Prajna Capital

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• IIFL Nifty ETF
• DSP BlackRock Launches FMP Series 15 – 3M
• Understanding the Multi-Cap Mutual Funds
• Health Insurance: What is Waiting Period?

IIFL Nifty ETF Posted: 08 Oct 2011 06:52 AM PDT India Infoline Asset Management Company is the latest to enter the mutual fund industry. Its first offering is an exchangetraded fund (ETF) called IIFL Nifty ETF. The fund will invest in securities that make up the S&P CNX Nifty Index, in the same proportion as the index. The Nifty tracks the behaviour of a portfolio of bluechip companies, the largest and most liquid Indian securities. Exchange-traded funds score on account of their low-cost structure when compared with actively managed fund. The IIFL Nifty ETF proposes to have one of the lowest cost structures in the industry with expense ratio capped at as low as 0.25%. Actively managed funds charge a fee of between 1% to 2.5% as expense ratio. There are two things to look at in an exchange-traded fund. One is the size of the fund and the second is the tracking error. Tracking error tells us the difference in return between the actual fund and its benchmark. Both these aspects can be gauged once the fund has been in existence for some time and has a track record. Hence, experts advise investing in such funds through the secondary markets, rather than in NFOs. The fund size should be big enough so that investors are not exposed to the moves of a single investor or a group of investors. Exchange-traded funds are popular in the global markets where they account for 5% of the industry. In India, however, they are yet to pick up and account for merely 1% of the size of the industry. The IIFL Nifty ETF new fund offer (NFO) is open till October 12. Investors can either buy it during the NFO or from the NSE once it is listed 10 days after the NFO closes. However, to buy it fromthe stock exchange, investors need to have a broking account as well as a demat account, which come at a cost. WHY INVEST: The fund has one of the lowest expense ratio of 25 basis points. The Goldman Sachs Nifty ETS has an expense ratio of 50 basis points. WHY NOT TO INVEST: Since an ETF has no history, one cannot say with certainty what the tracking error will be. A high tracking error is not good for investors.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in IDFC Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in L&T Mutual Funds Online   Invest in Edelweiss Mutual Funds Online

DSP BlackRock Launches FMP Series 15 – 3M Posted: 07 Oct 2011 09:31 PM PDT DSP BlackRock Mutual Fund has announced the launch of DSP BlackRock FMP Series 15 – 3M. The new fund offer will be open for subscription from October 7, 2011 to October 11, 2011. The scheme will mature on January 10, 2012.     -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in IDFC Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in L&T Mutual Funds Online   Invest in Edelweiss Mutual Funds Online

Understanding the Multi-Cap Mutual Funds Posted: 07 Oct 2011 10:12 AM PDT   These funds offer a greater choice to fund managers in selecting companies MUTUAL fund investors have a wide array of options regarding the type of funds that they can choose for their portfolio. Earlier the classification was simple as there were equity diversified funds and within this category too the funds could be separated into areas like large-cap equity, mid-cap equity, index funds and so on. In recent times there is an added confusion for the investor because they find that there are several funds that do not fit into these previously considered broad categories at all and hence there has to be a different way in which these need to be analysed. Multi-cap funds: The fund, which invests across a range of areas, and sectors are known as multicap funds. As the name suggests these are different from the traditional largecap or mid-cap funds as there is likely to be the presence of companies with different levels of market cap in the portfolio of the fund. This can make the segregation of the fund quite difficult and hence investors have to understand the changing situation differently at various points of time. These funds thus represent a greater choice for the fund manager in the manner of selection of the companies within the portfolio. Changing nature: The first way in which these funds need to be considered is by actually considering the current stocks or areas where the investment is actually made. The flexibility for the investment provides a wide amount of choice for selection of the stocks in the portfolio. For this reason, it is essential that the investor consider the allocation that is given to the different areas in the investment declaration of the mutual fund offer document. This will provide the range within which the holdings will be visible but this can also change quickly. The investor could find out that for some time the fund is in the nature of a large-cap fund while at other times it functions as a small-cap funds. On several occasions there might not even be specific characteristics of the fund as various stocks with different market caps are similar in size. Fund manager: This manner of construction of the portfolio is also an important reason why the fund manager occupies an important position for the investor into such a fund. The fund manager will decide upon the selection of the various holdings in the portfolio and if this is done in an effective manner then there is a good chance that there will be an outperformance for the fund. The downside is also high as there are various times when the view of the fund manager will not work out as expected and in such a situation there can be a wide divergence in the performance of the fund. Focus on the style of fund manager to manage the fund will be a critical r decision while selecting a particular fund. Evaluation: The evaluation of such funds is not an easy task because they are constantly changing their characteristics. So for example, if this was in favour of the large-caps then you might be comparing their performance to how the large-caps are doing but while doing that you might realise that the fund is actually a mid-cap fund so you need to change the benchmark. One of the ways in which the activity can be undertaken is by using the benchmark that is mentioned by the fund. The other way of doing this is also be looking at some benchmark that you might set out on your own and that can be used as a guidepost to look at how the situation is turning out to be.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in IDFC Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in L&T Mutual Funds Online   Invest in Edelweiss Mutual Funds Online

Health Insurance: What is Waiting Period? Posted: 07 Oct 2011 09:24 AM PDT When you sign up for a new health insurance policy, it doesn't get implemented with immediate effect. The policy comes into effect after a 'waiting period', which depends on the kind of insurance and other factors, such as age, your medical history and the company. In other words, the insurer is liable to entertain any claim amount filed only after this waiting period. If an individual undergoes an accident or undergoes hospitalisation during the waiting period, the customer may not be covered for a loss. As mentioned before, the concept of waiting period exists across different kinds of insurance policies, and the quantum of waiting period may differ depending up on the insurer and the nature of the insurance policy. However, following are the broad indicators of waiting period. There is an initial waiting period of 30 days, which goes up to 90 days in some cases, from the effective date of the policy. Some insurance policies may permit treatment for accidental external injuries with a minimum of 24-hour hospitalisation. Pre-existing diseases may not be covered in the first 2-4 years of the policy depending on your age and the nature of the policy. A pre-existing disease refers to any medical condition of an individual prior to the commencement of the policy. Now the policy may be effective for any other ailments in the first few years of the policy. Buy any claim filed for illness related to the pre-existing disease will not be covered in the first 1-4 years of the policy as stated in the policy document. This feature is most common in insurance policies designed for senior citizens. Also, the insurer may insist that you stick with the same insurer if you want the cover to continue without further waiting periods in future. The third is the ailment-specific waiting period, during which an ailment will not be covered. This again varies from company to company. But some common ailments that involve waiting periods include, ENT disorders, polycystic ovarian diseases, diabetes, osteosrthiritis, osteoporosis, hypertension and hernia. These ailments are usually covered only after two years from the date of commencement of the policy.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in IDFC Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in L&T Mutual Funds Online   Invest in Edelweiss Mutual Funds Online

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