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Largecap Funds:

DSP BlackRock Top 100 Fund

ICICI Prudential Focused Blue Chip Fund

Birla Sun Life Front Line Equity Fund

Large and Midcap Funds

ICICI Prudential Dynamic Plan

HDFC Top 200 Fund

UTI Dividend Yield Fund

Mid and SmallCap Funds

Reliance Equity Opportunities Fund

DSP BlackRock Small & Midcap Fund

Sundaram Select Midcap

IDFC Premier Equity Fund

Small and MicroCap Funds

DSP BlackRock MicroCap Fund

Sector Funds

Reliance Banking Fund

Reliance Banking Fund

Gold Mutual Funds

Relaince Gold Savings Fund

ICICI Prudential Regular Gold Savings Fund

HDFC Gold Fund

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Invest Mutual Funds Online

Download Mutual Fund Application Forms from all AMCs

Gold ETFs - Tracking Error

Posted: 16 Apr 2012 06:29 AM PDT

At present, there are 13 gold ETFs and three gold funds of funds

OVER the past few years, gold-backed exchange traded funds (ETFs) have emerged as preferred investment tools for people who want to take advantage of the price rise in the metal without the hassles of physically buying it and preserving it.

Since 2007, when the first gold ETF-benchmark BeES was launched in the country, there has been a steady increase in the investments going into this paper gold. In the past four years, several fund houses launched their gold ETFs and some of them have even launched gold fund of funds, which invest in gold ETFs. At present, there are 13 gold ETFs and three gold fund of funds.

Though all these funds have gold as the underlying asset and they closely track the price movement in the commodity, the net asset value (NAV) of a gold ETF does not exactly reflect the value of the physical gold and the returns from each fund will be slightly different from the other. This is because of the tracking error in the ETF.

The tracking error occurs due to the expenses charged for managing the fund, transaction costs and the portion of the investment held in liquid assets.

The charges for managing the fund are deducted from NAV of the fund. To cover administrative expenses, the fund also holds some amount in cash or liquid funds. This could be a very small portion of the total amount, but still it will affect the ability to fully reflect the price movement in physical gold. The lower the tracking error the better.

When invested for a longer period, a higher expense ratio will have a larger impact on returns.

The expense ratio of Indian gold ETFs range between 1 per cent and 1.5 per cent. When it comes to gold fund of funds, there is an additional expense ratio of 0.5 per cent to 0.75 per cent. So, when one invests in gold ETF through fund of funds, the total expense of the investor would range between 1.5 per cent and 2.25 per cent.

However, both gold ETFs and fund and funds can coexist. Despite having a comparatively higher expense ratio, gold fund of funds enable systematic investment and the investor needs to have only a demat account.

Another important thing one has to look for while investing in gold ETFs is the

i impact cost and this is crucial at the time of redemption. Impact cost is the difference between the bid price and sell price and depends upon the liquidity of the fund and the availability of bidder and seller.

A significantly large fund will have more number of buy and sell orders and, thus, the impact cost will be lower. When a fund has poor buy and sell orders, the impact cost could go up.

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Invest Mutual Funds Online

Download Mutual Fund Application Forms from all AMCs

Some of the Top performing Mutual Funds are

HDFC Top 200 Fund

ICICI Prudential Dynamic Plan

DSP BlackRock Top 100 Fund

Birla Sun Life Front Line Equity Fund

Reliance Equity Opportunities Fund

IDFC Premier Equity Fund

SBI Magnum Contra Fund

Sundaram Select Midcap

UTI Dividend Yield Fund

L&T Growth

Posted: 16 Apr 2012 05:39 AM PDT

L&T Growth Fund (LTGF) is open-ended diversified equity fund that invests predominantly in large caps. LTGF follows the growth style of investing and has been in existence for over 10 years now.

Type of scheme	Open-ended
Category	Diversified equity
Sub-category	Large Cap
Style	Growth
Launch date	September 17, 2001
Risk-Return proposition	High risk-Average return

Investment Objective and Proposition

The fund's primary investment objective is "generate long term capital appreciation income through investments in equity and equity related instruments; the secondary objective is to generate some current income and distribute dividend. However, there is no assurance that the investment objective of the scheme will be achieved." Following large cap bias, LTGF invests 80%-100% of its total assets in equity and equity-related instruments and upto 0%-20% in debt & money market instruments.

Portfolio Characteristics

In the last one year, exposure of LTGF to large caps has ranged between 74%-86% of its assets. It has invested small portion of its assets in mid and small caps. However, the fund has not refrained from taking aggressive cash calls and at times has held about 24% of its portfolio in cash and equivalent assets. While buying stocks for its portfolio, LTGF follows the bottom-up approach whereby it focuses on company specific factors rather than the economic trends. The fund aims to control the risk through broad diversification within the confines of its investment strategies. Stocks are included in the portfolio based on their assessment on the following key parameters.

· Management quality, strategy and vision

· Business dynamics

· Financial strength of the company

· Free cash flow generation

· Returns on capital employed and returns on equity

· Intangible assets such as brands, distribution etc.

· Valuation in relation to the history of the stock as well as its peer group.

