Great News for MF investors

As per the latest SEBI directive,
Effective Jan 4 MF investors would not be charged any entry load if they are making direct application to the fund house.
You can start making direct applications to your fund houses from now on to save on entry load.Definitely a bad news for the MF brokers.

Which mutual fund to invest in???

When we say always invest in proven funds....People ask for specific names.
Here's an article that I found on Money today which may be useful for you in choosing a mutual fund for investment.
mutual fund blog India

NFO talk

NEWS :- Birla Sun Life Special Situations Fund:
Birla Sun Life Special Situations Fund is an open end equity fund that will invest in contrarian picks or stocks where there is potential for unlocking of value due to a corporate action.
Return/risk profile: While the return potential it carries is high, the fund’s risk profile will be also high. The fund is suited only to investors who own other equity products in their portfolio. Stocks in contrarian or special situations can carry significant downside risk if the expected event or unlocking of value doesn’t materialise
Fund Manager: A. Balasubramanian
Details: New fund offer closes on January 15. The benchmark is BSE 200. Minimum investment is Rs 5,000
Investors can invest a small portion of their funds for diversification, if they feel the theme is interesting. Risk - return proportion is high. Birla Sunlife is having a good number of performing equity funds. Investors who don't have Birla funds may add this to their kitty for diversification .


Among the tax saving investment options, ELSS and PPF/EPF are unique in the sense that returns from are absolutely tax free.
1) Interest earned from PPF is not taxed during accrual or pay out.
2) Dividend from ELSS is tax free.
3) ELSS has a lock-in period of three years. So,Profit on sale of units held after 3 years is a long term capital gain. It is subject to Nil tax as per current IT act.
ELSS and PPF are the way to go...

ELSS- equity linked saving scheme of Mutual Funds
PPF- Public provident fund
RPF- Contribution to Employee Provident Fund
' Tax investment options' , " Ways to invest to save tax', "1 lakh investment exemption under 80c'
'Which is the best tax saving investment option?',ta saving tips, how to save tax, what are the instruments that you can invest to save tax,best option to invest

Stocks and MFs penetration

I was travelling through some of tier-2,tier-3 cities in South India and even through some smaller towns. I was amazed to see the number of mutual fund advertisements, ads of stock brokerage houses. I was visiting these places almost after 5 years. Was good to see that equity investments is pulling in more and more people. Even in IPOs there is a broader participation from the public. if this trend continues for a while, we may not be an FII dependent market.
Another significant thing that was noticeable was that disposable income had reasonably increased in those places and spending pattern of people has also changed. realised that 'India growth story ' is real at least to some extent. Hope this growth continues and brings out many more millions out of poverty.

Advantage of planning for tax (investments) in advance

Planning for you tax saving investments at the beginning of the financial year is very critical (April - it's time to plan your taxes )and can be very handy for you. I would like to quote examples of two persons I know. The first person always plans for his tax saving investments in advance. This year too, he needed to save Rs 48,000. He planned out an SIP for 8000 for 6 months starting May'07 in a ELSS MF (tax saving mutual fund). His SIP got over in Oct07 and he is ready to present his savings to his employer by end of October'07 ( his employer needs it only by Jan'08). Now apart from saving 30% taxes on amount invested, he also has earned more than 10,000 as unrealised profits on his investments( thanks to the bull run !!).
My second friend starts thinking about tax planning only on January 1. His employer needs tax proof to be submitted by Jan'10. He never saves too. So, he is thinking between taking a personal loan for investing or paying 30% tax instead of saving.
Both of these friends almost earn the same amount and spending patterns are also similar. But the second person also spends a bit extra as there is no commitment like SIP.Planning for your tax investments always makes a difference. If you keep investing throughout the year, you tend to gain a lot as you don't feel the burden of investing a huge amount. You also need not fall prey to year end rush which can make you take a wrong investment decision too.
Always plan for your taxes in advance.Happy tax saving!!.
ELSS= Equity linked saving scheme.

