   - **F&O Role**: Buys puts for hedging and sells covered calls for income generation.

   - **AUM**: ~₹4,000 crore.

 

7. **Kotak Equity Savings Fund**

   - **Why**: Efficient use of derivatives to reduce volatility while maintaining growth potential.

   - **NAV Growth**: ~8-9% annualized, suitable for medium-term goals.

   - **F&O Role**: Buys equities and uses options (both buying puts and selling calls) for hedging and income.

   - **AUM**: ~₹5,500 crore.

 

8. **ICICI Prudential Equity Savings Fund**

   - **Why**: Strong focus on hedging equity exposure with derivatives, ensuring stability.

   - **NAV Growth**: ~7-9% annualized returns.

   - **F&O Role**: Sells covered calls and buys puts to manage risk.

   - **AUM**: ~₹9,000 crore.

 

9. **SBI Equity Savings Fund**

   - **Why**: Offers a mix of equity, debt, and derivatives with a focus on risk management.

   - **NAV Growth**: ~7-8% annualized, appealing for conservative investors.

   - **F&O Role**: Uses options for hedging (buying puts) and income (selling calls).

   - **AUM**: ~₹4,500 crore.

 

10. **Mirae Asset Equity Savings Fund**

    - **Why**: Relatively new but gaining traction for its balanced approach and use of F&O.

    - **NAV Growth**: ~8-10% annualized, with a focus on long-term stability.

    - **F&O Role**: Employs both buying and selling of options for hedging and income.

    - **AUM**: ~₹1,000 crore.

 

### Why These Funds?

- **Arbitrage Funds**: These are ideal for investors seeking low-risk, tax-efficient returns (taxed as equity funds). They use F&O to exploit price inefficiencies, ensuring stable NAV growth. Their low volatility makes them suitable for short-term investments or parking funds.[](https://www.angelone.in/knowledge-center/mutual-funds/can-mutual-funds-invest-in-options-and-futures)

- **Equity Savings Funds**: These funds appeal to investors with moderate risk appetite, as they balance equity growth with debt stability and use F&O to hedge risks and generate additional income through option writing. They are suitable for medium-term goals (3-5 years).[](https://www.angelone.in/knowledge-center/mutual-funds/can-mutual-funds-invest-in-options-and-futures)

- **NAV Increase**: The NAV of these funds grows due to successful arbitrage trades (in arbitrage funds) or a combination of equity appreciation, debt returns, and option premiums (in equity savings funds). However, returns are capped compared to pure equity funds due to hedging.[](https://www.investor.gov/introduction-investing/investing-basics/investment-products/mutual-funds-and-exchange-traded-funds-etfs/mutual-funds)

- **Buyer and Seller Roles**:

  - **Arbitrage Funds**: Act as **buyers** in the cash market (stocks) and **sellers** in the futures market to lock in price differences. They rarely use options but may buy puts for hedging in some cases.

  - **Equity Savings Funds**: Act as both **buyers** (e.g., buying puts to hedge downside risk) and **sellers** (e.g., writing covered calls to earn premiums). The covered call strategy, permitted by SEBI, generates income but limits upside potential.[](https://indiafa.org/which-indian-mutual-funds-employ-options-in-their-portfolios/)

 

### Caveats and Considerations

- **Performance Data**: The returns mentioned (e.g., 5-10% annualized) are based on historical trends and may vary. Always check the latest NAV and performance on platforms like **Value Research**, **Moneycontrol**, or **ET Money**.[](https://www.valueresearchonline.com/funds/best-mutual-funds/)[](https://www.etmoney.com/mutual-funds/featured/best-mutual-funds/29)[](https://www.moneycontrol.com/mutual-funds/best-funds/equity.html)

- **Risk**: While arbitrage funds are low-risk, equity savings funds carry moderate risk due to equity exposure. NAV can decline during market downturns, though hedging mitigates losses.[](https://cleartax.in/s/best-mutual-funds-india)

- **Fees**: Expense ratios impact NAV growth. Look for funds with low expense ratios (e.g., 0.5-1%) to maximize returns.[](https://www.nerdwallet.com/article/investing/how-to-invest-in-mutual-funds)

- **Past Performance**: Past NAV growth does not guarantee future results. Analyze 3-5 year returns and consistency during market downturns.[](https://www.etmoney.com/mutual-funds/featured/best-mutual-funds/29)

- **Taxation**: Arbitrage funds and equity savings funds (with >65% equity exposure) are taxed as equity funds (10% LTCG for gains above ₹1 lakh if held over 1 year). This makes them tax-efficient compared to debt funds.[](https://www.angelone.in/knowledge-center/mutual-funds/can-mutual-funds-invest-in-options-and-futures)

 

### How to Choose

- **Investment Horizon**: Arbitrage funds for short-term (1-3 years), equity savings funds for medium-term (3-5 years).

- **Risk Tolerance**: Arbitrage funds for low risk; equity savings funds for moderate risk.

- **Check F&O Exposure**: Review the fund’s portfolio (available in monthly factsheets) to confirm F&O usage and strategy.

- **Fund House Reputation**: Opt for AMCs like ICICI Prudential, Kotak, SBI, or HDFC for their robust track record.