Equity Portfolio

Holdings	Oct 2011	Nov 2011	Dec 2011	Jan 2012	Feb 2012
ITC Ltd.	5.3	5.8	5.6	5.7	6.2
Reliance Industries Ltd.	6.9	6.7	6.4	6.5	5.9
ICICI Bank Ltd.	5.2	5.5	6.8	6.9	5.7
HDFC Ltd.	3.3	3.7	2.6	3.6	5.3
Infosys Ltd.	4.6	5.3	4.9	5.2	5.2
HDFC Bank Ltd.	5.3	5.5	3.8	4.9	4.9
Larsen & Toubro Ltd.	1.6	2.4	4.7	4.8	4.1
Bharti Airtel Ltd.	3.4	4.5	4.5	3.5	3.4
State Bank Of India	3.3	3.3	3.9	4.3	3.4
Tata Consultancy Services Ltd.	2.4	1.6	1.4	2.0	3.0

As per the portfolio disclosed on March 30, 2012, the fund holds in all 37 stocks. Top-10 stocks constitute 47.0% of the portfolio, while its exposure to top-5 sector concentration has been 43.3% of its total portfolio. As on March 30, 2012, the large caps constituted 84.9% of the portfolio, while its exposure to mid and small caps was 4.9%, cash and cash equivalents assets were to the tune of 10.2% of the total portfolio. The fund manager of LTGF has not excessively churned the portfolio which is revealed by its portfolio turnover ratio of 1.1 times which is considered moderate.

How LTGF has fared vis-à-vis its peers

Scheme Name	6-Mth (%)	1-Yr (%)	3-Yr (%)	5-Yr (%)	Std. Dev. (%)	Sharpe Ratio
Canara Robeco Eq Diversified (G)	10.8	0.0	30.7	14.7	7.26	0.30
HDFC Growth (G)	11.2	-4.0	28.8	13.8	6.95	0.29
SBI Magnum Equity (D)	13.0	-2.4	26.2	10.6	7.46	0.26
Birla SL Frontline Equity (G)	9.7	-8.2	24.4	11.7	7.34	0.24
Sundaram India Leadership Fund (G)	10.9	-6.3	24.0	9.0	7.62	0.22
L&T Growth (G)	11.0	-7.2	22.3	5.4	7.93	0.21
S&P CNX Nifty	11.5	-9.9	18.3	7.3	7.59	0.18

The table above reveals that LTGF's performance has been ordinary. Over a 3-Yr time frame, the fund has generated returns at 22.3% CAGR thereby outperforming its benchmark index – S&P CNX Nifty. However, it has underperformed its benchmark over the period of 5 years by generating 5.4% CAGR returns against 7.3% CAGR returns generated by S&P CNX Nifty. On the volatility front, the fund has exposed its investors to a greater risk by being more volatile than some of its category peers and its benchmark. Its standard deviation of 7.93 (which is a measure of risk) is higher than that of S&P CNX Nifty. The Sharpe ratio too (risk adjusted returns) is higher than that of S&P CNX Nifty but appears ordinary in comparison with its peers.

Performance across Market Cycles

	BULL PHASE	BEAR PHASE	BULL PHASE	CORRECTIVE PHASE
	01-Aug-2005 - 09-Jan-2008	09-Jan-2008 - 09-Mar-2009	09-Mar-2009 - 05-Nov-2010	05-Nov-2010 - 04-Apr-2012
L&T Growth (G)	46.7	-61.0	80.4	-9.8
S&P CNX Nifty	50.3	-53.5	71.7	-11.4

(For a period over 1-Yr the returns calculated are CAGR, while for less than 1-Yr they are absolute)

Study of performance across market cycles reveals that LTGF has been extremely inconsistent. It fails to make its mark in any of the market cycle; be it bull or bear; it has never been dependable. It failed to perform during the ferocious bull market of 2005-08 and also disappointed in the subsequent bear phase. Although the performance of LTGF has improved a bit in last 2 years; it still struggles in difficult market conditions.

Fund Manager Profile

Name of the Fund Manager	Mr. Pankaj Gupta
Total Work Experience	Over 8 years
Managing the fund since	Sep-10
Qualifications	B.com, PGDM (IIM-L)

Despite being a large cap fund, LTGF has been shaky and volatile. Although last 2 years have been reasonably good for the fund; its performance still doesn't look promising. Investors would be better off avoiding LTGF Fund as it would be imprudent to overlook the shortcomings in the performance of the fund.

Investing in a fund managed by a fund house which follows systems and processes and has an established track record of performance may enhance your chances of benefiting from your mutual fund investment

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What is Currency Swap Agreement ?

Some of the Top performing Mutual Funds are

HDFC Top 200 Fund

ICICI Prudential Dynamic Plan

DSP BlackRock Top 100 Fund

Birla Sun Life Front Line Equity Fund

Reliance Equity Opportunities Fund

IDFC Premier Equity Fund

SBI Magnum Contra Fund

Sundaram Select Midcap

UTI Dividend Yield Fund

Posted: 16 Apr 2012 04:48 AM PDT

India is expected to enter into a multi billion dollar currency swap arrangement with Japan to raise dollar funds to increase the central bank's firepower to fight the uncertainty that has gripped the currency markets since August. ET looks at the concept of currency swaps and how this arrangement could help India's currency markets.

