The Benchmark S&P CNX 500 Fund is introduced with a new scheme called value investment plan. It is an innovative idea developed by a Harvard university professor. This scheme has no entry load, but there is exit load. If the investment is redeemed in one year of date of allotment, the exit load will be charged. The exit load is 1.5%. VIP well suits the present market conditions.
Usually, fund investment and share trading involves lot of risk. The market conditions are not positive all the time. Bull market can change suddenly into bear market. Before, everybody did diversification to avoid market risk. People invested in different shares and funds to prevent huge losses. At present, value investing plan is brought up to solve the problem. When market is in good condition, more units are bought. When market is in bad condition, fewer units are bought. Due to this, monthly investment automatically varies. This new scheme is totally different from systematic investment plan and other regular schemes. In systematic investment plan and other regular schemes, equal monthly investment is made. Profit is not high compared to VIP in normal schemes.
Value investing plan has numerous advantages. Some of the benefits are high return percentage and lower per unit acquisition cost. Since money is invested for a long time period, high profit is confirmed. Due to long time investment, units are bought at lower cost. So, lower per unit acquisition cost is achieved. Rupee cost averaging is possible in SIP. Though SIP has averaging, VIP only has high return percentage.
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Divya Kannan
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