Triggers in FundsIndia

FundsIndia's technology platform offers a unique way for investors to manage their investments - using the concept of triggers. This article explains what triggers are and how investors can use them effectively.

Before we proceed, please note that Triggers are an advanced method of managing investments, and are suitable for investors who know what they are doing.

What are Triggers?

Triggers, as the name suggests, are events that could cause an action. In terms of investments, triggers are market or investment related events that could result in an action being carried out either by the system or by the investor. A basic trigger setup consists of an event (trigger condition) and an action when the event happens. The action can be done manually or automatically by the system (in some cases).

Example: Suppose an investor has an investment of Rs. 10,000 in a liquid mutual fund. He/she wants to move the money into an equity fund when the Sensex index hits 16,000 points. A trigger can be setup for this purpose with the trigger condition being Sensex reaching 16,000 and the action being a 'Switch' transaction from the liquid fund to a chosen equity fund.

List of event types

FundsIndia's triggers can be setup for a variety of event types - some are market related, and some are investment related.

Market related events are those that do not involve a specific investor folio or scheme investment. They could either be based on an index value or the NAV of a scheme. Market events recognized by FundsIndia are:

1. Sensex index value (previous closing value)
2. NAV of a particular scheme

Investment related events relate to a particular investments change in value. Investment events recognized by FundsIndia are:

1. Total investment amount of the investment
2. Profit percentage of the investment
3. NAV of this scheme

Apart from these, triggers can also be set to fire on a particular calendar date of the month - just like setting a reminder.

List of Action types

When a trigger event happens, an action can be configured to be performed. This action can be one of the following:

1. New investment
2. Redemption - partially or fully
3. Switch - partially or fully

In all three cases, the action can be configured to either execute automatically or upon confirmation by the investor.

Example trigger setups

Here are some frequently used trigger setups in FundsIndia:

1. When my equity fund investment grows by 10% => switch the profit amount to a liquid fund.
2. When Sensex reaches a particular mark => let me know so I can make a new investment (or) switch from liquid fund to an equity fund
3. When a scheme's NAV reaches a point, redeem all my investments in that scheme.
4. On December 15th, switch my money from a liquid fund to an equity fund

Things to note about Triggers

There are a few things to note about using triggers in FundsIndia:

1. Sensex based triggers are based on the closing index value. We evaluate trigger conditions once a day based on the previous day's closing Sensex value.
2. Trigger actions are executed in the next available transaction window for mutual fund transaction processing. That is to say, that if a trigger condition is met on a day's NAV, the trigger action will execute the next day - using the current NAV of that day. No mutual fund transaction can be executed with full knowledge of applicable NAV for the transaction.