What Is A Currency Swap Arrangement?

A simple currency swap is a transaction that involves the exchange of principal and/or interest in one currency for the same in another currency. The purpose of currency swap is to hedge against risk associated with exchange rate movements, ensure receipt of foreign currency, and to achieve better lending rates. There are a number of combinations under which companies can pay or receive floating/fixed rates of interest. This arrangement is generally done between companies.

How Could The Deal Be Structured Between India And Japan?

The agreement could effectively be structured in a manner where Japan will accept rupees and give dollars to India up to a stipulated limit, and similarly India will take yen and send dollars to Japan if they demand for it.

How Do Swap Agreements Help Partner Countries?

The idea of such an exchange is to allow a country to manage its short term foreign exchange liquidity problems. The country that has dollar surplus can provide the use of its reserves to another country facing short term exchange issues though a swap arrangement. Japan at present has $1.3 trillion worth of reserves while India has approximately $ 300 billion.

How Will The Swap Help To Calm Indian Markets?

The Indian rupee has faced selling pressure because of the Eurozone uncertainty. The Indian currency has depreciated almost 20% against the dollar since August. Dollar inflows have almost dried up in the subsequent months while the high inflation coupled with a burgeoning current account deficit has worsened the situation. In this situation a currency swap arrangement gives confidence to market participants that India would be able to meet its short term dollar obligations through borrowing if needed. The government could also stave off sudden speculative attacks on the currency.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

HDFC TaxSaver

ICICI Prudential Tax Plan

DSP BlackRock Tax Saver Fund

Birla Sun Life Tax Relief '96

Reliance Tax Saver (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund

SBI Magnum Tax Gain Scheme 1993

Sundaram Tax Saver

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Application form for Tax Saving Infrastructure Bond and more information

Change in Fund Manager - Birla Sun Life MIP II - Wealth 25 Plan & MIP II - Savings 5 Plan

Submit filled up application Collection canter near you

Posted: 16 Apr 2012 04:15 AM PDT

Birla Sun Life Mutual Fund has announced a change in the fund manager of Birla Sun Life MIP II - Wealth 25 Plan & Birla Sun Life MIP II - Savings 5 Plan, with effect from April 4, 2012. The new fund manager will be Mr. Satyabrata Mohanty and Mr. Kaustubh Gupta.

Earlier, these funds were being managed by Mr. Satyabrata Mohanty and Mr. Nishit Dholakia

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Download Mutual Fund Application Forms from all AMCs

Mutual Fund investors will get a consolidated statement of holding from both CAMS and KARVY

Some of the Top performing Mutual Funds are

HDFC Top 200 Fund

ICICI Prudential Dynamic Plan

DSP BlackRock Top 100 Fund

Birla Sun Life Front Line Equity Fund

Reliance Equity Opportunities Fund

IDFC Premier Equity Fund

SBI Magnum Contra Fund

Sundaram Select Midcap

UTI Dividend Yield Fund

Posted: 16 Apr 2012 03:32 AM PDT

If you are a mutual fund investor with a permanent account number (PAN) and are wondering why you are not being sent the consolidated accounts statement (CAS) mandated by Sebi, you needn't worry. Fund managers are themselves not clear on how to go about it.

CAS is a single account statement that consolidates financial transactions in an investor's folios across schemes of all mutual funds.

In November last year, the Association of Mutual Funds in India (Amfi) had mandated that all mutual fund transactions, effective from October, be clubbed in one statement and sent across to investors.

This was in line with an amendment in the Securities and Exchange Board of India (Sebi) regulations. They now state that the asset management company should ensure the consolidated account statement for each calendar month is issued on or before the 10th day of the succeeding month. It should detail all transactions and holdings at the end of the month, including the transaction charges paid to the distributor across schemes of all mutual funds, to all investors whose folios have seen transactions that month.

However, barring a few, all investors continue to get separate statements from different fund houses, Investors whose investments fall in the micro-SIP category (annual investment not exceeding ~50,000) will not get the combined statement. This has nothing to do with micro-SIP. If PAN is available, even if the annual investment is below ~50,000, investors should get the combined statement, provided there are transactions in the concerned month. According to distributors, if an investor's overall annual investments through SIPs cross Rs 50,000, s/he should be provided with CAS.

According to the amended regulations, the asset management company should identify common investors across fund houses by their permanent account numbers.

Moreover, while issuing a combined statement, only folios having financial transactions in a month, identical holders and KYC-compliant unit holders will be considered.

Some say unless data is shared, there would be operational issues, as the back office system gets ready. We have sent the required details and investors should get the combined statements in the next three-four weeks.

Fund houses have outsourced the combined statements to a third vendor, which would be responsible for sending documents to investors.

Right now, registrars and transfer (R&T) agents are dumping transaction details to vendors on the basis of PAN. Meanwhile, we are making sure that we keep sending separate statements to investors till the process settles down in a few months.

