Blog: Mutual Funds Unplugged

Blogger: Dhruva
Starting 1st october, mutual funds are charging  service tax on investment management fee. The same is being communicated to mutual fund investors. All mutual funds investors should be receiving similar communication via email or post. Total expense ratio (TER) for equity mutual fund is raised from 2.50% to 2.70% and same for debt funds to 2.45%. AMCs have started charging service tax on investment management fee which is over and above the TER.The maximum scheme expenses could even go more than 3% in equity funds after adding service tax on management fee, 20 basis extra TER (which has to be clawed back to schemes in the event of redemptions), and 30 basis additional expenses on gross new ... Read more
clicks 292 View   Vote 0 Like   6:09am 11 Oct 2012
Blogger: Dhruva
In a bid to curb mis-selling of mutual funds, all mutual fund advisers and relationship managers will get a unique identification number (UID) and the deadline for which, set by SEBI is 1st November. All national distributors and banks who have appointed relationship managers and sales personnel who advise clients will come under this rule. The mutual fund application form will also have a provision for disclosing the Unique Identification Number for sales personal.“Onus should not be only on the client or AMC. It should be on the distributor as well. It is not to crucify anyone but it is to make sure that people take responsibility and give the right advice. Sometimes clients also take th... Read more
clicks 311 View   Vote 0 Like   10:43am 9 Oct 2012
Blogger: Dhruva
To sell their products, marketers come up with half cooked information. To attract investors to their schemes, they try to build false rumors, this leads to confusion in minds of mutual fund investors. I have tried to cover common myths prevailing in mutual fund industry:Lower NAV mutual fund is cheaper: Whenever a new mutual fund scheme is launched, agents try to sell the scheme stating that the NAV is only Rs 10 and is cheaper than the existing mutual fund products. Further he would explain that if you invest Rs 5000, you will get 500 units of the new mutual fund but if you buy any existing mutual fund with NAV say Rs20, you will get only 250 units. Poor investor would not understand the g... Read more
clicks 270 View   Vote 0 Like   7:05am 31 Aug 2012
Blogger: Dhruva
With gold prices sky rocketing to all time high of Rs 31,029 on MCX, units of gold ETFs traded on the exchanges surged to their 52-week high on Thursday.Following Gold ETFs surged to their 52 week High on Aug 23 2012:Axis MF’s Gold ETFBirla Sun Life Gold ETF (Growth)Quantum Gold Fund ETFReliance Gold ETFReligare Gold ETFUTI Gold ETFThere has been a consistent increase in Gold prices over the period of 5 years. In 2008 the price of gold per 10 gm was approx Rs 10,000, now it has risen to Rs 30,000 in span of 4 years. This is phenomenal. I don't remember any mutual fund giving such return during this period.... Read more
clicks 298 View   Vote 0 Like   6:05am 24 Aug 2012
Blogger: Dhruva
Gold is clearly on rising spree. Today, 10 grams of gold reached Rs 30,745 just short of Rs 5 from its all time high. Looks like we are going to see record high pretty soon. Gold stockists are continuously buying gold ahead of marriage season and festivals and on strong global cues. In London, gold gained $5.70 at $1,644.30 an ounce.On the domestic front, gold of 99.9 and 99.5 per cent purity climbed by Rs 235 each to Rs 30,745 and Rs 30,545 per 10 grams, respectively. Gold had gained Rs 70 in last two sessions. Sovereigns rose by Rs 50 to Rs 24,550 per piece of eight grams.... Read more
clicks 268 View   Vote 0 Like   10:49am 22 Aug 2012
Blogger: Dhruva
SEBI has announced consolidated package to regulate and boost investments in mutual funds. Following are highlights of the package:Recommendation to allow mutual funds investment under Rajiv Gandhi Equity Savings scheme.Regulate mutual fund advisers who charge fees.Self Regulatory Organization (SRO) to be formed for Mutual Fund distributors.Service tax will be charged on new mutual fund investments. 30 basis point extra spend for application received beyond top 15 cities.Formulate a Mutual Fund policy in 6 months.May allow transactions up to Rs 20,000  without PAN card or bank account.... Read more
clicks 285 View   Vote 0 Like   7:03am 21 Aug 2012
Blogger: Dhruva