- **Use Tools**: Platforms like **Value Research Fund Screener**, **ET Money**, or **Moneycontrol** can help filter funds based on returns, risk, and F&O usage.[](https://www.valueresearchonline.com/funds/best-mutual-funds/)[](https://www.etmoney.com/mutual-funds/featured/best-mutual-funds/29)

 

### Recommendations

- **For Conservative Investors**: ICICI Prudential Equity Arbitrage Fund or Kotak Equity Arbitrage Fund for stable, low-risk returns.

- **For Moderate Risk-Takers**: HDFC Equity Savings Fund or Kotak Equity Savings Fund for balanced growth with hedging.

- **Action Steps**:

  1. Visit **www.valueresearchonline.com**, **www.etmoney.com**, or **www.moneycontrol.com** to check the latest NAV, returns, and portfolio details.

  2. Consult a financial advisor to align fund selection with your goals and risk profile.

  3. Start a **Systematic Investment Plan (SIP)** for disciplined investing, even with small amounts (e.g., ₹500/month).[](https://www.etmoney.com/mutual-funds/featured/best-mutual-funds/29)

 

**Note**: The list above is based on general trends and available data up to July 2025. For the most recent performance, check the latest fund factsheets or consult platforms like Value Research or Moneycontrol. Always read scheme documents carefully, as mutual fund investments are subject to market risks.[](https://economictimes.indiatimes.com/mutual-funds)

 

If you need specific performance data for a particular fund or further analysis, let me know, and I can guide you on how to access it!

 

 

 

How nse/bse gets income, % income, equity trading, f & o trading, and mutualfund trading, past 3years data, in simple to understand?

The **National Stock Exchange (NSE)** and **Bombay Stock Exchange (BSE)** are India’s primary stock exchanges, and they generate income from various sources, including **equity trading**, **futures and options (F&O) trading**, **mutual fund trading**, and other services. Below, I’ll explain their income sources, provide an estimate of the percentage contribution of each, and share insights based on available data for the past three years (2022–2025). I’ll keep it simple and easy to understand.

 

---

 

### How NSE and BSE Generate Income

Stock exchanges earn money through fees charged for the services they provide to investors, brokers, and companies. The main income sources are:

 

1. **Transaction Fees**:

   - **Equity Trading**: Fees charged on trades in the cash market (buying/selling stocks).

   - **F&O Trading**: Fees on derivatives trades (futures and options contracts).

   - **Mutual Fund Trading**: Fees on mutual fund transactions executed through the exchange’s platform (e.g., NSE’s NMF or BSE’s StAR MF).

2. **Listing Fees**: Charged to companies for listing their shares or bonds on the exchange.

3. **Data Services**: Selling market data (e.g., stock prices, indices) to investors, analysts, and institutions.

4. **Clearing and Settlement Fees**: Fees for processing and settling trades.

5. **Other Services**: Includes fees for technology services, colocation (high-speed trading servers), and training/certification programs.

 

---

 

### Percentage Contribution of Income Sources

Exact percentages vary year to year, and exchanges don’t always break down their revenue in public reports. However, based on available data and industry insights, here’s an approximate breakdown of income sources for NSE and BSE over the past three years (2022–2025):

 

#### **NSE Income Breakdown (Approximate)**

- **F&O Trading**: ~60–70%

  - F&O is the largest revenue driver for NSE due to high trading volumes in NIFTY 50 and Bank NIFTY contracts.

- **Equity Trading**: ~15–20%

  - Cash market trades (stocks, ETFs) contribute significantly but less than F&O due to lower volumes.

- **Mutual Fund Trading**: ~2–5%

  - Platforms like NMF (NSE Mutual Fund) generate fees, but this is a smaller segment.

- **Listing Fees**: ~5–10%

  - Fees from IPOs, bonds, and other listings.

- **Data Services and Others**: ~10–15%

  - Includes market data subscriptions, colocation, and certifications.

 

#### **BSE Income Breakdown (Approximate)**

- **F&O Trading**: ~40–50%

  - BSE has a smaller F&O market share (~18%) compared to NSE (~82%), but it’s still a key revenue source.

- **Equity Trading**: ~20–25%

  - BSE has a significant cash market presence, especially for smaller companies and SMEs.

- **Mutual Fund Trading**: ~5–10%

  - BSE’s StAR MF platform is widely used for mutual fund transactions, contributing more than NSE’s NMF.

- **Listing Fees**: ~10–15%

  - BSE lists more companies (~6,000 vs. NSE’s ~2,671), so listing fees are significant.[](https://en.wikipedia.org/wiki/National_Stock_Exchange_of_India)

- **Data Services and Others**: ~10–15%

  - Similar to NSE, includes data sales and other services.

 

**Note**: These percentages are estimates based on industry reports, exchange announcements, and posts on X. Exact figures are not publicly disclosed in detail.

 

---

 

### Income from Equity, F&O, and Mutual Fund Trading (Past 3 Years)

While precise revenue figures for each segment are not fully disclosed, we can use available data and trends to estimate contributions. Below is a simplified overview based on turnover data and industry insights for 2022–2025. Turnover (trading volume) is a key indicator, as transaction fees are a percentage of traded value.

 

#### **1. Equity Trading (Cash Market)**

- **NSE**: Dominates with higher trading volumes. In 2023–2024, the NSE’s cash segment turnover was approximately ₹150–200 lakh crore annually. Transaction fees (0.00325% per trade) generate significant income.[](https://www.indiastat.com/data/economy/national-stock-exchange-nse)

- **BSE**: Lower volumes than NSE, with turnover around ₹20–30 lakh crore annually. BSE’s equity trading revenue is substantial but less than F&O.