According to Amfi, as PAN based KYC is mandatory for all purchases and would be updated by virtue of a purchase transaction, a CAS will be sent to the KYC address of the investor. However, if the KYC is not updated in any folio considered for consolidation, it will be sent to the address available in a folio in which the investor carried the month's last transaction.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

HDFC TaxSaver

ICICI Prudential Tax Plan

DSP BlackRock Tax Saver Fund

Birla Sun Life Tax Relief '96

Reliance Tax Saver (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund

SBI Magnum Tax Gain Scheme 1993

Sundaram Tax Saver

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Application form for Tax Saving Infrastructure Bond and more information

Loan Liabilities should have Life Insurance to Cover

Submit filled up application Collection canter near you

Posted: 16 Apr 2012 02:32 AM PDT

Some of the biggest assets most people dream of possessing are sometimes not easily affordable. Everyone hopes to own a fancy car or a house of his/her own, but with rising expenses or soaring property rates, almost everyone ends up taking a loan in order to purchase their dream.

So, now having acquired it, spare a thought on what would happen if you are unable to complete the payment of the loan amount due to some untoward incident? In such a case, a mortgage insurance plan, or a decreasing cover term plan are ideal tools to cover the loan liability that you may have.

Why A Loan Insurance Plan?

You've taken a loan to purchase your dream home car or home appliances and are repaying the same though EMIs with your hard earned money. But did you know, that if you were unable to pay off the full amount towards the loan repayment, not only would your family have to bear the burden of the outstanding loan, but they would also end up losing the prized possession to the bank, despite having partially paid off the loan. This is why a plan which offers good insurance cover for your loan liability is essential for you. A loan insurance product or decreasing term cover gives you the assurance that the asset will always be yours, irrespective of any situation that may arise.

In fact, even in the case of any other smaller loans that you may have taken such as an auto loan, personal loan or credit card liabilities, the burden can fall on your family in case of an untoward incident that incapacitates you to pay the EMIs regularly.

How To Secure Your Loans ?

There is some rigidity that a conventional mortgage plan poses on various aspects. But a decreasing term cover plan can help you overcome these. Let's take a look how: Loan schedules: To cover your loan with a mortgage assurance plan, you need to submit a loan schedule provided by the bank to the insurer. This loan schedule decides the period over which the loan must be paid off at regular intervals. If during the course of loan repayment the rate of interest increases, the insurance cover continues as per the original loan schedule submitted. This means that the cover may not be adequate to meet the outstanding loan amount which may have increased due to changes in interest rate.

If you choose to secure your loan through a decreasing cover term plan, there are some options available wherein one can cover their loans which do not require a loan schedule for the cover to kick in. Such plans allow you to select your rate of interest from a range on the basis of which the sum assured is decided. This is helpful to cover multiple loans, in addition to the home loan under a single plan by taking a cumulative rate of interest and sum assured. Also, in the situation when interest rates change, you can always top-up the new outstanding loan amount with an additional sum assured.

Cover for small loans

Mortgage insurance is usually available as a bundled product along with the loan which covers only the loan taken from the bank. Such products are limited in their features as they are available only if you have taken a home loan and they do not fulfill any other financial objective. A decreasing cover term plan can be used to cover various kinds of loans such as personal or consumer loans, in addition to high-value loans. Further, these plans can also help to build a corpus for your child's education, marriage or retirement.

Flexibility

Since most mortgage insurance plans work according to the predecided loan schedule from the bank, they offer very little flexibility. On the other hand, a decreasing cover term plan would give you the option to select your policy term, premium payment frequency, and rate of interest. Some products also give you the option to pay premiums in advance which entitles the policyholder to favorable discounts. Some life insurers offer decreasing term cover plans on a limited premium payment mode, wherein the premium needs to be paid only up to two-thirds of the entire policy term.

You cannot forget that your family is your responsibility, and it is for you to make sure that they are well taken care of, in your presence as well as in your absence. You should ensure that they are left with good financial backing rather than the burden of your loans.

Opting for a decreasing term cover plan with various flexibilities would give you better coverage than a conventional mortgage plan. Therefore, safeguarding your loan liabilities can be one of the best decisions you could make for both, yourself as well as your family.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

HDFC TaxSaver

ICICI Prudential Tax Plan

DSP BlackRock Tax Saver Fund

Birla Sun Life Tax Relief '96

Reliance Tax Saver (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund

SBI Magnum Tax Gain Scheme 1993

Sundaram Tax Saver

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Application form for Tax Saving Infrastructure Bond and more information

Submit filled up application Collection canter near you

Templeton India Income

Posted: 16 Apr 2012 01:45 AM PDT

The falling interest rate scenario helped the fund deliver double-digit returns during its first six years. Since then returns have moderated as it opted for a more conservative path. Though the fund was known to always have a portfolio maturity higher than the average, in the six months ended March 2008, it went to the extreme (12.34 years to 21.04 years). From that time onward, there has been a perceptible change in stance with very few instances when the portfolio maturity has exceeded the average. This resulted in a few missed opportunities but over time evens out. For instance, the fund abstained from increasing its average maturity towards the end of 2008. The result: a return of 7.34 per cent in 2008 (category average: 14.15%). Nevertheless, this turned out to be beneficial in the first quarter of 2009 when yields unexpectedly started moving up and the fund delivered 0.64 per cent (category average: -3.88%). The expense ratio keeps fluctuating and is currently on the higher side