Reviving mutual fund industry has been a concern for ministry of finance and quite a few measures are being taken to revive the same.There is a serious discussion on including investment in Mutual Funds under Rajiv Gandhi Equity Scheme. Though nothing is finalized yet, mutual fund industry will get a real boost if it gets included in Rajiv Gandhi Equity Scheme. As a mutual fund investor, similar to ELSS, investors will get benefit of tax savings under section 80c if this gets implemented. This would be a good move by the government because direct investment in equity is much riskier than investment in mutual fund, unless the investor has considerable knowledge of stock market. ... Read more
clicks 279 View   Vote 0 Like   3:47am 20 Aug 2012
Blogger: Dhruva
In the meeting held yesterday, SEBI has allowed following 7 AIFs (Alternative Investment Funds) to operate in India:IFCI Syncamore India Infrastructure FundUtthishta Yekum FundIndiaquotient Investment TrustForefront Alternate Investment TrustExcedo Realty FundSabre Partners TrustKKR India Alternate Credit Opportunities FundThese AIFs can operate in India under 3 broad categories:Category I: This category include funds like Infrastructure Funds, SME funds and siocial welfare funds which get incentives from the government.Category II: Ones which fall in between funds which get incentives from govt. and short term funds.Category III: Short term funds like hedge fund etc.... Read more
clicks 275 View   Vote 0 Like   10:38am 17 Aug 2012
Blogger: Dhruva
Latest News from SEBI on mutual funds:SEBI has allowed mutual funds flexibility in using expense charges, to expand market reach.Committee for National Mutual Fund policy. Rajiv Gandhi Equity Savings Scheme may provide tax incentives for mutual funds.eIPOs will be available at over 1000 points initially.Entry load will not be re-introduced.More information to come.....!... Read more
clicks 266 View   Vote 0 Like   11:40am 16 Aug 2012
Blogger: Dhruva
Mumbai SkylineThere has always been comparison of India and China economies. In terms of mutual funds, China marches much ahead of India with their robust economic structure. Let us look at the facts of Mutual Fund industry in India and China.Mutual fund industry started in India in the year 1963. In China, till 1998 there was no mutual fund industry.Mutual Funds in India is about Rs 6.85 lakh crore with 1.8 lakh crore in equity schemes. China manages about 19.4 lakh crore, with almost all investment in equity. Similar to 401(k) system in United States, new system in China allows retirement investment account where investment in equity is eligible as retirement savings.Nothing of that sort ... Read more
clicks 270 View   Vote 0 Like   4:51am 16 Aug 2012
Blogger: Dhruva
Even though Mutual Funds are arguably one of the best sources of generating income in long run, there has been a significant and consistent decline of mutual fund investment. First quarter of FY13 has seen a steady decline in number of equity folios with investors exiting.The number of exits between April 2012 - July 2012 has equaled 1/3rd of closures in last 2 years. As per SEBI, in July alone, more than 3 Lakh accounts were closed/cancelled.This is really a matter of concern. Primary reason of account closures has been low performance of stock market and this has led to low performance of mutual funds.During the year 2008-09 the number of equity folios was 4,11,31,623 and now in 2012-13 (J... Read more
clicks 295 View   Vote 0 Like   4:56am 14 Aug 2012
Blogger: Dhruva
Mutual funds invest money in stock market by buying shares of listed companies. On of the criteria of identifying a stock to buy, is the popularity of the stock among mutual funds. As we know, mutual funds are managed by well informed and professional fund managers, when most of the mutual fund managers bet on a particular stock, means the stock is worthy the money. Following is the the list of top 10 mutual fund favorite stocks:ICICI Bank: With market value of  Rs 9,285 crores, bought by 187 mutual funds schemes in the last quarter and market cap of over 1 lakh crore, this is the most favorite stock of mutual funds. State Bank of India: 2nd most popular stock among mutual funds. Market val... Read more
clicks 275 View   Vote 0 Like   10:46am 13 Aug 2012
Blogger: Dhruva
There are plenty of mutual fund investment options to choose from the market. Mutual fund agents sell mutual fund products depending upon how much commission they would make and not on the basis of performance of the fund house. The one which gives them good commission becomes good fund for them. However, we are the ones who invest our hard earned money and it's our prerogative to understand which one to choose. To evaluate a mutual fund following points should be taken into consideration:  Fund House: Fund house like SBI, UTI, Reliance etc have a goodwill in the market. It is expected that funds from a reputed house should be better performing. Though, it is not always true, however, ... Read more