- **Income Contribution**: Equity trading fees contribute ~15–20% for NSE and ~20–25% for BSE, as F&O dominates NSE’s revenue.

 

#### **2. F&O Trading (Derivatives)**

- **NSE**: World’s largest derivatives exchange by contract volume. In 2023–2024, F&O turnover was ~₹1,000 lakh crore (notional value), with NSE holding ~82% market share. Transaction fees (~0.002% for futures, higher for options) make F&O the top earner.[](https://stockify.net.in/blog/nse-vs-bse-101-guide-with-detailed-explanation-of-market-share-and-financial-summary/)

- **BSE**: Gained traction in F&O, especially after relaunching SENSEX options. Turnover in 2023–2024 was ~₹200 lakh crore, contributing ~50% of BSE’s revenue.

- **Income Contribution**: F&O is the largest revenue source, especially for NSE (~60–70%) and significant for BSE (~40–50%).

 

#### **3. Mutual Fund Trading**

- **NSE**: The NMF platform facilitates mutual fund purchases and redemptions. Turnover is smaller compared to equity/F&O, with fees based on transaction value (e.g., 0.005–0.01%). In 2023–2024, mutual fund turnover was estimated at ₹5–10 lakh crore.[](https://www.nseindia.com/research/publications-reports-nse-market-insights)

- **BSE**: StAR MF is a leading platform for mutual fund transactions, with higher volumes than NSE’s NMF. Estimated turnover of ₹10–15 lakh crore in 2023–2024, contributing ~5–10% of BSE’s revenue.

- **Income Contribution**: Mutual fund trading is a smaller segment (~2–5% for NSE, ~5–10% for BSE).

 

#### **Revenue Estimates (2022–2025)**

- **NSE**:

  - Total revenue: ~₹10,000–12,000 crore annually (2023–2024).

  - F&O: ~₹6,000–8,000 crore (60–70%).

  - Equity: ~₹1,500–2,000 crore (15–20%).

  - Mutual Funds: ~₹200–500 crore (2–5%).

  - Others (listing, data, etc.): ~₹1,500–2,000 crore.

- **BSE**:

  - Total revenue: ~₹1,500–2,000 crore annually (2023–2024).

  - F&O: ~₹600–1,000 crore (40–50%).

  - Equity: ~₹300–500 crore (20–25%).

  - Mutual Funds: ~₹100–200 crore (5–10%).

  - Others: ~₹300–500 crore.

 

**Source**: Estimates based on turnover data from NSE/BSE websites, industry reports, and X posts.[](https://www.indiastat.com/data/economy/national-stock-exchange-nse)

 

---

 

### Trends Over the Past 3 Years (2022–2025)

1. **F&O Dominance**:

   - F&O trading volumes surged, especially on NSE, driven by retail participation. In 2023–2024, NSE’s F&O segment saw ~80–100 crore contracts traded annually, boosting revenue.[](https://www.indiastat.com/data/economy/national-stock-exchange-nse)

   - BSE’s F&O market share grew from ~10% in 2022 to ~18% in 2024, particularly after relaunching SENSEX options.

2. **Equity Trading**:

   - Equity volumes grew steadily, with NSE maintaining higher liquidity. BSE’s SME platform contributed to equity trading growth.

   - Retail investor participation increased, with NSE reporting over 11 crore unique investors by January 2025.[](https://en.wikipedia.org/wiki/National_Stock_Exchange_of_India)

3. **Mutual Fund Trading**:

   - BSE’s StAR MF platform saw higher adoption due to its user-friendly interface, outpacing NSE’s NMF.

   - Mutual fund transactions grew due to rising SIPs (Systematic Investment Plans), with ~₹2 lakh crore in annual SIP contributions industry-wide by 2024.

4. **Other Trends**:

   - Listing fees grew with more IPOs (e.g., Travel Food Services ₹2,000 crore IPO in July 2025).[](https://groww.in/blog/difference-bse-nse)

   - Data services revenue increased as exchanges sold real-time market data to fintech platforms and investors.[](https://www.nseindia.com/market-data/real-time-data-subscription)

 

---

 

### Why These Sources Matter

- **F&O**: High volumes and frequent trading make it the top earner, especially for NSE. Retail investors’ interest in options (e.g., NIFTY, Bank NIFTY) drives this.

- **Equity**: Steady but lower than F&O due to fewer trades and lower fees per transaction.

- **Mutual Funds**: Growing due to retail investor interest in SIPs, but fees are low, so contribution is smaller.

- **Others**: Listing and data services provide stable income, especially for BSE with its large number of listed companies.

 

---

 

### Simple Takeaways

- **NSE**: Makes most money from F&O (~60–70%), followed by equity (~15–20%) and mutual funds (~2–5%). It’s the bigger exchange with more trading volume.

- **BSE**: Earns significantly from F&O (~40–50%), equity (~20–25%), and mutual funds (~5–10%). Its mutual fund platform (StAR MF) is stronger than NSE’s.

- **Past 3 Years**: F&O has grown massively, especially for NSE. Equity and mutual fund trading are growing but contribute less. Listing and data services are steady earners.