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Public Provident Fund ( PPF )

Some of the Top performing Mutual Funds are

HDFC Top 200 Fund

ICICI Prudential Dynamic Plan

DSP BlackRock Top 100 Fund

Birla Sun Life Front Line Equity Fund

Reliance Equity Opportunities Fund

IDFC Premier Equity Fund

SBI Magnum Contra Fund

Sundaram Select Midcap

UTI Dividend Yield Fund

Posted: 16 Apr 2012 12:11 AM PDT

The rise in interest rates on the Public Provident Fund (PPF) applicable from December 1 is set to lead the improvement in net small savings collections – deposit minus withdrawals -- in the remaining four months of the current financial year. The government has increased the PPF interest rate from eight per cent to 8.6 per cent from December 1. The rates on other post office small savings schemes have also been raised. The gross net small savings collections during April-September this year stood at a negative 13,097 crore, with gross collections of `1,82,556 crore and 1,95,653 crore of withdrawals. Net receipts from PPF till September in the current financial year was only `1,324 crore -- Rs 9,863 crore deposit and `7,193 crore withdrawal.

Net PPF contribution to the National Small Savings Fund (NSSF) in 2009-10 and 2010-11 had been `24,777 crore and 22,510 crore, respectively. Besides raising the PPF interest rate from December 1, the government has also raised the ceiling on annual contributions to the fund to `1lakh, from 70,000. D Swarup, former expenditure secretary, said although it would be difficult to reach the levels of the previous two years in terms of net collections, around `10,000 crore could be reached at the end of the financial year. He added that December-March were the crucial four months, when people invested in PPF for getting income tax benefit. Net collections from various savings deposits during April-September was a negative `15,344 crore – Rs 16,458 crore of deposits and 17,9923 crore of withdrawals. In 2009-10 and 2010-11, net receipts from this head stood at 33,679 crore and `31,613 crore, respectively. The net collections from savings certificates in 2009-10 and 2010-11 were 5,894 crore and `45,30 crore, respectively, as against `922 crore till September this year.

Loans from NSSF are one of the sources to finance the annual plan of states. The shortfall in net collections in small savings schemes apparently means lower loans to states from the NSSF, which would have to be made good by the states from other sources of financing. The interest rate rises for PPF and other small savings schemes are aimed at recovering the lost ground in the next four months.

Interest rates on savings accounts in post offices have been raised to four per cent from 3.5 per cent at present. Rates on deposits of other maturities have also been raised. The Monthly Income Scheme would earn interest of 8.2 per cent, but accounts opened on or after December 1 would not be entitled for bonus.

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Invest Mutual Funds Online

Download Mutual Fund Application Forms from all AMCs

You can Bargain for Better Loan Terms, With a Good Credit Score

Some of the Top performing Mutual Funds are

HDFC Top 200 Fund

ICICI Prudential Dynamic Plan

DSP BlackRock Top 100 Fund

Birla Sun Life Front Line Equity Fund

Reliance Equity Opportunities Fund

IDFC Premier Equity Fund

SBI Magnum Contra Fund

Sundaram Select Midcap

UTI Dividend Yield Fund

Posted: 15 Apr 2012 11:36 PM PDT

In today's fast paced economy where there is intense competition among brands and services for the consumer's attention and business, deriving the best value for your money is imperative.

Be it goods or services like insurance, telecom or banking, we now have multiple options to choose from based on our requirements.

Take for instance the credit sector where we now have several banks and financial institutions keen to provide loans and credit cards to disciplined consumers who have a healthy credit history.

Today, almost all the banks and lending institutions check the credit score and credit information report (CIR) of an applicant before approving loan applications.
A consumer's credit score has today become the most prudent indicator of his or her financial discipline and credit eligibility. Therefore, a consumer with a good credit score is most desired by lenders. The consumer can use this powerful reputational collateral to his or her advantage.

The first step is to know what your credit score is and then understand your credit health.

Since the growth of the credit information industry, the only implemented generic scoring model that has been introduced and is being used by lenders in India is the CIBIL TransUnion Score.

Through advanced analytics, this score assigns a number from 300 to 900 to a borrower based on his or her credit history. The higher your credit score (ie, the closer it is to 900), the more likely you are to get your loan application approved. The reason being, if a score is closer to 900, the loan provider will have more confidence in the individual's ability to repay the loan.

While each bank will have its own credit scoring cut-off based on the credit sanctioning policies, it has been observed that most banks are lending to consumers with a credit score of 750 and above.

In addition to a good credit score, lenders may also consider other critical factors like your income-to-debt ratio, your residential status, professional qualifications, etc, while deciding on your loan application. Therefore, along with a good credit score, you must also ensure that all these factors are well placed before applying for the loan. To avail of the benefits of your good credit score you should:

Evaluate the home loan options and shortlist the ones that best suit your financial requirements.

Ensure that all the documentation required along with the loan application is up to date and ready for provision. This may include PAN card copy, passport copy, Form 16 for the previous two years, and six months' bank statements, etc.