Running behind a theme

A thematic fund has become a fashion nowadays. We see fund houses coming up with a lot of thematic NFOs. 'Infrastructure' is very hot among them.
Nothing wrong in having a part of portfolio in thematic funds. But we need to understand such 'concepts' are seasonal and may tumble once the season is down. The most important thing is that season never ends with a notice. (like IT sector suddenly seeming unattractive and most IT sector funds going down all of a sudden)
If you are a long term investor, you should have thematic funds just to add flavor and not as your main holding. For new investors its always better to avoid thematic funds as far as possible.
NFO= New fund offer from Mutual funds.

Post office schemes get life again

The government has at last done something to revive interest in Post office saving schemes.

1)The Government on Friday announced that the benefit of Section 80C of the Income Tax Act, 1961 will be extended to investments under Five Year Post Office Time Deposit Account and Senior Citizens Savings Scheme. The benefit of the deduction will be available in respect of investments made under these schemes with effect from April 1.
2)Also, 5% bonus will be payable on the deposits made under Post Office Monthly Income Account Scheme upon maturity. This benefit will be available on investments made in respect of new accounts opened under the Post Office Scheme on or after December 8.Together with bonus, the effective yield will be 8.9% as against 8.3% presently available under the Post Office Scheme.(POMIS).
This is definitely a good news for all of the post office investors.

Index Funds

Index funds refer to equity funds that concentrate on a specific index such as Nifty, BSE. The key aim in investing in such index funds is to get returns that equal the returns of the index during a specific time period. The funds invest the money in stocks which are a part of the particular index. The ratio of money invested in various stocks is equal to the ratio of the shares in the index.

During any trading session, ETF index funds can be purchased and sold at the prevailing rates and so are similar to purchase and sale of shares. Demat account is compulsory for transacting in Exchange Traded Index funds ( ETFs). For non ETF index funds, demat account is not required and investment can be made with just a bank account as in case of normal MFs.

Tracking error is the differentiator when it comes choosing one index fund against the other. Tracking error is the extent to which the NAV of the index funds move in a manner that is inconsistent with the movements of their respective indices during a given period.

Average 1 year return from index funds as of 6th Dec 07 45.42%*

Returns proportionate to index

* returns data from valueresearchonline

ELSS -Good way to start

For salaried class who pay income tax and not investing in equity/ equity MF, ELSS fundwould be the best way to start investing in MFs.
This is because.
1) You start an investment for tax saving and straight away get a return equal to your income tax rate notionally. This takes you off the initial fear of investing in equity.
2) The Lock-in period of 3 years allows you to get a feel of equity market.both ups and downs.
3) The confidence you gain by investing in ELSS can then be extended to equity investing.
SIP should be the preferred way to invest in ELSS too. More on ELSS
ELSS= Equity Linked Savings Scheme. Investment in this fund upto Rs.100000 can be used for availing tax exemption.

Fund house with a difference

Quantum AMC follows a direct-to-investor model. Brokers are not used by the fund house to collect investment.
This fund house doesn't charge an entry load as entry load is primarily used to pay commissions to mutual fund agents or distributors.
If you are willing to invest directly either in bulk or SIP without paying brokerage/ entry load on it, you can do it through Quantum fund. ( 100% of your money will be converted into fund units)
Investors should appreciate the intention of QUANTUM AMC in eliminating brokers . Those who are willing to invest can look into for more details.
AMC= Asset management company.

Small fund - NFO

"DBS Chola Mutual Fund has announced the launch of its three-year close-ended fund DBS Chola Small Cap Fund. The fund will invest in equity and equity related instruments of companies with small market capitalisation. The offer is open from November 20 to December 20. The minimum application amount is Rs. 5,000."- news

our views-Lot of proven mid caps available in the market. Pure small cap oriented funds are very few ( DSPML Small companies fund and Sundaram BNP paribas select small cap). Investors who have a big time horizon and want to have smaller companies in their portfolio can look at this fund.

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These are just opinions/ ideas exchanged. No one can claim us responsible for any investment failures /losses based on the ideas expressed here.

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