- **Data Check**: For exact numbers, visit **www.nseindia.com** or **www.bseindia.com** for annual reports or turnover data.[](https://www.nseindia.com/)[](https://www.bseindia.com/market_data.html)

 

If you want specific figures for a particular year or more details on a segment, let me know, and I can guide you to the right sources!

----------

Which mutualfunds fund is good, alternative to f & o trading/ derivative instrument trading, top 10list? Why?

Futures and Options (F&O) trading involves high risk and volatility due to leveraged positions and speculative strategies in derivative instruments. For investors seeking alternatives to F&O trading, mutual funds offer a diversified, professionally managed option with lower risk and less need for active monitoring. Based on your prior interest in high-growth equity mutual funds (e.g., flexi-cap, small-cap, and aggressive growth funds) and a focus on long-term wealth creation, the following mutual funds are recommended as alternatives to F&O trading. These funds are selected for their strong performance, active management, and ability to deliver high returns without the speculative nature of derivatives. The list focuses on **equity mutual funds** (flexi-cap, small-cap, mid-cap, and multi-cap) that align with your goal of NAV growth and can serve as substitutes for the high-risk, high-reward nature of F&O trading.

 

### Why Mutual Funds as an Alternative to F&O Trading?

- **Lower Risk**: Mutual funds diversify investments across multiple stocks, reducing the impact of individual stock volatility compared to F&O, which often involves concentrated bets.

- **Professional Management**: Fund managers actively adjust portfolios based on market conditions, unlike F&O, which requires constant investor attention.

- **Long-Term Growth**: Equity funds aim for capital appreciation over time, offering compounding benefits without the daily leverage risks of F&O.

- **Tax Efficiency**: Equity mutual funds (with >65% equity exposure) are taxed at 12.5% for long-term capital gains (LTCG) above ₹1.25 lakh (post-2024 budget), compared to F&O gains, which are taxed as business income at slab rates (up to 30%).

- **No Leverage**: Unlike F&O, mutual funds don’t involve borrowing or margin calls, reducing the risk of significant losses.

- **Alignment with Your Goals**: Your past queries show a preference for high-growth funds like Quant Flexi Cap and Bandhan Small Cap, which are suitable for long-term wealth creation, similar to the potential upside of F&O but with lower risk.

 

### Top 10 Mutual Funds as Alternatives to F&O Trading (2025)

The following list includes top-performing equity mutual funds in India, selected based on their 3–5 year annualized returns, consistency, fund manager expertise, and alignment with high-growth objectives. These funds are primarily **flexi-cap**, **small-cap**, **mid-cap**, and **multi-cap** funds, as these categories offer high return potential akin to F&O but with diversified risk. Data is sourced from industry reports, Value Research, Moneycontrol, and recent trends up to July 2025.

 

1. **Quant Flexi Cap Fund (Direct Plan - Growth)**

   - **Category**: Flexi-Cap

   - **Why**: Actively managed with dynamic allocation across large-, mid-, and small-cap stocks. High turnover aligns with your interest in funds that trade based on performance (similar to F&O strategies). Delivered ~35–40% CAGR over 3 years, outperforming benchmarks.

   - **Returns**: ~35.60% (3-year annualized), ~20–25% (1-year) as of June 2025.

   - **NAV Growth**: Strong due to exposure to high-growth sectors like finance and technology.

   - **AUM**: ~₹6,500 crore.

   - **Expense Ratio**: ~0.7%.

   - **F&O Alternative**: Offers high returns through active stock selection, mimicking the upside potential of F&O without leverage risks.

 

2. **Parag Parikh Flexi Cap Fund (Direct Plan - Growth)**

   - **Category**: Flexi-Cap

   - **Why**: Combines domestic and international equities (e.g., US tech stocks like Apple) for diversification. Consistent performer with ~20–22% CAGR over 5 years. Low volatility makes it a stable alternative to F&O.

   - **Returns**: ~20.01% (3-year), ~18–20% (1-year).

   - **NAV Growth**: Steady growth due to diversified portfolio and conservative management.

   - **AUM**: ~₹70,000 crore.

   - **Expense Ratio**: ~0.6%.

   - **F&O Alternative**: Provides exposure to high-growth stocks with lower risk than F&O’s speculative bets.

 

3. **Bandhan Small Cap Fund (Direct Plan - Growth)**

   - **Category**: Small-Cap

   - **Why**: Focuses on high-growth small-cap stocks, offering F&O-like upside potential (e.g., ~35–40% CAGR over 3 years). High volatility but suitable for risk-tolerant investors seeking aggressive growth.

   - **Returns**: ~35.60% (3-year), ~25–30% (1-year).

   - **NAV Growth**: Rapid NAV increase driven by small-cap rallies.

   - **AUM**: ~₹4,000 crore.

   - **Expense Ratio**: ~0.8%.

   - **F&O Alternative**: Captures high-growth opportunities similar to stock-specific F&O trades but with diversification.

 

4. **Motilal Oswal Midcap Fund (Direct Plan - Growth)**

   - **Category**: Mid-Cap

   - **Why**: Targets mid-cap companies with strong growth potential (e.g., Zomato, Bajaj Finance). High turnover and active management align with your preference for performance-based trading.

   - **Returns**: ~24.10% (3-year), ~20–25% (1-year).

   - **NAV Growth**: Strong due to mid-cap sector outperformance.