Keep your latest credit report and score ready with you if the lenders require any clarifications.

Ensure that all the documents required on behalf of the co-applicant are ready if you plan to have a co-applicant for the loan . It is also advisable to check the co-applicant's credit score, as this is also checked by the lenders.

Approach lenders that provide loan plans you have shortlisted. Mention to them that you have a high credit score and healthy credit report and have all the documents in place. Request them to provide you the best possible terms and conditions and loan processing timelines, based on your credit score.

Evaluate the most optimal option that provides you the best deal in the shortest possible processing time once the lenders revert to you with all the information.

Based on the information on your high credit score, there are chances that the lenders may provide you with competitive terms and conditions. Through this approach, you will be able to bargain and avail of the most beneficial home loan offer. Also, as all your groundwork and documentation is ready, you can immediately apply for the loan. Once you apply, your credit report and credit score will be checked by the lender and on re-confirmation and validation of the documentation, they may sanction the credit based on the promised terms and conditions.

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Invest Mutual Funds Online

Download Mutual Fund Application Forms from all AMCs

How to select a good debt mutual fund ?

Some of the Top performing Mutual Funds are

HDFC Top 200 Fund

ICICI Prudential Dynamic Plan

DSP BlackRock Top 100 Fund

Birla Sun Life Front Line Equity Fund

Reliance Equity Opportunities Fund

IDFC Premier Equity Fund

SBI Magnum Contra Fund

Sundaram Select Midcap

UTI Dividend Yield Fund

Posted: 15 Apr 2012 10:53 PM PDT

Understanding how a fund generates returns will make it easy to pick one

For a long time, investing in mutual funds has been synonymous with investing in equity. Debt funds are still not in the preferred list because a debt fund is seen as a complicated product with a varying NAV and dividend compared with a simple debt product that returns the principal and pays interest. Here are six pointers that can help you understand debt funds.

First, a debt fund is a portfolio of debt instruments. This makes it completely different compared with buying a bond. A bond offers specific cash flows (interest and principal) on specific dates. The debt fund manager gets inflows from investors, buys debt securities of varying maturities, reinvests the interest and redemption cash flows he receives from time to time. He also manages the redemptions that investors make from the fund. So a debt fund is a dynamic, running manager of cash flows. All open-ended debt fund portfolios are bundles of cash flows that vary daily. This is in sharp contrast to the inert activity of buying a bond and holding it till maturity. Of all debt funds, only a fixed maturity plan (FMP) replicates this action of buying and holding. Buying a debt instrument and a debt fund are not the same.

Second, a debt fund delivers the total return. This is a combination of the return from interest earned (called accrual), and that from change in the market value of securities (called mark-to-market or MTM). A debt fund has to value its securities every day based on the current market value. This means that if it bought a bond, which paid 10% interest, and the rate in the market falls to 9%, the earlier bond will gain in value. The longer the maturity of securities in the portfolio (average maturity or duration in the factsheet), the higher the MTM of a fund. To differentiate debt funds, figure out the proportion of returns from each component.

Third, to choose a debt fund, you need to consider only one picture. How has 10 invested in the fund moved over time? Most funds publish this picture, which is the movement of NAV over time, and tells you how the total returns have changed. If you see a steady line moving up, the fund gets most of its return from accrual, and is a low-risk and low-return product. As the MTM component in its total return increases, the volatility in NAV will rise. Remember that over time, the NAV graph will only move up. This is because a debt fund will have a steady interest income, which will make good the MTM losses over time. Your choice of fund should depend on how long you can stay and how much movement in NAV you are prepared to take.

Fourth, the return from a debt fund will vary based on the total return it generates, but within a category, there'll be little difference. If you see a steady month-on-month, quarter-on-quarter return, you should be fine. Expect the intermittent drop in performance to correct with time. It is a reasonable assumption that most debt funds will choose carefully, not take too much risk, and manage to stabilise the NAV over time. Default is a highly sensationalised event in investors' minds, but the truth is that no fund manager will hold debt that has dropped in credit rating, let alone wait until default. The risk of selecting a wrong debt fund is much lesser. What you need to worry about are outliers. If most funds are delivering 9%, a fund returning 10% should raise your eyebrow, while a fund giving 8% has no case. If you choose the average debt fund, you will do just fine.

Fifth, debt markets involve a good amount of math, logic and analytics. Investing in debt requires taking a view on interest rates, which the fund manager will do. If the expectation is for the RBI to reduce interest rates, the funds have positioned themselves to make some MTM gains should the event occur. But it is also true that interest rates in the market are very high, making accruals attractive. If your intent is strategic, you will be fine investing in income funds that offer both. If your intent is tactical, you will choose a long-term debt fund when the market panics, and sell when the rates begin to fall. If you like the best of both, you may pick shortterm debt funds that straddle both the worlds. Make your choice based on your understanding of debt markets. Do not dabble in speculation if ideas like the yield curve and interest rate expectations are too technical for you.

