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- Capital protection schemes form Mutual Funds
- Consider factors while picking a Mutual Fund
- With tax advantage FMPs are better than Bank FDs
| Capital protection schemes form Mutual Funds Posted: 03 Sep 2012 03:53 AM PDT Download Tax Saving Mutual Fund Application Forms Call 0 94 8300 8300 (India)
Capital protection schemes form Mutual Funds
ASSET management companies (AMCs) have lined up capital protection-oriented funds for the risk-averse investors who want to protect investments from market volatility.
Capital protection-oriented schemes are one of the fastest growing categories in the industry that has grown three times on a year-on-year (y-o-y) basis to Rs 9,600 crore as on June 30, from Rs 3,000 crore in June 2011, according to industry officials.
These schemes, however, do not legally guarantee protection of capital and similar to debt-oriented balanced sch emes can deliver negative returns.
ICICI Mutual Fund and Sundaram Mutual Fund have filed the offer documents for approval with the Securities and Exchange Board of India (Sebi), while Birla Sun Life's Capital Protection Oriented Fund is open for subscription from August 14 to August 28.
In the past two years, Reliance Capital Asset Management (RCAM) has launched 12 dual advantage fixed tenure funds with different durations (two to five years). RCAM's Dual Advantage Fund is a capital protection fund, a fixed-tenure, close-ended hybrid fund, that seeks to offer stability of fixed income while combining the likely upside potential of equity markets.
It has been the recent attraction among the mutual fund investors, especially in the present volatile market scenario.
Capital protection funds expect to achieve downside protection by investing in debt securities maturing on or before the duration of the scheme, subject to the credit risk and market-linked appreciation by investing in equities. For potential upside, some schemes are also investing in premium of exchange-traded options. The debt equity ratio in these schemes varies from 60 to 80 per cent exposure to debt and 20 to 30 per cent exposure to equity.
ICICI Prudential Capital Protection Oriented Fund III expects to achieve the market-linked appreciation by investing in premium of exchange-traded options, the offer document filed with Sebi said.
Sundaram Asset Management has filed draft offer document with Sebi for renewal of their capital protection funds of two, three and five years tenures, Sunil Subramaniam, directorsales and marketing, Sundaram Asset Management, said.
Some of the best performing capital protection schemes include Reliance Dual Advantage Fund's four series (March, April, May, June series) launched between March 2011 and June 2011, which have given oneyear return of 11.23 per cent, 10.70 per cent, 10.28 per cent and 10.25 per cent, respectively.
The capital protection schemes are close ended and are listed on the stock exchanges, enabling an exit before the scheme matures
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Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com --------------------------------------------- Invest Mutual Funds Online Download Mutual Fund Application Forms from all AMCs Download Mutual Fund Application Forms Best Performing Mutual Funds
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| Consider factors while picking a Mutual Fund Posted: 03 Sep 2012 03:04 AM PDT Download Mutual Fund Application Forms Call 0 94 8300 8300 (India) Several people are convinced about using equity mutual funds as a preferred tool to invest, but they hit a roadblock when it comes to selecting the right fund. Some are promising, but new; others are established, but floundering. The advisers who clamour for trail commissions should be asked to demonstrate proven capability to select good funds for investors. We are not there yet primarily due to limited regulation on what advisers should do and how they earn their income. Investors end up buying funds based on past performance, which may not be repeated, as the fund houses themselves point out.
The focus for the investor should be on selection from the peer group, which these lists enable. A fund's performance may fall along with the markets in which it invests. Even the best equity fund may not post a positive return when the equity market return is negative. The decision at this point is an asset allocation decision-whether to remain in equity or not. It should not be confused with the fund selection decision, which is about choosing the right fund among peers that may be impacted by the market too. First, there are funds for which you don't need to take a view; in case of others, your view matters. For example, if you buy a diversified equity fund investing in both large- and mid-caps, you leave it to the fund manager to take a view on the segment that will work well, and allocate accordingly. If you buy a fund that focuses on the mid-cap segment, you are going for a diversified portfolio, but are implementing a view on how midcaps will perform. Make sure you understand where you need to have a view and where the fund manager can do it for you.
Some funds label such differences clearly and are transparent about how they function. In most cases, in order to push a new product, a fund house may come up with a fancy investment style, but not pursue it. Try and understand how the fund house does its job and choose the funds aligned to a stated philosophy. Ensure you buy into a specified, comparable, competitive product that is managed transparently. Review annually and replace laggards. Leaders fight to persist, but laggards always find the climb back tough. Happy Investing!!
We can help. Call 0 94 8300 8300 (India)
Leave your comment with mail ID and we will answer them OR You can write back to us at prajnacapital [at] gmail [dot] com --------------------------------------------- Invest Mutual Funds Online Download Mutual Fund Application Forms from all AMCs Download Mutual Fund Application Forms Best Performing Mutual Funds
Invest in Tax Saving Mutual Funds Download Any Application Forms Buy Mutual Funds Online Invest Online Buy Gold Mutual Funds Invest Now  |
| With tax advantage FMPs are better than Bank FDs Posted: 03 Sep 2012 01:19 AM PDT Download Tax Saving Mutual Fund Application Forms Call 0 94 8300 8300 (India)
1. Lower tax rates:
While interest from bank FDs is subject to tax at the investor's marginal rate of tax (10% to 30%, plus 3% cess), returns from FMPs are subject to tax based on the options thus selected:
a) Dividend option: Dividend Distribution Tax (DDT) at 12.5% plus 5% surcharge and 3% cess (total 13.519%) is deducted at source. b) Growth option: Long term capital gains (LTCG) tax if units are held for more than one year and short-term capital gains tax otherwise. The latter is taxed at the investor's marginal rate of tax. In case of LTCG, the tax rate is 10.3% (without indexation benefits) or 20.6% (with indexation benefits) whichever is lower. Indexation allows investors to be taxed only if they generate returns over and above inflation by adjusting the purchase price for inflation.
Happy Investing!!
We can help. Call 0 94 8300 8300 (India)
Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com --------------------------------------------- Invest Mutual Funds Online Download Mutual Fund Application Forms from all AMCs Download Mutual Fund Application Forms Best Performing Mutual Funds
Invest in Tax Saving Mutual Funds Download Any Application Forms Buy Mutual Funds Online Invest Online Buy Gold Mutual Funds Invest Now  |
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