   - **AUM**: ~₹10,000 crore.

   - **Expense Ratio**: ~0.7%.

   - **F&O Alternative**: Offers high returns with less risk than F&O by diversifying across mid-cap stocks.

 

5. **Nippon India Small Cap Fund (Direct Plan - Growth)**

   - **Category**: Small-Cap

   - **Why**: Largest small-cap fund with diversified holdings across 200+ stocks. High returns (~30–35% CAGR over 3 years) make it a strong F&O alternative for aggressive investors.

   - **Returns**: ~30–35% (3-year), ~20–25% (1-year).

   - **NAV Growth**: Consistent due to exposure to emerging sectors.

   - **AUM**: ~₹50,000 crore.

   - **Expense Ratio**: ~0.7%.

   - **F&O Alternative**: High-growth potential without the leverage risks of F&O.

 

6. **HDFC Mid-Cap Opportunities Fund (Direct Plan - Growth)**

   - **Category**: Mid-Cap

   - **Why**: Invests in mid-cap companies with strong fundamentals. Delivered ~25–30% CAGR over 3 years, balancing growth and stability.

   - **Returns**: ~25–30% (3-year), ~18–22% (1-year).

   - **NAV Growth**: Steady with focus on quality mid-caps.

   - **AUM**: ~₹60,000 crore.

   - **Expense Ratio**: ~0.8%.

   - **F&O Alternative**: Provides growth similar to F&O directional bets but with diversified risk.

 

7. **SBI Contra Fund (Direct Plan - Growth)**

   - **Category**: Contra/Value

   - **Why**: Invests in undervalued stocks, offering high returns during market recoveries. Aligns with your interest in active trading strategies (~25–30% CAGR over 3 years).

   - **Returns**: ~25–30% (3-year), ~20–25% (1-year).

   - **NAV Growth**: Strong due to contrarian bets paying off.

   - **AUM**: ~₹30,000 crore.

   - **Expense Ratio**: ~0.9%.

   - **F&O Alternative**: Captures upside from undervalued stocks, reducing speculative risks of F&O.

 

8. **ICICI Prudential Value Discovery Fund (Direct Plan - Growth)**

   - **Category**: Value

   - **Why**: Focuses on undervalued stocks with long-term growth potential. Consistent ~20–25% CAGR over 3 years, suitable for investors seeking stability with growth.

   - **Returns**: ~20–25% (3-year), ~15–20% (1-year).

   - **NAV Growth**: Moderate but consistent due to value investing approach.

   - **AUM**: ~₹40,000 crore.

   - **Expense Ratio**: ~0.8%.

   - **F&O Alternative**: Lower volatility than F&O with similar long-term return potential.

 

9. **Kotak Small Cap Fund (Direct Plan - Growth)**

   - **Category**: Small-Cap

   - **Why**: Invests in high-growth small-cap stocks with a disciplined approach. ~25–30% CAGR over 3 years, appealing for aggressive investors.

   - **Returns**: ~25–30% (3-year), ~18–22% (1-year).

   - **NAV Growth**: High due to small-cap outperformance.

   - **AUM**: ~₹15,000 crore.

   - **Expense Ratio**: ~0.7%.

   - **F&O Alternative**: Offers high returns like F&O but with diversified exposure.

 

10. **Canara Robeco Bluechip Equity Fund (Direct Plan - Growth)**

    - **Category**: Large-Cap

    - **Why**: Focuses on stable large-cap stocks (e.g., HDFC Bank, Reliance), offering lower volatility than F&O. ~15–18% CAGR over 3 years, ideal for conservative growth seekers.

    - **Returns**: ~15–18% (3-year), ~12–15% (1-year).

    - **NAV Growth**: Steady due to large-cap stability.

    - **AUM**: ~₹12,000 crore.

    - **Expense Ratio**: ~0.6%.

    - **F&O Alternative**: Lower risk than F&O with consistent returns for long-term investors.

 

### Why These Funds?

- **High Returns**: Small-cap, mid-cap, and flexi-cap funds like Quant, Bandhan, and Nippon India offer 20–40% CAGR, rivaling F&O’s potential upside without leverage risks.

- **Active Management**: Funds like Quant and Motilal Oswal have high turnover, actively adjusting portfolios to capture market opportunities, aligning with your interest in performance-based trading (e.g., May 31, 2025 query).

- **Diversification**: Unlike F&O, which often involves concentrated positions, these funds spread investments across multiple stocks, reducing risk.

- **Risk-Return Balance**: Flexi-cap funds (Parag Parikh, Quant) balance growth and stability, while small/mid-cap funds (Bandhan, Nippon) offer higher returns for risk-tolerant investors, matching F&O’s aggressive profile.

- **Alignment with Your Preferences**: Your prior focus on Quant Flexi Cap, Bandhan Small Cap, and Motilal Oswal Midcap (June 2025 queries) indicates a preference for high-growth, actively managed funds, which these selections reflect.

- **Tax Benefits**: Equity funds have favorable taxation (12.5% LTCG vs. F&O’s slab rate), enhancing net returns.

 

### Why Not F&O-Involved Funds?

While your initial query asked about funds investing in F&O, funds like **arbitrage funds** (e.g., ICICI Prudential Equity Arbitrage) and **equity savings funds** (e.g., HDFC Equity Savings) were listed, but they are less suitable as F&O alternatives:

- **Lower Returns**: Arbitrage funds (~5–7% CAGR) and equity savings funds (~7–10% CAGR) prioritize stability over growth, unlike the high-return potential of F&O.