clicks 248 View   Vote 0 Like   6:03am 10 Aug 2012
Blogger: Dhruva
In a bid to increase mutual fund investment, AMFI (Association of Mutual Funds in India) has sent a proposal to SEBI (Securities and Exchange Board of India) to have a platform similar to shares and equity trading, for mutual funds investment. Similar to demat account, AMFI has proposed to create a unique CAN - Common Account Number, just like Demat account number for mutual fund investors. A person with one CAN can invest in any number of mutual funds in one go.SEBI seems to have approved this proposal of mutual fund trading platform and should come into existence  by 2nd quarter of 2013. With this platform in place, new and existing mutual fund customers will be able to buy different sche... Read more
clicks 302 View   Vote 0 Like   4:36am 9 Aug 2012
Blogger: Dhruva
PAN: Permanent Account Number is one of the most important detail of an individual and organization.Following are the unique features of a PAN card:Is 10 digit alphanumeric number.First five characters are Letters, next four are numbers and last character, a letterPAN number can be divided into following 5 Parts: PAN            1. First three characters are alphabetic series running from AAA to ZZZ         2. Fourth character of PAN represents the status of the PAN holder.              • C — Company              • P — Person              • H — HUF(Hindu Undivided Family)              • F — Firm        ... Read more
clicks 264 View   Vote 0 Like   3:30am 8 Aug 2012
Blogger: Dhruva
P Chidambaram has said today that finance ministry will come up with quite a few measures to increase investment in mutual funds, considering most of the investment comes from metro cities of India. To quote "In the next few weeks, we will announce a number of decisions to attract more people to invest in mutual funds, insurance policies and other well-designed instruments", as we are aware with Pranab Mukherjee becoming the president of India, finance ministry has now been allocated to Mr Chidambaram. Looks like government is seriously considering to boost of investment in securities, a new scheme was launched earlier in this budget  on the same lines, Rajiv Gandhi Equity Sche... Read more
clicks 290 View   Vote 1 Like   6:22am 7 Aug 2012
Blogger: Dhruva
Tracking of your mutual fund investment is as important as your investment. It is very easy to track the value of your investment in a particular mutual fund. For this, we need to understand two terms:Number of Units: What you hold in a Mutual Fund is, the number of units of the mutual fund. For example when you invested Rs 5,000 on 'A' mutual fund which has NAV of Rs 10, what you actually get is 500 units of that mutual fund. So, 500 units is your holding in 'A' mutual fund.NAV: Net Asset Value. In simple terms, it is the cost of 1 unit of Mutual Fund on a particular day. NAV of a mutual fund gets updated every working day and may increase or decrease. Total Value of my Mutual Fund holding ... Read more
clicks 295 View   Vote 0 Like   8:31am 6 Aug 2012
Blogger: Dhruva
Indian Rupee looks to be getting weaker day by day primarily due to reduction in capital flow and European market fears. Experts believe the situation will not improve for a while. So, how does the rupee fall impact you and which industries/sectors loose/gain from this.LosersImporters : This community is drastically affected by the rupee fall. The companies which borrow raw materials from abroad have seen their cost increase and is eroding their profits. Many companies which have loan from international organizations are also affected as they have to pay more. Foreign Eduction : Foreign education has become much more expensive due to the rupee fall.Travel Industry : With fall in rupee, forei... Read more
clicks 289 View   Vote 0 Like   7:21am 4 Aug 2012
Blogger: Dhruva
International Mutual Funds are mutual funds which invest money predominantly in international market. If you understand economy of a particular international country well and know the sectors which are likely to perform well in that country, you may choose to invest in the mutual fund which invest money in that country and sector. However, before investing you should keep in mind forex exchange, political and economic scenario of the country.Following are the funds available in India which invest in international markets:Franklin Asian EquityHang Seng BeESJP Morgan JF Greater China Equity Off-shoreMirae Asset China AdvantageDSPBR World Mining FundING OptiMix Global CommoditiesMir... Read more