Sixth, expenses directly impact the return. If a fund earns 10% as interest income and pays 2% as expense, 20% of its direct income is gone. Debt funds cannot and do not charge expenses like equity funds. If the expectation is for rates to fall, which in debt markets is a bull run as prices of bonds rise, distributors will ask for more commissions to sell debt funds. In the past six months, expense ratios of several aggressively selling debt funds have risen. Between two debt funds with similar average maturity, NAV volatility, and return, choose the one with a lower expense ratio.

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Should you Invest in Sector Mutual Funds ?

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Posted: 15 Apr 2012 10:01 PM PDT

Banking sector funds as a category topped the performance charts in the past three months with 23.62% return. But the same category of funds is the worst performer if you look at the one-year performance – the category lost 14.58% during the period. The story is same with infrastructure funds, too: they have gained 15.32% in the past three months, but lost 12.75% over the past one year. Similarly, most sectoral funds with higher exposure to the power sector have outperformed other funds by a wide margin in the last quarter of 2007 (calendar year), but they lost heavily in the first quarter of CY2008, as the market corrected. As you can see, the data — sourced from Value Research, a mutual fund tracking firm — presents a confusing picture. Especially for investors who are in search of sectoral funds to beat the broader market. But that is the hallmark of sectoral funds, which can be cyclical or extremely sensitive to even a minute change in their respective business environment.

Rationale

Alpha – the extra returns over the overall market returns – is a dream for many investors. And sector dedicated funds sometime do deliver on this count. According to Morningstar India, another mutual fund tracking firm, if you had invested in FMCG funds, you would have earned an average 10.57% return in CY2011. On the other hand, if you had invested in large-cap oriented equity schemes, you would have lost 24.46% during the same period. A look at the accompanying table will tell you that sectoral funds have occupied slots for top three performing ranks in the past seven years, except for a stray year of CY2009, when small- and mid-cap diversified funds as a category occupied the second rank with 95.36% returns. In short, if you expect a sector to grow faster than the economy, you can consider investing in a fund dedicated to the sector. Banking sector should benefit from the secular growth of the Indian economy in the long term, while recent the Budget provisions should be beneficial for the infrastructure and power sectors. Investors can consider investing in funds dedicated to these sectors.

However, a higher return is not the only reason why investors should look at a sector fund. A sector fund can be used sparingly in times of volatile market conditions to make your portfolio defensive. You can invest in a healthcare fund or an FMCG fund for this purpose, an investment advisory and training portal. FMCG and healthcare funds as a category have shown lower volatility over the long term compared to diversified equity funds. Over five years, healthcare funds and FMCG funds have recorded lower standard deviation of 27.63 and 22.14, respectively; compared to large cap funds (29.78) and mid- & small-cap funds (32.49).

Be Mindful About The Risks

A sector fund leaves the fund manager with limited options, as he has a mandate to invest only within the sector. If the sector enters a bad phase, the fund manager can do very little. A look at the performance of these schemes (See Table) also underlines the fact that you cannot simply invest in the 'best performing sector fund' of last year and sit quietly for it to deliver. To your surprise, you may find that the same sector is not in the top league anymore. That is why it is extremely important that you should have a clear view of the sector. Also, never invest too much in a sector fund as it increases risk. For example, if a professional employed in an information technology firm, with stock options of his company, invests in a technology sector fund thinking that it is a high growth sector, he may be sitting on a huge risk. Here most of his cash flows, fortune and investment are tied to the future of IT sector and any adverse development in that sector can have a devastating impact on his finances. If you are convinced with the growth prospects of a sector, you can invest in that sector's funds; but restrict your exposure to these funds to 10-15% of your equity portfolio.

How To Choose One

Short-term performance may give a distorted picture to investors due to high volatility, especially in the case of sectoral funds, where the stock universe is rather small. Always look at the long-term performance, say, more than three years, to arrive at an informed decision. Long-term track record is just one parameter to start with. Another important factor you have to look at is the portfolio composition. If you are considering a healthcare fund while building a defensive portfolio, a high MNC exposure may be better than a fund portfolio comprising Indian mid and small-cap companies during volatile market conditions. If you are in a volatile market such as the one we are in now, probably a large-cap oriented sector fund may be better to start with.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

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Birla Sun Life Tax Relief '96

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SBI Magnum Tax Gain Scheme 1993

Sundaram Tax Saver

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KOTAK 50 Fund

Posted: 15 Apr 2012 07:48 PM PDT

Kotak 50 tackled the decline in its NAV impressively last year even as other prominent schemes tumbled badly. This scheme is now worth watching in 2012

A brilliant performer in the pre-financial crisis years, Kotak 50 lost its sheen thereafter as it failed not only to sufficiently cushion its downside risk in 2008 but also to recover as handsomely as its peers in 2009. Its at-par performance with the Nifty in 2010 also failed to lift spirits. However, a timely strategy to keep away from sectors anticipated to be negatively impacted by RBI's aggressive rate hikes helped the scheme perform better than its peers last year. Its conscious strategy to invest heavily in the domestic consumption theme such as FMCG, pharma and telecom sectors also helped. While the fund manager continues to be optimistic on these sectors even in 2012, it will be interesting to see if Kotak 50 can live up to the expectations this year as well.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

HDFC TaxSaver

ICICI Prudential Tax Plan

DSP BlackRock Tax Saver Fund

Birla Sun Life Tax Relief '96

Reliance Tax Saver (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund

SBI Magnum Tax Gain Scheme 1993

Sundaram Tax Saver

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Changes in Insurance Domain - MOTOR INSURANCE

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Posted: 15 Apr 2012 09:04 AM PDT

Innovative Products On Their Way

Ever since detarrification of prices came into the picture in 2008, insurers have been promising add-ons to what was, until then, a standard product. While some headway has been made, customers are yet to see substantial innovation in motor policies. In 2012, though, you could finally get access to more options. Add on products like Road Side Assistance would be introduced for a wider coverage and better customer service experience. Such assistance services would help consumers through a traumatic experience in case of an accident or breakdown.