- **Different Objective**: These funds use F&O for hedging or arbitrage, not for speculative gains, which doesn’t match the aggressive return profile of F&O trading.

- **Limited Upside**: Hedging strategies cap returns, making them less appealing for investors seeking F&O-like growth.

 

Instead, equity funds (flexi-cap, small-cap, mid-cap) are better alternatives, as they offer high growth potential with managed risk, aligning with your goal of NAV increase and long-term wealth creation.

 

### Recommendations

- **Aggressive Investors**: Allocate 50–60% to small/mid-cap funds (Bandhan Small Cap, Nippon India Small Cap, Motilal Oswal Midcap) for high growth, and 40–50% to flexi-cap funds (Quant, Parag Parikh) for diversification.

- **Moderate Risk**: Focus on flexi-cap (Parag Parikh, Quant) and large-cap (Canara Robeco Bluechip) for balanced growth (~15–20% CAGR).

- **Investment Strategy**: Use **Systematic Investment Plans (SIPs)** to average out market volatility, as suggested in your May 2025 queries, instead of lump-sum investments to mimic F&O’s high-risk timing.

- **Check Performance**: Use platforms like **Value Research** (www.valueresearchonline.com), **Moneycontrol** (www.moneycontrol.com), or **ET Money** (www.etmoney.com) to verify latest NAV and returns.

- **Consult Advisor**: Given your ₹65–70 lakh investment history (May 2025), consult a financial advisor to tailor allocations to your risk profile and goals.

 

**Note**: Returns are approximate based on data up to June 2025 and may vary. Mutual fund investments are subject to market risks; read scheme documents carefully. For the latest performance, check fund factsheets or the above platforms.

 

If you need a specific allocation plan (e.g., for ₹10 lakh) or further comparison of these funds, let me know!

 

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Suppose, i have 50lakhs, wants to investment for 1year without reedem, after 1year i have plan reedem based on need and investment when i have money (when salary credit entire money, reedem House hold needs around 1lakh, both reedeem and investment around 1lakh), suggest, best stargey to investmet in active fund and passive, considering advantage of LTgc, growth, compounding, less exit and expenses ratio.. Etc in this case? Provide table to easy understanding

 

 

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Given your investment scenario, you have **₹50 lakh** to invest for **1 year** without redeeming, followed by a strategy to **redeem ₹1 lakh monthly** for household needs and **invest ₹1 lakh monthly** from your salary, aiming to balance growth, tax efficiency (Long-Term Capital Gains, or LTCG), compounding, and low costs (expense ratios and exit loads). You prefer a mix of **active** and **passive mutual funds** to achieve these goals. Below, I outline the best strategy tailored to your needs, incorporating your preference for high-growth funds (e.g., Quant Flexi Cap, Bandhan Small Cap, Motilal Oswal Midcap) and passive funds (e.g., UTI Nifty 50 Index Fund) from prior conversations, while optimizing for LTCG benefits, growth, compounding, and low costs. A table summarizes the strategy for clarity.

 

### Key Considerations

- **Investment Horizon**: Initial 1-year holding without redemption, followed by monthly redemptions and investments. The strategy focuses on funds that qualify for LTCG (12.5% tax on gains above ₹1.25 lakh after 1 year) to minimize tax liability.

- **Growth and Compounding**: Active funds (flexi-cap, small-cap, mid-cap) for high growth (~15–25% CAGR) and passive funds (index funds) for stable returns (~12–15% CAGR) to maximize compounding over time.

- **Redemption Strategy**: Redeem ₹1 lakh monthly from units held over 1 year to avail LTCG benefits. Use a **First-In-First-Out (FIFO)** redemption method to ensure older units (held >1 year) are sold first.

- **Investment Strategy**: Invest ₹1 lakh monthly from salary via **Systematic Investment Plans (SIPs)** to average out market volatility and ensure continuous compounding.

- **Low Costs**: Select funds with low expense ratios (<1% for active, <0.3% for passive) and no/minimal exit loads after 1 year.

- **Risk Profile**: Your preference for funds like Quant, Bandhan, and Motilal Oswal suggests a high-risk, high-reward appetite, but including passive funds adds stability.

- **LTCG Optimization**: Equity funds held over 1 year qualify for 12.5% LTCG tax on gains above ₹1.25 lakh, compared to short-term capital gains (STCG) at 20% for holdings under 1 year. The strategy prioritizes holding units for >1 year before redemption.

- **Household Needs**: Redeeming ₹1 lakh monthly requires liquidity and minimal exit loads to avoid penalties.

 

### Recommended Strategy

1. **Initial Investment (₹50 Lakh)**:

   - Allocate across a mix of **active equity funds** (flexi-cap, small-cap, mid-cap) for high growth and **passive index funds** for stability.

   - Suggested allocation: 60% active (₹30 lakh), 30% passive (₹15 lakh), 10% liquid fund (₹5 lakh) for emergency liquidity.

   - Funds chosen based on your prior investments (e.g., Quant Flexi Cap, Bandhan Small Cap, Motilal Oswal Midcap, UTI Nifty 50 Index) and performance data up to July 2025.