clicks 453 View   Vote 0 Like   9:23am 3 Aug 2012
Blogger: Dhruva
To understand Gilt Funds, we need to know what are G-Secs.G-Secs are Government Securities, issued by Reserve Bank of India, on behalf of government of India. The Gilt Funds invest money in these G-Secs. Similar to debt funds, these are low risk mutual funds. However, unlike debt funds, which invest money in all debt instruments, Gilt Mutual Fund focus only one category of debt instrument, G-Secs. Long term and short term gilt funds are available to invest depending on investment horizon.Based on their 1 yr performance, following are top 10 Gilt Funds option Growth:RankGilt Fund Name3 Yr %1 Yr %6 Months %1Baroda Pioneer Gilt Fund 12.2714.815.312Kotak Gilt - Investment Regular Plan 8.0514.775... Read more
clicks 328 View   Vote 0 Like   10:56am 2 Aug 2012
Blogger: Dhruva
Statistics of a Mutual Fund reveals the performance of the fund. Following are the stats of a large cap Mutual Fund: Fidelity Equity Fund:Crisil Rank:1Top Holdings:ITC: 6.49%Reliance: 6.37%HDFC Bank: 5.52%ICICI Bank: 5.42%TCS: 4.07%SBI: 4.07% Returns: (NAV as on 27-July-2012) 1 Year: -6.3%2 Years: -1.7%3 Years: 9.6%5 Years: 5.9%Yearly Absolute Returns: (NAV as on 27-July-2012) 2011: -21.1%2010: 26.3%2009: 82.9%2008: -50.5%2007: 53.6%Advice: As per crisil, this is one of the best performing mutual funds in the Large Cap segment, considering the performance of its peers and benchmark index. It is advisable to continue with your investment in this fund, if already invested. Looking at the top... Read more
clicks 325 View   Vote 0 Like   4:22am 30 Jul 2012
Blogger: Dhruva
As mentioned in previous posts, SIP is one of the best forms of investment. Following are important points to remember while renewing your SIP.Folio number will remain same while renewing SIP.Folio number must be KYC compliant. Mutual Fund company might send you a mail about ending of your SIP term along with SIP renewal form, else, SIP renewal form can be downloaded from the Mutual Fund website.You need to provide bank details and ECS mandate. This can be different from your earlier bank. Depending on the performance of your fund, over the SIP years, you may change the SIP amount as  well as duration.Send your SIP renewal instruction to the Mutual Fund company about 1 month prior to the la... Read more
clicks 296 View   Vote 0 Like   11:01am 25 Jul 2012
Blogger: Dhruva
Taxation on mutual funds must be understood clearly so that returns are not eaten away by taxes. Broadly the mutual fund you purchase will be one of the following categories:Equity Mutual Fund.Liquid Fund - Money Market Fund.Debt Fund.Income generated from the mutual fund will be one of the following:Dividend. Short term Capital Gain (Holding <1 year).Long Term Capital Gain (Holding > 1year).                                                                                          Let's understand taxation for each:Equity Mutual Fund:Dividend: Tax Free.Short Term Capital Gain Tax: If you sell the mutual fund units within 1year of investm... Read more
clicks 345 View   Vote 0 Like   5:24am 24 Jul 2012
Blogger: Dhruva
Last date of filing tax in 31st July and we have by now received our Form 16 from the employer. Time now to file our returns.Pointers to note while filing tax:What is Form 16:Certificate issued by employer to employee with details of  income earned and tax deducted from source and paid to the government on your behalf. Most of the employees get their Form 16 by April 30 and are expected to file their tax return by July 31.Check following items in Form 16 and make sure they are correct:Assessment Year and PeriodYour PAN number.Total amount of Tax deducted.  HRA and other allowances exemption from the gross salary.All investments under 80c, 80d etc.Form 26AS:Register to Income Tax website an... Read more
clicks 261 View   Vote 0 Like   4:43am 23 Jul 2012
Blogger: Dhruva
Create your account at http://cleartax.in/Keep your Form 16 handy.Enter details from your form 16 into following sections of the site           3.1 Personal Info.          3.2 Income Sources.          3.3 Deductions.          3.4 Taxes Paid.          3.5 Tax Filing.    4.   Click on the icon to File your income tax return.    5.   After about 2 minutes you will receive your unique acknowledge number on your email id as           acceptance of your return from Income Tax department..    6.   Once you receive your ITR-V in few days, sign and post it to:          Address of CPC - Bangalore :          Post Bag No... Read more
clicks 303 View   Vote 0 Like   8:21am 19 Jul 2012
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