Rewards For Model Behaviour On Cards

Again, a long-pending promise that is yet to come good, the practice of linking to premiums to factors other than the standard ones pertaining to the vehicle is quite prevalent abroad. The year 2012 could be the year it's introduced in India, too, given that many insurers have been collecting the data required to enable this mechanism. There will be use of more factors for pricing, particularly details of the insured such as age, marital status, driving record etc will be introduced in pricing of motor insurance. This would lead to better risk-based pricing. Thus, consumers with better driving habits and vehicle maintenance can expect relatively better premium pricing than others.

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

HDFC TaxSaver

ICICI Prudential Tax Plan

DSP BlackRock Tax Saver Fund

Birla Sun Life Tax Relief '96

Reliance Tax Saver (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund

SBI Magnum Tax Gain Scheme 1993

Sundaram Tax Saver

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Application form for Tax Saving Infrastructure Bond and more information

Health Insurance – Offer double tax benefit

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Posted: 15 Apr 2012 08:24 AM PDT

Deciding on the type of health cover one should buy, tax benefit played a crucial role. Reason: You are eligible for a deduction of ~15,000 each under Section 80D for health insurance. And they wanted to utilise this well.

We saw that we had to pay a higher tax with a family floater plan Hence we went for separate policies for both of us. Here's how they worked out the math.

They pay ~3,283 annually for each of their policies. Their tax liability works out to be ~3,515.10 each or a total of ~7030.20, as they fall in the highest tax bracket. Bajaj Allianzs Individual Health Guard charges an annual premium of ~3,283 for a cover of ~2 lakh for those between 26 and 40 years.

If they had bought a family floater, the policy could be bought by either only one of them could have got a deduction. As a result, one had to taxed on the entire ~15,000 deduction allowed (Rs 4,500). The other one would pay a tax of ~3,022.50 after a deduction of the premium of ~4,925 for ~2 lakh (Bajaj Allianzs Family floater Health Guard) for a family of two (self and spouse). Total tax liability = Rs 7,522.50. Difference = Rs 492.

Many base their health cover purchase on the tax aspect. However, he advises against it because multiple policies will mean a cumbersome claim procedure. The difference on the basis of tax is not huge. Youd rather pay the ~400 as you are paying ~2,000 more as premium in order to save the ~400.

The only good part is that with individual cover you don't have to share the sum insured, which you would have to with a family floater. At the same time, family floaters are meant for young families (senior most member below 45), as the price is based on the age of the senior-most member covered. The higher the age of the oldest family member, the higher will be the payout. Separate covers should be bought for senior citizens.

However, in dual-income households, many couples want to make the most of tax deductions for which they are eligible. Jamshedpur-based insurance broker J N Sharma has often seen couples split the coverage amongst themselves to claim the deduction. Say, they need a ~6 lakh cover, they will buy two family floaters worth ~3 lakh each.

If you and your spouse split the premiums, for a family floater plan, you could claim the deduction if you both contribute to the premium. For instance, if you pay by two cheques of your individual accounts, you could claim the deduction. But, if you are paying through a joint account, the first account holder would get preference.

How if parents or senior citizens require to be covered?

Insurance brokers say if it is the wife's parents, she should opt for family floater covering parents or individual cover for the parents, as the case may be, and vice versa. Say the husbands parents need to be covered, he could opt for individual covers for them -- and the wife could buy a family floater covering the couple and their children. This is so because one cannot claim deductions for premiums paid for in-laws. Most family floaters cover self, spouse and dependent children, not parents.

But, there are some health plans that cover the entire family. Like Max Bupa's Family First (a family floater plan) covers up to 13 kin. Here, if your in laws are also covered you would not get deductions for the premium pertaining to your in-laws. This is not easy to ascertain and the tax authorities may depend on the insurer to give the details. If not, they will decide on their own. Say, you pay an annual premium of ~10,000 for a policy covering your in-laws. The tax authorities may allow you a deduction of ~8,000, saying you are paying ~2,000 for the in-laws. Here, you could split the premium and claim both of you are covering your parents.

Split the total coverage amongst the spouses to claim the deduction In a family floater, if the premium is split between the couple, deduction is allowed Payment through joint account will see the first account holder getting preference If senior citizens need to be covered, premiums paid to cover in laws will not be considered One spouse can cover his/her parent(s), the other can buy a family floater and vice versa But, give importance to the coverage and premium and not tax benefits

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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

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Download Tax Saving Mutual Fund Application Forms from all AMCs