2. **Post 1-Year Strategy**:

   - **Redemption**: Redeem ₹1 lakh monthly from funds held over 1 year (using FIFO) to avail LTCG tax benefits. Start with the liquid fund for immediate needs, then move to index or active funds to preserve growth potential.

   - **Investment**: Invest ₹1 lakh monthly from salary via SIPs, maintaining the same allocation ratio (60% active, 30% passive, 10% liquid) to ensure compounding and growth.

3. **Fund Selection Criteria**:

   - **Active Funds**: High-growth funds with strong 3–5 year returns (~15–25% CAGR), low expense ratios (~0.6–0.8%), and no exit load after 1 year.

   - **Passive Funds**: Low-cost index funds tracking Nifty 50 or similar indices (~12–15% CAGR), with expense ratios <0.3% and no exit load.

   - **Liquid Fund**: For emergency liquidity, with minimal or no exit load and ~6–7% returns.

4. **Tax Harvesting**: Redeem and reinvest gains annually to utilize the ₹1.25 lakh LTCG exemption, enhancing tax efficiency.

 

### Recommended Funds

Based on your preference for high-growth funds and prior investments, the following funds are selected for their performance, low costs, and suitability for your strategy:

 

1. **Quant Flexi Cap Fund (Direct Plan - Growth)**:

   - **Category**: Flexi-Cap (Active)

   - **Why**: High returns (~35% CAGR over 3 years), active management, and dynamic allocation across market caps. Aligns with your aggressive growth preference.

   - **Expense Ratio**: ~0.7%

   - **Exit Load**: 1% if redeemed within 1 year, 0% after.

   - **Returns**: ~20–25% (1-year), ~35% (3-year).

 

2. **Parag Parikh Flexi Cap Fund (Direct Plan - Growth)**:

   - **Category**: Flexi-Cap (Active)

   - **Why**: Diversified across domestic and international equities, stable returns (~20% CAGR), and low volatility. Balances growth and risk.

   - **Expense Ratio**: ~0.6%

   - **Exit Load**: 2% if redeemed within 1 year, 0% after.

   - **Returns**: ~18–20% (1-year), ~20% (3-year).

 

3. **Bandhan Small Cap Fund (Direct Plan - Growth)**:

   - **Category**: Small-Cap (Active)

   - **Why**: High-growth potential (~35% CAGR), suitable for risk-tolerant investors seeking F&O-like returns.

   - **Expense Ratio**: ~0.8%

   - **Exit Load**: 1% if redeemed within 1 year, 0% after.

   - **Returns**: ~25–30% (1-year), ~35% (3-year).

 

4. **UTI Nifty 50 Index Fund (Direct Plan - Growth)**:

   - **Category**: Large-Cap Index (Passive)

   - **Why**: Tracks Nifty 50, low cost (0.14% expense ratio), and stable returns (~12–15% CAGR). Ideal for your passive allocation and prior interest in this fund.

   - **Expense Ratio**: ~0.14%

   - **Exit Load**: None.

   - **Returns**: ~12–15% (1-year), ~14% (3-year).

 

5. **ICICI Prudential Liquid Fund (Direct Plan - Growth)**:

   - **Category**: Liquid Fund

   - **Why**: Provides liquidity for emergency redemptions, low risk, and ~6–7% returns. No exit load after 7 days.

   - **Expense Ratio**: ~0.2%

   - **Exit Load**: 0.007% (Day 1) to 0% (after 7 days).

   - **Returns**: ~6–7% (1-year).

 

### Investment and Redemption Plan

- **Year 1 (Initial ₹50 Lakh)**:

  - Invest ₹50 lakh as a lump sum in January 2025 and hold without redemption until January 2026 to qualify for LTCG.

  - Allocation: ₹18 lakh (Quant Flexi Cap), ₹12 lakh (Parag Parikh Flexi Cap), ₹10 lakh (Bandhan Small Cap), ₹15 lakh (UTI Nifty 50 Index), ₹5 lakh (ICICI Prudential Liquid).

- **Year 2 Onward**:

  - **Redemption**: Redeem ₹1 lakh monthly starting January 2026, using FIFO to sell units held >1 year (LTCG-eligible). Start with ICICI Prudential Liquid Fund for the first 5 months (₹5 lakh total), then move to UTI Nifty 50 Index Fund (stable NAV) and active funds (Quant, Parag, Bandhan) to preserve growth.

  - **Investment**: Invest ₹1 lakh monthly via SIPs from salary, maintaining the same allocation ratio: ₹60,000 (active funds: ₹36,000 Quant, ₹24,000 Parag), ₹30,000 (UTI Nifty 50 Index), ₹10,000 (ICICI Prudential Liquid).

  - **Tax Harvesting**: Annually redeem gains up to ₹1.25 lakh per fund to utilize the LTCG exemption, then reinvest to maintain compounding.

 

### Expected Outcomes

- **Year 1 Returns (Estimated)**:

  - Quant Flexi Cap: ~20–25% → ₹18 lakh grows to ~₹22.5–23.5 lakh.

  - Parag Parikh Flexi Cap: ~18–20% → ₹12 lakh grows to ~₹14.2–14.4 lakh.

  - Bandhan Small Cap: ~25–30% → ₹10 lakh grows to ~₹12.5–13 lakh.

  - UTI Nifty 50 Index: ~12–15% → ₹15 lakh grows to ~₹16.8–17.3 lakh.

  - ICICI Prudential Liquid: ~6–7% → ₹5 lakh grows to ~₹5.3–5.35 lakh.

  - **Total Corpus (Year 1)**): ~₹71.3–73.6 lakh (before expenses).

- **Year 2 Onward**:

  - Redeem ₹12 lakh annually (₹1 lakh x 12) for household needs, taxed at 12.5% on gains above ₹1.25 lakh.

  - Invest ₹12 lakh annually via SIPs, compounding at ~15–20% (blended return of active/passive funds).

  - Corpus growth depends on market performance, but a blended 15% CAGR could grow the portfolio to ~₹90–100 lakh in 3–5 years, assuming consistent SIPs and redemptions.

 

### Table: Investment Strategy Summary

| **Fund**                        | **Type**       | **Category**       | **Initial Allocation (₹)** | **SIP Allocation (₹/Month)** | **Expense Ratio** | **Exit Load**            | **Expected 1-Year Return** | **Why Chosen**                                                                 |

|---------------------------------|----------------|--------------------|----------------------------|------------------------------|-------------------|--------------------------|----------------------------|--------------------------------------------------------------------------------|

| Quant Flexi Cap Fund (Direct)   | Active         | Flexi-Cap          | 18,00,000                  | 36,000                       | 0.7%              | 1% (<1 year), 0% (>1 year) | 20–25%                    | High growth, active management, aligns with aggressive strategy                 |

| Parag Parikh Flexi Cap Fund (Direct) | Active      | Flexi-Cap          | 12,00,000                  | 24,000                       | 0.6%              | 2% (<1 year), 0% (>1 year) | 18–20%                    | Diversified, stable returns, balances risk                                      |

| Bandhan Small Cap Fund (Direct) | Active         | Small-Cap          | 10,00,000                  | 20,000                       | 0.8%              | 1% (<1 year), 0% (>1 year) | 25–30%                    | High-growth potential, suits risk-tolerant investors                            |

| UTI Nifty 50 Index Fund (Direct)| Passive        | Large-Cap Index    | 15,00,000                  | 30,000                       | 0.14%             | None                     | 12–15%                    | Low cost, stable returns, ideal for passive allocation and redemptions          |

| ICICI Prudential Liquid Fund (Direct) | Liquid   | Liquid Fund        | 5,00,000                   | 10,000                       | 0.2%              | 0% (>7 days)             | 6–7%                      | Liquidity for emergency redemptions, low risk                                  |

| **Total**                       |                |                    | **50,00,000**              | **1,00,000**                 |                   |                          |                           |                                                                                |

 

### Advantages of the Strategy

- **LTCG Benefits**: Holding for >1 year ensures gains above ₹1.25 lakh are taxed at 12.5%, compared to 20% STCG or 30% business income tax for F&O.

- **Growth and Compounding**: Active funds (Quant, Parag, Bandhan) target 15–25% CAGR, while passive funds (UTI Nifty 50) add stability at 12–15%. Monthly SIPs ensure continuous compounding.

- **Low Costs**: Expense ratios are low (0.14–0.8%), and exit loads are 0% after 1 year, minimizing costs.

- **Liquidity**: Liquid fund (ICICI Prudential) and passive fund (UTI Nifty 50) provide easy redemptions for ₹1 lakh monthly needs without penalties.

- **Flexibility**: The mix of active and passive funds allows you to adjust allocations based on market conditions or needs.

- **Alignment with Prior Preferences**: Incorporates your favored funds (Quant, Parag, Bandhan) and passive strategy (UTI Nifty 50) from past discussions, tailored for growth and tax efficiency.

 

### Implementation Tips

- **Start SIPs**: Use platforms like **ET Money**, **Groww**, or **Zerodha Coin** to set up SIPs and track NAV. Lump-sum investments can be made via these platforms or directly with AMCs.

- **Track FIFO**: Work with a financial advisor or platform to ensure redemptions follow FIFO for LTCG benefits. Most platforms (e.g., CAMS, KFintech) provide unit-holding details.

- **Tax Harvesting**: In January 2026, redeem ₹1.25 lakh gains per fund (if available) tax-free, then reinvest to maintain growth.

- **Monitor Performance**: Check quarterly factsheets on **Value Research** (www.valueresearchonline.com) or **Moneycontrol** (www.moneycontrol.com) to ensure funds align with market trends.

- **Emergency Buffer**: Keep ₹5 lakh in the liquid fund for unforeseen needs beyond ₹1 lakh monthly redemptions.

 

### Risks and Caveats

- **Market Risk**: Active funds (small-cap, flexi-cap) are volatile; NAV may dip in bear markets. Passive funds are less volatile but still market-linked.

- **Redemption Impact**: Monthly redemptions of ₹1 lakh may reduce compounding if markets underperform. Consider reducing redemptions if possible.

- **Returns Not Guaranteed**: Expected returns (12–30%) are based on historical data and may vary. Review performance annually.

- **Tax Changes**: LTCG rules may change post-2025; stay updated via **Income Tax India** (www.incometaxindia.gov.in).

 

**Note**: Mutual fund investments are subject to market risks; read scheme documents carefully. Verify latest returns and NAV on Value Research or Moneycontrol before investing.

 

If you need a detailed projection of returns, a specific redemption schedule, or help setting up SIPs, let me know!

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